Did you know that government entities have the power to seize a house if the property is unsafe to live in? Generally, a city or county government can remove a home from its private owner if the property is unfit for human habitation and cannot be repaired while someone is living there. Buyers can often purchase these houses as long as they agree to bring the property up to codes and lift its condemned status.
TL;DR (Too Long; Didn't Read)
You can find out if a house has been condemned by contacting your local building safety department.
What is a Condemned House?
A condemned house is one that violates local building codes and is generally unsafe to live in. This type of property is usually an eyesore, structurally unsound and a danger to the public. Different municipalities have different rules, however, and some cities might also have the power to condemn a property that has been continuously vacant for a long period, for example 60 days, or where the utilities have been discontinued.
Local, state and federal governments also have the power to seize and demolish properties in order to make way for new public infrastructure projects such as the construction of a freeway or reservoir. This is known as the law of eminent domain. The properties themselves might be safe and in good repair, but since the homes will be demolished, they fall under the category of condemned.
What's the Effect of Condemning a House?
When a house is condemned, the government can seize legal ownership from the private owner. The house may be demolished or it may be sold to raise funds for the government. A condemned property usually sells at a steep discount – the price may be no more than the value of the land – but it depends on the nature of the code violations. Buyers must be willing to rehab the house in order to lift its condemned status.
Condemnations are usually a last resort, however. More often, the owner is given a code violation notice and must fix the code issues to restore a "clean" title to the property. The government does not seize the title in this scenario, but the owner may decide to sell the house at a below-market price instead of fixing the violations.
How to Find Out if a House Was Condemned
Condemnation is a matter of public record, and the municipality will keep a list of condemned properties that you can search free of charge or for a small fee. Some governments keep an online database of code-violated properties. Enter the words "condemned property" and the name of your municipality into a search engine and see what comes up. Failing that, give the local building safety or code enforcement department a call and ask where you can inspect the list.
How to Buy a Condemned Property
The actual process is the same as with buying any property – you make an offer, negotiate the sale conditions and fill out the paperwork. The big differences are that you may be negotiating with a government agency instead of a private seller and also that you may struggle to get a mortgage. Most lenders will only lend on habitable homes, so you're looking at making a cash offer or speaking to niche lenders who specialize in financing condemned properties.
Understand that the house will keep its condemned status until you've brought it up to code. This means you will not be able to live in the home, mortgage it or sell it until the renovation work is done, and the city may require that you complete the work within a certain time period. Get quotes for the rehab work before you sign a purchase contract to ensure that you're not biting off more than you can chew.