To come home to is one of the scarier things a homeowner can find on their front door, a condemnation notice. That typically means a local inspector has determined that the house is uninhabitable, and it poses an urgent practical question: what to do? You have to fix everything until you are allowed to sell, no? Can you sell it at all? In other words, is the house nearly worthless?
The simple response is yes, you can sell a condemned house; plus, no matter the age or condition of your home (fewer repairs required) if you are selling it correctly. This article takes you through what exactly condemnation means, what your options are as the property owner, and what an as-is cash sale looks like for a property in this condition.
This article is not legal, tax or financial advice, but rather has been prepared only for informational purposes. However, condemnation rules and processes also vary widely between cities/counties, so it pays to verify the particulars with your local building or code enforcement department and a licensed professional regarding your own situation.
What Does a Condemned House Mean?
In real estate, “condemned” is used in two different ways, and misuse creates considerable confusion.
The first can denote eminent domain, the government’s taking of private property for public use, such as a highway expansion or school construction, in exchange for compensation. That is a separate legal procedure under the Takings Clause of the Fifth Amendment, and it is not what homeowners usually mean when they talk about having their house condemned.
The second meaning, which was the subject of this article, is condemnation due to an unsafe situation or code violations. Condemnation in this case means government has used its powers to deem property unsafe or non-compliant while eminent domain is the power of land confiscating property for public project use, according to The Legal Information Institute at Cornell Law School. In practice, a local building, health or fire department has determined that the structure is unsafe for humans to live in and issue an official order.
Below are some common reasons which lead to a house being condemned.
Well, a condemnation for code violations typically follows one or all of these things:
- Structural hazards like a rotting roof, broken down foundation and fire
- Absence or inoperative utilities, i.e. no running water, electricity, heat, or sewage service
- Severe mold or moisture damage. One reason is that exposure to damp and moldy environments makes anyone more likely to develop respiratory symptoms, and people with asthma or compromised immune systems can suffer extreme reactions (according to the CDC) that cause jurisdictions to issue condemnation orders when extensive growth of a specific kind occurs.
- Contamination from lead-based paint hazards in homes built before 1978 or contamination from other sources
- Excessive pest infestation or health code violations, often linked with hoarding or extreme neglect
- Continuing code violations that were previously brought to your attention and never addressed
Most importantly, a condemnation notice for code violations does not affect your ownership of the property. The government is not taking your land, but it will inform you that the structure on it is now unsafe to live in. You are the owner of the house, and you have choices regarding its use.
Is It Possible to Sell a Condemned House?
Yes. Unless restricted by law, the owner normally still has the ability to sell a condemned property, with local disclosure laws applying. The changes with the most promise are those around who is likely to purchase it and how the transaction generally works.
Generally, a condemned house will never be an appropriate subject for a standard financed sale. Basic standards of habitability and safety have to be met at minimum for mortgage lenders to approve a loan; a condemnation notice is pretty much about as black-and-white as you can get in terms of being disqualified. Does this mean the house can’t sell? Not at all, it means that to get critical mass we are now looking only for cash buyers who can buy that property as is with no lender conditions blocking their way.
What You’re Required to Disclose
While you’re not obligated to fix a condemned house prior to selling it, you must typically be transparent about the condition and status of the property. Most states require sellers to disclose known material defects, and a condemnation notice is as material a defect as they come. This is a step not to be skipped, regardless of who you’re selling to, because if you try and sell without mentioning the condemnation status you’ll typically end up causing yourself some legal exposure for later on.
Why You Don’t Need to Make Repairs Before Selling (But You Do If You’re Going to Live In It)
Now this is where the confusion lies; the repairs necessary to remove a condemnation order and reoccupy the house legally are completely different from what is required to rehabilitate the house for sale.
Usually you’d need to pull permits, make the cited repairs and have a re-inspection before anyone would even be able to legally live there again to lift a condemnation notice. That process is costly and time-consuming, and let’s be honest, it isn’t something that everybody wants to deal with, particularly if you have inherited the property, the home is a rental house or if the repair list is longer than the price of that home itself.
Selling doesn’t need any of that. A cash buyer who is buying as-is will buy the property in its current condemned state and assumes responsibility for repairing or demolishing after closing. You have no requirements to fix anything, get permits, or even lift the condemnation prior to closing.
How Selling a Condemned House As-Is Looks In Real Life
Eagle Cash Buyers buys houses AS-IS providing home owners with cash for homes such as properties with code violations, deferred maintenance or condemnation. Here’s what that generally involves:
No repairs needed prior to selling or after. You are not obliged to take care of the cited violations, obtain permits, or succeed in a re-inspection. Your property IS valued, and it is commercially appraised as-is.
No agent commissions. In a traditional sale, agent commission are usually split 5-6% total between agents. In this case, a cash sale directly does away with that expenditure.
The transaction can deal with both liens and back taxes. If the property has any unpaid tax balances or liens, these will usually be included in the offer and resolved through escrow at closing instead of needing to pay them off yourself beforehand.
