Can you sell a condemned house?

Can you sell a condemned house? The short answer

You can sell a condemned house, as is, to a buyer who understands what's wrong and is willing to take on the fix. You still own it, you still owe property taxes on it, and you can still sign a deed. The condemnation follows the property, so the buyer takes on the obligation to repair it or tear it down under the local government's rules.

What you generally can't do is let anyone live in it, rent it out, or hide the condemnation from a buyer. You'll also need to deal with any fines, liens or demolition orders the local government has attached, which are usually settled at closing.

What is a condemned house?

A condemned house is one that a local authority, usually a building, code enforcement or health department, has declared unsafe or unfit for people to live in. The official sign of it is a notice or placard on the door, along with a written order to the owner listing the problems.

Don't confuse it with eminent domain, which is also called condemnation. In eminent domain, the government takes private property for public use, like a road, and must pay for it. A condemned house in the code-enforcement sense is still yours; it simply can't be occupied until it's fixed.

A condemned property isn't always a ruin. Some houses are condemned because the utilities were shut off, or because one serious hazard, like a collapsed porch or a gas problem, made the whole building unsafe until it's repaired. The order you received spells out exactly what the authority wants fixed, and that list is the starting point for any buyer's price.

When a house is condemned: common reasons

Local codes differ, but these problems are typical reasons a property is condemned:

• Serious structural damage, like a failing foundation, roof or load-bearing walls
• Fire, flood or storm damage that makes the house unsafe
• No running water, heat, working sewer or electricity
• Severe mold, pest infestation or sanitation problems, including extreme hoarding
• Dangerous wiring, gas leaks or other immediate hazards
• Long-term vacancy and disrepair that make the building a danger to neighbors

What happens when a home is condemned

Once a home is condemned, anyone living there usually has to leave by the date on the notice. The owner receives an order listing the violations and a deadline to fix them, apply for permits, or demolish. Most places give owners a way to appeal or ask for more time; the notice should explain how.

If the owner doesn't act, the local government may charge fines, hire contractors to secure or board up the property, and in some cases demolish the structure. Those costs are often billed to the owner and can become a lien on the property. Your homeowner's insurance may also be affected, so tell your insurer and read your policy.

Over time, condemned houses tend to go one of four ways. The owner repairs it, passes inspection and gets the order lifted. The owner sells it to a buyer who repairs it. The local government demolishes it, leaving the owner with a vacant lot and a bill. Or the owner stops paying taxes and fines, and the house is eventually lost to a tax sale. The first two keep the most value in the owner's hands, which is why acting early matters.

Fines can also keep growing while the order stays open, sometimes on a daily or monthly basis depending on the local code. Ask the code office for a written statement of everything owed and whether any of it can be reduced once the house is sold to someone who will fix it.

Your options if you own a condemned house

Your choice depends on the repair cost, your budget and how much time you have before the next deadline. Get a contractor's estimate for the items on the order, and ask the building office what permits and inspections it takes to lift the condemnation. If the cost is modest and you have the money and time, repairing may preserve the most value. If the cost is large, uncertain or more than you can fund, selling the condemned house as it stands moves the risk to a buyer who does this work regularly.

• Repair it and get the condemnation lifted, then live in it, rent it or list it on the open market
• Sell it as-is to a cash buyer who takes on the repairs
• Demolish it, with permits, and sell the land
• Ask the local government about extensions, payment plans or repair programs while you decide

Why buyers of a condemned house usually pay cash

Most mortgage loans require the house to be safe and livable when the loan closes. A condemned house fails that test by definition, so most financed buyers can't purchase it unless they use a renovation loan, which comes with its own requirements. That leaves cash buyers, investors and builders as the main market.

That's also why listing a condemned house on the open market often doesn't work the way sellers hope. Showings bring people who can't get financing, and agents may not want the listing. If the house is in a strong location and the repair is simple, listing to investors can still bring competitive offers. If the repair is large or the fines are growing, a direct sale is usually simpler.

Pricing and disclosing a condemned house

Buyers of a condemned house work backward from the finished value. They estimate what the property would be worth once repaired and legal to occupy, then subtract the repairs, permits, fines, holding costs, their risk and their profit. That's why offers on condemned property can look low next to the value of nearby houses that are in good shape. The useful comparison is what you'd net from repairing and listing it yourself, after every cost and the months it takes.

Disclosure is essential. Give buyers the condemnation order, any correspondence with the city, and what you know about the problems. Hiding a condemnation can undo a sale or expose you to legal claims later, and the title company or the local government's records will usually reveal it anyway.

How to sell a condemned house, step by step

Preparation makes the sale smoother and protects you from surprises at closing.

• Get a copy of the condemnation order and the list of violations
• Call the code enforcement or building office to confirm deadlines, fines and any pending demolition
• Ask the title company or county about liens tied to the property
• Keep the property secured and insured as best you can
• Disclose the condemnation and known problems to every buyer in writing
• Compare written offers on net proceeds after fines and liens, not price alone

If tenants lived in the condemned house

If the house was rented when it was condemned, landlords may have obligations to the tenants, such as returning deposits or, in some places, helping with relocation costs. Rules vary by state and city, so check local law or talk with a landlord-tenant attorney before you sell.

Make sure the house is actually empty before closing, and document it. A buyer will want to know that no one has a right to occupy the property, and the local government may need confirmation that nobody is living in a building it has declared unsafe.

Selling a condemned house with Prominent

Prominent Cash Offer buys houses directly, as-is, in any condition, including houses that have been condemned. Share the address and the order you received; if the property is a fit, you'll get a written cash offer with the terms spelled out. There are no fees or commissions, we pay the closing costs, and you choose the closing date. Fines and liens are typically paid from the proceeds at closing through the title company. There's no obligation to accept.