Last Update: 02/24/16

The reality that Florida real estate is in a Wild West situation is known by most professionals in the real estate industry — but it just keeps getting more wild it seems.  Now, there is a growing problem with illegal home conversions – which potential buyers may know as “nonconforming conversions. ”

Surf through sites listing residential real estate for sale in South Florida and you’ll find listings that warn of property conversions.  No need to link to examples; they are now popping up in most search results when you search for real estate in Florida – with descriptions like “illegal,” “nonconforming,” or “unconforming.”

For example, the real estate listing (which usually has a very nice price for the property) may state something like (excerpts taken from actual listings):

• this property may have illegal non conforming portions of the house. This should be verified by the buyer with appropriate city offices.
• short sale available to cash buyers has illegal garage conversion addition ….
• Code violations may exist and are the responsibility of the buyer to confirm and resolve.

Florida real estate buyers should heed these warnings and be very, very diligent in investigating that property before making a purchase.  Why?  Because illegal home conversions are a big and growing problem in South Florida, and the new buyer may be the one stuck with dealing with the problem.  And by that, we mean paying the tab.

What are Illegal Conversions or Nonconforming Conversions in Florida Homes and Condos?

Most changes made to homes, condos, and other real estate must be done only after permits have been obtained from the appropriate authorities.  (Read the Florida Condominium Act requirements regarding conversions online here.)

The local building authority will have its own requirements, such as requiring architectural plans be submitted for additions to homes, etc.  There are also requirements for things like electrical permits, and of course, the local authority will have its periodic inspections with the inspection reports being filed as the actual work is being done.

If material changes are made to the property without following the proper channels, then it’s an illegal alteration of the property.  It is an illegal conversion.

This means that the home owner, when this is discovered, can expect to be charged a penalty by the local authorities for not having the proper permits, etc. – and this is if the addition or conversion is acceptably built.   That penalty can be high: something like double the original costs.

If a condo or homeowners’ association is involved, then their provisions may impose additional fines, fees, and other problems for the condo owner.  The owner may be required to return the property to the condition it was before the structural changes were made (even if it they are sound) by the association in order to keep all the properties in conformity with a particular theme, design, or style.

Florida Illegal Conversions Bring Many Problems For the New Condo Owner or Home Buyer

Changes to residential real estate that is done without proper government approval and the okay of any homeowners’ association, condo board, etc. means that the buyer and now, owner, must bear the financial burden of the nonconformity.  That can mean big money.  The ability to sell that nonconforming home can be a problem, too, because lending may be a problem.  Finding a loan to purchase a nonconforming property is probably unlikely.  For example, Freddie Mac has guidelines to be followed for condominium mortgages which address nonconforming condominiums.

Meanwhile, if the illegal conversion has caused problems in the neighborhood, the buyer may be faced with private lawsuits from citizens who have hired their own attorneys and filed civil lawsuits to force their association to pursue the situation.  This is happening more and more as local government fails to act because of budget constraints.

Larry’s Tip

There are all sorts of illegal conversions of Florida real estate right now, and more innovative ways of altering homes and condos are being discovered all the time.  Why?  A growing problem is the need for homes and condos to house more people:  kids are moving back home with parents, for example.  There is also a trend in South Florida for immigrant families to house more and more family members under one roof.

This means that homes and condos are being altered to deal with the increased needs of those that live in these homes and condos.  Garages are being converted into bedrooms, and cars are being moved into the streets.  This means streets are harder to access — a big problem for emergency vehicles and public safety becomes an issue.

In today’s marketplace, buyers should be leery of a seller’s disclosure statement.  If you aren’t, then as the current owner you will have to deal with the future problems resulting from any illegal conversion and your legal remedy will be to assert a claim against your seller for your damages.  If you buy with knowledge of the illegal conversion, then you’re facing the seller having a defense that you bought with knowledge of the issue and they are therefore not responsible.  Other potential parties that may be responsible for your damages can be appraisers and home inspectors, depending on the situation.

A good piece of advice when you and your family are purchasing or selling your family home in one of the biggest transactions of your life is to at least talk with a Florida real estate lawyer. Getting someone to review all of the paperwork including the all important promissory note, isn’t as costly as most of us think it is. And it’s always a lot cheaper than paying to fix a problem after a closing occurs.  Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

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