'May Not Be Permitted' Wasn't the End of the Story

The listing called them 'two completely remodeled and modernized' apartments, with full kitchens, bathrooms and a theater room. The buyer was told no permits had been pulled, and he signed advisories saying improvements might not be permitted or up to code. After closing, the county red-tagged the apartments. A California appeals court said the permit disclosure didn't end the case.

What the court looked at

In an unpublished opinion filed August 28, 2023 (Stuart v. Cannavino, E078327), California's Fourth District Court of Appeal, Division Two, looked at the sale of an equestrian property in Riverside County with barns that had been converted into apartments. According to the opinion, the sellers told the listing agent no permits had been obtained, and the buyer was told the apartments were remodeled from existing structures 'requiring no permits per [S]eller.' The buyer signed a Buyer's Inspection Advisory and a Statewide Buyer and Seller Advisory that both warned about permits, and the sellers' questionnaire described the structures as '2 Apartments.'

After closing, a family member who later bought the property learned the apartments had no certificates of occupancy, and a pool permit was denied because there were no permitted residences on the property. The county later red-tagged the barn apartments as unsafe and concluded the structures couldn't be remedied and had to be demolished.

The trial court granted summary judgment for the sellers. The appeals court reversed. It said the buyer's claims rested on more than permits: they also covered the lack of a certificate of occupancy, habitability and, for the concealment claim, irrigation permitting, and the sellers' motion only addressed the permit issue. The court also reversed the sellers' fee award. It didn't decide that the sellers did anything wrong; it sent the case back for further proceedings.

One more note: this opinion is unpublished. Under California Rules of Court, rule 8.1115, it can't be cited as precedent, so we're sharing it as a real-world example, not as a binding rule.

Why this one is worth a second look

Permit advisories and 'may not be permitted' language are standard in California files. This case is a reminder that a general warning about permits and a specific description like 'two apartments' can be read side by side, and they may not answer the same question.

Permits, certificates of occupancy and whether a space can legally be lived in are related, but they aren't the same thing.

A quick check before your client removes contingencies

Before contingencies come off, compare how the listing and the seller forms describe a space with what the permit history shows. Is a unit, ADU or converted structure marketed as living space? Is there a certificate of occupancy or final on record? Did the buyer request permit documents, and what came back?

These aren't legal or engineering questions. They're plain-English questions a careful second read can raise. We flag inconsistencies and red flags early, so questions can go to the right professional.

What's at stake

Here, the dispute has run through summary judgment, an appeal and a remand, and the county concluded the structures had to come down. A side-by-side read of the marketing and the forms happens much earlier and costs far less.

How House Owl helps

We understand how overwhelming the paperwork is. You're the one guiding your client through it. House Owl is a second set of eyes on your disclosures and transaction documents, so questions get caught and referred to the right professional before close.

A simple plan for your next escrow

1. Book a free 30-minute Learn More call. (https://calendly.com/jason-myhouseowl/learn-more-1)

2. We review your disclosures and transaction documents for inconsistencies and red flags.

3. We walk your client through what we found on a recorded video call, and you're invited to join, so they can close with more confidence.

Why House Owl

An independent second read of your disclosures and transaction documents, with the walkthrough saved as a video recording. We can send a quick recap after the review, and if something needs your attention, we reach out to you directly.

Jason Piske has worked in California real estate since 2016 and offers disclosure-risk training to brokerages. You can see how it works on our Services page (/services-new) and get quick answers in our FAQ (/faq). Payment terms are in our Terms (https://www.myhouseowl.com/terms-and-conditions).

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Clients who understand their documents before they sign. That's the outcome worth working toward on every file.

A second set of eyes on your disclosures.

For more information, book a free 30-minute Learn More call. (https://calendly.com/jason-myhouseowl/learn-more-1)

Sources

Stuart v. Cannavino, E078327, Cal. Ct. App., 4th Dist., Div. 2 (unpublished, Aug. 28, 2023; modified Sept. 1, 2023), opinion text via gno.law: https://gno.law/c/9422870/stuart-v-cannavino-ca42 ; also Counsel Stack: https://law.counselstack.com/opinion/stuart-v-cannavino-ca42-calctapp-2023

General information, not legal advice. House Owl is an independent document review service, not a law firm, real estate brokerage or home inspector. Owner Jason Piske is a California real estate licensee (DRE 02004501), but in a House Owl review he doesn't act as anyone's agent or represent any party. Laws differ by state; talk to a qualified attorney in your state about a specific situation.