What are legal issues with purchasing a fixer-upper?

If you’re in the market for a home and are considering a fixer-upper, chances are you already understand the value one might provide. You’re probably confident that you can get a house significantly under market value and, with some improvements, increase its value considerably.

Forbes magazine suggests Six Things Homebuyers Should Avoid When Shopping For A Fixer-Upper. 

Here are six physical attributes of fixer-upper homes that potential homebuyers should probably avoid:

1. Structural issues: This means problems with the integrity of the house. Are load-bearing walls solid? Is there termite damage? Is there water damage that could lead to ceilings or walls caving in? If the house could literally fall down, it might be wise to steer clear.

2. Cracked foundation/basement walls: This might be categorized with No. 1 above, but it’s a completely different item for home inspectors, so it probably should be considered as such by potential buyers, too. If there are cracks or substantial dampness in a home, it’s best to stay away.

3. The “skin”: This means the things on the outside of the home that keep the elements from getting inside. A new roof can be a huge expense, and siding isn’t much less. Unless you have a large budget for repairs, you might want to avoid these things. They can eat a huge chunk of that budget, and it’s not all that hard to find other houses without these immediate needs.

4. Non-code electrical: It’s no big deal if you need to replace some non-working switches or outlets, maybe change an ugly fixture or two. But it’s another thing if the home is not up to electrical code. Even if you could rewire a home and install a new box yourself, unless you’re licensed, you’re asking for trouble. And licensed electricians can cost upwards of $80 an hour in labor alone.

5. Major plumbing issues: Plumbers also charge a ton per hour, so unless a house’s plumbing issues are limited to running toilets or plugged drains, it might be wise to not mess with it. A house with a cracked main stack or one that’s been stripped of copper is probably not worth it. Those are major, major repairs.

6. Windows: Not everyone realizes that windows have a finite lifespan; they must be replaced. If you have 15 30-year-old windows in a house, and a decent replacement is at least $300, you’re talking about $4,500. That’s likely more than what a new furnace and hot water tank would cost.


I would highly suggest also obtaining a home inspection before closing on the deal. Make your real estate contract is conditioned upon a satisfactory (to you) home inspection. However, do not just sign a form contract with the home inspector. I would certainly counsel you to have your Home Inspector contract reviewed by a lawyer to make sure its not completely one-sided. I reviewed one this week that required litigation/arbitration to occur in Arizona even though the property was in Alabama.