Buying a Property With an Open Code Case
Why Violations, Fines, and Liens Do Not Always Stay With The Seller.
Across Metro Atlanta, buyers are acquiring older commercial buildings, rental homes, and redevelopment sites. Many of these properties have a history of complaints, inspections, or citations that is not obvious from a walkthrough.
A buyer may assume that a code violation is the seller's problem. In practice, an open enforcement matter can affect the property after closing. It can delay financing, limit permits, and leave the new owner responsible for conditions they did not create.
Before committing to a purchase, buyers should understand whether an enforcement matter exists, what it requires, and who will be responsible for resolving it.
Violations Often Follow the Property
Code enforcement generally addresses the condition or use of a property, not only the conduct of a particular owner. A change in ownership may not end the case.
Depending on the jurisdiction and the type of violation, a new owner may receive a new notice, be required to complete the same corrections, or inherit deadlines already in progress.
Unpaid fines, abatement costs, or assessments may also be recorded against the property. That can affect title, closing, and future transactions.
A Clean Walkthrough Is Not a Clean Record
A property may look well maintained and still have an open case. The violation may involve unpermitted work, an unauthorized use, or a missed reinspection rather than visible damage.
Similarly, repairs completed by a seller may not have been inspected, approved, or formally closed out by the local government.
Buyers should ask for records rather than assurances. A seller's statement that an issue was "taken care of" should be confirmed with the enforcing office.
What to Request During Due Dilligence
Due diligence should include a search for open code cases, citations, permits, stop-work orders, and recorded liens. Buyers should also request copies of notices, correspondence, inspection reports, and any compliance agreements.
Permit history should be compared with the current condition of the building. Additions, conversions, and interior changes without matching permits may point to future enforcement risk.
Where records are unclear, a direct inquiry with the appropriate department may be needed before the due-diligence period expires.
Use the Contract to Allocate the Risk
When an open case is identified, the purchase agreement can address it directly. Options may include requiring the seller to resolve the matter before closing, adjusting the price, or holding funds in escrow until compliance is confirmed.
The contract should state who is responsible for corrections, who pays outstanding fines, and what happens if the case is not resolved on schedule.
Clear representations and closing conditions give the buyer a basis to act if undisclosed violations surface later.
Consider the Impact on Your Plans
An open case may do more than require repairs. It can delay permits for renovations, affect a lender's willingness to close, or prevent a new business from obtaining approvals.
Buyers should consider how the violation fits into their timeline and budget, not only what it costs to correct.
Identifying these issues before closing preserves leverage. After closing, the buyer often carries both the problem and the cost.
