Detroit's housing stock is old. A significant portion of residential properties in the city were built decades ago, and many have undergone modifications over the years without consistent oversight. For buyers entering the Detroit market, code compliance is not an abstract concern. It is a practical issue that affects what they are buying and what obligations they are taking on.
Coventry Enterprises LLC reviews code compliance as part of its broader transaction oversight work. This article explains what code compliance means in the Detroit context and what buyers need to know before they close.
What Building Codes Actually Cover
Building codes establish the minimum standards that structures must meet for safety and habitability. In Detroit, these include the Michigan Building Code, electrical codes, plumbing codes, and local Detroit amendments to those standards. When a property has been modified or renovated, those modifications are supposed to meet the code in effect at the time the work was done and, in some cases, current code requirements.
The problem in the Detroit market is that not all work done on older properties was permitted, inspected, or completed to code. Finished basements, added bathrooms, electrical panel upgrades, HVAC replacements, additions, and roof work are commonly done without permits. Some of this work is fine. Some of it is not, and discovering after closing that unpermitted work does not meet code can be expensive.
The other code compliance issue in Detroit involves the city's Certificate of Compliance program. Detroit requires certain properties to obtain a Certificate of Compliance before they can be sold. This certificate indicates that the property has been inspected and meets minimum habitability standards. Not all sales that should involve a Certificate of Compliance actually include one, and buyers who purchase without understanding this requirement can face complications.
Inspection Rights and How to Use Them
Standard purchase agreements include an inspection contingency that gives the buyer the right to inspect the property within a specified period. This right is worth using fully. A thorough inspection by a qualified inspector can identify code issues, unpermitted work, structural concerns, and deferred maintenance that affect the property's value and the buyer's future obligations.
The inspection period is also the time to check permit history. Detroit's building department maintains permit records. If a seller claims that electrical work was done or an addition was built, the permit history will show whether a permit was pulled and whether an inspection was completed. No permit for significant work is a signal worth investigating further.
Coventry Enterprises LLC has reviewed transactions where buyers skipped or limited their inspection to avoid slowing the process down. In a competitive market, there can be pressure to waive contingencies. The committee's position, consistent with its compliance review standards, is that inspection rights exist for good reasons and waiving them is a significant decision that deserves careful consideration, not a reflexive response to competitive pressure.
How the Committee Reviews Code Compliance
When a transaction is brought to Coventry Enterprises for compliance review, the committee's examination of code compliance covers several areas.
- Was the buyer informed of any known code compliance issues with the property in the seller's disclosure documents?
- Was a Certificate of Compliance required for this transaction, and if so, was one obtained?
- Were there open permits or permit violations on the property at the time of closing, and were these disclosed?
- Was the buyer given adequate time and access to conduct a meaningful inspection?
- Did the inspection report identify issues that were then addressed, negotiated on, or disclosed to the buyer before closing?
Jack Bodenstein Coventry Enterprises review methodology for code compliance is specific about what the record must show. A seller's claim that they were unaware of code issues does not close the inquiry. The committee examines what a reasonable inspection of the property would have revealed, and whether the conduct of the transaction gave the buyer a fair opportunity to discover issues before committing.
What Buyers Can Do Before Closing
The most important step is using the inspection period fully. Hire a qualified inspector with experience in Detroit-area properties. Ask specifically about unpermitted work, code compliance issues, and the city's Certificate of Compliance requirement. Check permit records directly if you have specific concerns about renovations or modifications.
If the inspection reveals code issues, address them in the transaction before closing. That might mean a price adjustment, a seller commitment to remedy the issue before closing, or a decision not to proceed. None of those options are available after you have already closed.
For buyers who have closed on a Detroit property and have concerns about code compliance issues that were not disclosed, or about the conduct of the transaction around the inspection and disclosure process, Coventry Enterprises LLC provides independent compliance review. See the compliance review service for more information.