I recently purchased a home and soon thereafter received a letter in the mail from the Building and Inspections Department indicating that there was an Order of Compliance for the walk-out stairs from my basement. Upon further investigation, it was discovered that the permit to build the stairs had not been closed with the city because they did not have an engineer’s report outlining that the underpinnings of the cement staircase had been properly constructed. This was all work done by the former owner. What should I do?
The first thing you should do is contact the lawyer who assisted you with the purchase. In the past, before title insurance was introduced into the real estate transaction system, your lawyer would have written a letter to the city verifying that the property was compliant with all permits, zoning and would know in advance if there were outstanding permits.
This process is now replaced with a one-time payment title insurance policy that will address issues that may arise after your purchase, which would have been discovered had this particular letter been written. However, if you knew there was a problem with an open permit, as one of my clients has been made aware recently before he purchased a property, the issue will not be covered by the insurance policy and a claim would be denied (this is somewhat akin to a pre-existing condition in health insurance policies in the U.S.).
Presumably, if there is a problem with the stairs that require remedial action, your lawyer will be able to assist you with preparing an insurance claim and having the issue rectified. It is important in this process that you involve the city and its inspectors who are generally very receptive and are acting in the best interests of you as well as any visitors to your property who may be at risk. Once a compliance order has been issued it is important to keep your local inspector up-to-date.