A written, no-obligation cash offer. Discovering what the property is worth in its current condition does not tie you to anything.
A closing timeline you control. This is partly because there’s no lender approval process to wait on, cash sales on distressed properties often close in a matter of weeks rather than the months it can take with a traditional listing.
More information on the common route can be read about in our how it works page, as well as a wider overview of what an as-is sale covers in our sell my house page.
Cash Sale of a Condemned House vs. Traditional Sale
| Factor | Traditional Listed Sale | Cash Sale (As-Is) |
| Repairs required before selling | Yes, almost all buyers will require it, and so will any lender | No |
| Available buyer pool | Few exclusions, bought out of buyer’s funds | Cash buyers and investors |
| Lender involvement | Necessary, and the status of condemnation blocks approval | None |
| Disclosure of condemnation status | Required | Required |
| Liens or back taxes | Typical requirement for resolution by the seller prior to or at closing | Usually, are addressed via the transaction at closing |
| Typical timeline | Slow-ish, if it even sells while in that condition | Days to a few weeks |
| Commissions | 5-6% typical | None on a direct cash sale |
Things That Influence The Value Of A Trespassed Home
There are a few caveats that go beyond an as-is home when it comes to making a cash offer on a condemned property:
The scope of the violations. The absence of a handrail is not in the same ballpark as a faltering footing structure or an eminent domain home without electricity, running water.
Whether utilities are connected. You are usually assuming homes that have had utility shut offs by the city will need that restored as part of any renovations, which factors into cost estimates.
Outstanding liens or tax balances. These take away net proceeds in all circumstances (they are deducted from the transaction).
Local demolition versus renovation economics. It is in the case of certain dilapidation that a land value after withdrawal of the edifice establishes more accurate data than the inheritance or foster loss.
Time-sensitive city deadlines. However, some municipalities have compliance deadlines that, if not met, can lead to the city pursuing either demolition or other legal remedies, putting pressure on to resolve the status of a property one way or another.
It is also important to understand that the sale of any house can have tax consequences regardless of whether it is occupied or not. The IRS sets out rules regarding excludable from gain on the sale of your principal residence if certain ownership and use condition are met, but specifics depend so much more on how the property was used and you as to make it a tax professional question instead of guidance.
If you’re considering your alternatives and would like a broader perspective on what happens in the sale of a house with care code violations specifically, our related guide on selling a house with code violations elaborates on this pericope and our earlier angle covering the legal/market side of this question as it concerns whether you can sell a condemned house.
Frequently Asked Questions
How to Sell a Condemned House Without Repairs
Yes. Fixes to remove a condemnation order and legally return home are not the same as to sell. A cash buyer buying the transaction as is means that somebody will take the property in its current state and you are not responsible to make repairs, pull permits or go back through a re-inspection before selling.
If My House Is Taken, Does That Mean I’m Out of Ownership?
No, not when there’s a code violation or an unsafe condition. You retain ownership. This is distinct from the taking in eminent domain whereby a governmental body itself takes the property for public use and compensates its owner. A code-violation condemnation involves a safety statement about the structure, but not ownership exchange.
Do I Need to Disclose That a Buyer Has When Buying the House Is Condemned?
Yes. A condemnation notice is material information regarding the property and most states require sellers to disclose known material defects. This is true regardless of whether you’re selling with a traditional listing or to an all-cash buyer.
Is It Possible for a House to Be Condemned and Still Have a Mortgage or Liens?
Yes, condemnation status can extinguish the subject mortgage, tax lien and any subsequent liens on the property. Those liabilities still have to be addressed in connection with a sale, often at the closing.
Do You Make Less Money Cashing In a Condemned Home Than Making Repairs First?
Generally speaking, yes an as is cash offer will be based on the current condition of the home and not a fully repaired value. What it determines to avoid is the expense, time and fiscal liability of doing the repairs yourself that credit a condemned property can be considerable. Whether you should make that trade-off is a function of your particular repairs, timeline, and finances.
What Is the Speed of a Condemned House Cash Sale?
While timelines vary property to property and by location, cash sales on distressed (or condemned) properties close in weeks, not the months a traditional listing would take, because there is no lender-approval process.
The Bottom Line
A condemnation notice is no joke, but it doesn’t have to be the final say in what you can do. You still own the home, you’re still free to sell it, and you don’t have to rebuff the condemnation or make repairs before you do. What that does mean is that it pushes your realistic pool of buyers to those who can pay cash with a lender’s green light on the sidelines.
If you are working with a condemned or code-violation property and are wondering how much cash offer will be, contact our team. We make all-cash offers to purchase houses as-is in all 44 states (including condemned houses, those with code violations and notices), for sale by owners of record or their representatives. Follow the link to our sell my house page to begin today.d go to our sell my house page, or simply call us today and let us guide you through the ins-outs of your situation.
