Q: I am buying a house built with 2 finished bedrooms. A 3rd room was finished by the owner w/o getting permits. Issue?

A: The Real Estate Condition Report asks whether the Seller made improvements without required permits during that Seller's period of ownership. If the Seller did not disclose this to the Buyer then the Buyer may choose to terminate the Offer prior to closing. If the Buyer discovers this after closing and there are consequential damages, then the Buyer may have claims against Seller if brought within applicable statutes of limitations that vary based on the claim.

If Seller disclosed the lack of permits prior to acceptance of the Offer, then Buyer's only recourse may be to object to defects discovered in the course of the Inspection Contingency (assuming Buyer has an inspection contingency).

If Buyer closes on the property, then Buyer arguably does not have a duty to disclose the lack of permit on the Condition Report as the question only relates to Buyer's period of ownership. HOWEVER, if Buyer is aware of other defects stemming from the prior owner's failure to obtain permits, then Buyer will need to either correct those defects before selling the property or properly disclose those defects to future buyers.

Buyer should also be aware that future buyers may check municipal records for permits and the lack of permitting may impact their willingness to purchase the property, the price of the property and/or the scope of the inspections.

A: Under the new Wisconsin Real Estate Disclosure Form, effective date July 1, 2014, the seller of a home must disclose any repairs/updates made to the home without the required permits. So your Seller should disclose them to you in the real estate condition report. See Question E6, on page 4 of the form which says "Are you aware of any remodeling, replacements, or repairs affecting the property's structure or mechanical systems that were done or additions to this property that were made during your period of ownership without the required permits?"

Under the facts you presented above, if you buy the home and become the owner, the repairs would have been made under the previous owner, therefore if you do not make any repairs, replacements, or remodeling without the required permits, you could truthfully answer this question as "no" because it did not occur during your period of ownership. However, you may choose to disclose this to a future Buyer out of an abundance of caution. I suggest discussing this with your attorney if you purchase the home and later decide to sell it.