You are realizing the American dream in Vermont, buying or upgrading a house. Whether it is your first home, a replacement home or a vacation home in or around one of Vermont’s ski resorts, you think it should be a simple matter; after all, it is done thousands of times every day all across America. You need to get financing, a simple closing and then the joys of homeownership, right? Perhaps. Buying a home in Vermont has never been more challenging. While interest rates are relatively low and the number of financing institutions willing to lend money has never been higher (presenting the Vermont real estate consumer with an array of confusing options), getting clear title to your dream home in Vermont is increasingly difficult.
Vermont’s environmental laws change frequently. In 1997, permit issues were declared to be title issues by the Vermont Supreme Court in a case known as “Bianchi v. Lorentz”. The Legislature has dealt with the ramifications from that case in at least four legislative sessions since then. Many times, unfortunately, Vermont homeowners who purchased their properties prior to 1997 will not find out that they have a permit related “issue” until they refinance or decide to sell. In other cases, purchasers who bought after 1997 and relied on the issuance of mortgage title nsurance to determine that their property is “free and clear” will not always be happy with that decision.
Vermont has three levels of permitting requirements that must be checked even for a typical single-family home, more if you are considering the possibility of purchasing a two family or other multifamily home or if you are considering renting your vacation home to others. Most municipalities in the State of Vermont now require septic permits even if the town does not have either zoning or subdivision regulations. Most towns, at this point, do have both types of regulations. You need to know whether your home needed a septic permit when the home was built or an amended septic permit when that nice new addition was added to the home after it was built. Additionally, you need to know whether the zoning permit was properly obtained, that the home met all of the local municipal setback requirements. Since 1997, if an addition of more than 500 feet was constructed, you should be sure that a Residential Energy Building Certificate was filed by the contractor. This little-known requirement applies to additions or new buildings constructed since 1997. The certificate must be signed by the contractor who supervised the construction of the addition or house and it must be posted in the mechanical room of the home. Failure to comply could lead to problems later. In August of 2002, the Legislature adopted significant changes to permits affecting septic systems and a prospective purchaser of a building lot needs to be sure that a septic system meeting the regulations enacted in 2002 can be constructed on the lot.
If the lot that your home is built on was subject to a town zoning or subdivision permit, you need to check those permits to make sure that there are no conditions that you might be responsible for later. Additionally, many towns have a “certificate of occupancy” requirement. If your home did not obtain a certificate of occupancy when it was completed, you should make sure to have the zoning administrator come out and issue one so that when you go to sell a refinance your home, you do not run into difficulties.
If your home was the subject of either a State of Vermont subdivision permit or an Act 250 Land Use Permit, there may be conditions imposed by the State of Vermont requiring that your water system and sewer system be inspected prior to its having been covered up by the contractor. This is also a requirement of most municipal septic permits. It is also possible that your home, if it is in a subdivision, is located in a subdivision that is subject to a State of Vermont Stormwater Discharge Permit. Most Stormwater Discharge Permits were issued with expiration dates that have long since passed. If this issue affects your subdivision, it is something to discuss with your attorney.
If your home was the subject of a Vermont subdivision permit and your water supply is from a drilled well, you must make sure that you and your predecessors have complied with any conditions of that permit. Most permits require that drilled wells cannot be “shared wells” without prior review and approval by the Vermont Agency of Natural Resources. Homeowners who have been neighborly and allowed adjacent property owners to “tap in” to their well have subsequently found out that they need to spend several thousand dollars in engineering fees to properly permit and equip the well for joint use.
Purchasing a two family or even a single-family house for rental also has its perils. The Vermont Department of Labor & Industry (VDLI) is strictly enforcing national building code regulations relating to two-family homes and single-family homes being rented to a non-owner. In the case of single-family homes being rented to vacationers, VDLI’s position is that if the owner rents to a group of more than eight people, the home should be equipped with a hardwired fire alarm, i.e., an alarm that rings into the local fire station, and other fire safety equipment, including in some cases, sprinkler systems that can cost $10,000 to $20,000 to retrofit to a home.
Multifamily homes have their own permitting issues. If the unit or apartment was placed “in service” after about 1973, it should have received a state public building permit as well as a VDLI occupancy permit. Any significant electrical and plumbing changes, or bedroom additions, done to a multifamily house since 1973 needs to be reviewed to see whether a Vermont public building permit or wastewater/water supply permit and VDLI permit was required for the renovations. In many cases, renovations that were performed without benefit of permit will need to be permitted after the fact. The only way to do that is to hire a master plumber or electrician and an engineer to supervise obtaining such a permit or permits.
The purchase of a home in Vermont is not as simple as it used to be and purchasers need to be very sure that any permits that might have been required during the life of the home being purchased were obtained. It is important that real estate purchasers be represented by competent legal counsel before making that very expensive investment in Vermont real estate.