What is a Condemned House and Can You Buy or Sell It?

When someone buys a house, they are responsible for its upkeep. Over time, the property will wear out or natural disasters can occur, making the house uninhabitable. When this occurs, the property can be condemned by the local government.

A condemned property is much harder to sell and undesirable to buy. The house might need to be torn down completely, which makes it more expensive to buy than vacant land. 

Learn what is a condemned house and what it means for your real estate prospects. If you see a historic home that is condemned or find a condemned property in a desired area, research your buying options to see if you can take over the plot.

What is a Condemned Property?

A condemned house or property is uninhabitable, which means it is unsafe for anyone to live in according to government standards.

The criteria for habitability usually include access to clean water, electricity, and working sewage. The house also needs to be structurally sound and hygienic – which means there can’t be an excessive infestation of pests or insects that could spread diseases to anyone who lives there. 

Some cities have regulations for working heating and air conditioning in a house to avoid condemnation. Residents in hot climates need air conditioning or some form of air circulation to escape dangerous temperatures in the summer. However, these systems are often unnecessary in climates like San Francisco.

In the winter, Americans in cold climates need heat to survive. Check your local regulations to see if heating and air are included in house safety. 

It takes a lot for a government to formally condemn a house. Oftentimes, the local condemning authority will visit the house multiple times and request the property owner make any necessary repairs so the house can be considered habitable.

Each city has a condemnation process to give homeowners notice that their properties need to be fixed. However, if the house is in terrible condition to the point where it cannot be repaired, the local authorities might immediately condemn the home.

Common Reasons for Condemning a House

Houses can be condemned for a variety of safety concerns. There could be health risks, structural concerns, or housing code violations that make the house unsafe to live in. Here are a few examples of why local authorities might condemn a house:

• A nearby river floods and washes a house off its foundation, which puts it at risk of collapsing.  
• Ice builds up on a house over the winter and causes the roof to cave in, creating a gaping hole. 
• A house is structurally sound after flooding, but the homeowners never fully remove the water. This causes the property to fill with dangerous mold. 
• A house catches on fire, cutting off electricity to the home and leaving smoke damage. 
• A person with mental illness becomes a hoarder and is unwilling to throw anything away. This creates unsanitary conditions because the home is filled with trash, along with insects and rodents climbing and pooping over it. 

After a natural disaster, local authorities will survey the damage and condemn any uninhabitable houses. However, individual homes can also be condemned. A single property might be labeled a condemned building if it catches fire or is no longer sanitary for human residence.

Rights and Implications for Homeowners and Residents

When the government identifies a condemned house, it will send a notice to the homeowner that the property needs to be vacated by a certain date. Because the owner is not able to maintain or fix the property, the government is taking control of it.

This is known as eminent domain and states that the homeowner should be compensated for the property based on its fair market value. Essentially, the government is buying the house from you to prevent you (or anyone else) from living in dangerous conditions. 

When asked about eminent domain in condemned properties, many legal experts believe it is easier to negotiate the fair market value of the home instead of trying to fight the condemned status or prevent the authorities from taking over the property. You might be able to get more for the house and use that money to purchase a property in better condition. 

To ensure that you are getting a fair price for the home, seek out an appraisal. An objective third party will provide an estimate of the property value based on the location of the house, its condition, and similar houses in the area. You can then bring this appraisal to your local government entity to prove that you are not receiving a fair price for the home. 

Most government bodies will do their best to offer fair windows of time for you to vacate the property and will try to offer reasonable prices for the house. However, it is hard to push back against the eminent domain process, especially if the house truly is uninhabitable.

What happens to mortgages on condemned houses?

If you owe money on your home and it is condemned, you will still need to repay your lender. When the government offers you a price for the house, you will use as much of it as you can to pay off the loan. Any money that is left over can be used as a down payment on your next property or as a nest egg if you decide to rent. 

You can work with your bank if structural issues or other building code violations make your property unfit for human habitation. You might reach an agreement on how to pay off the loan despite no longer owning the asset. 

Can you fix condemned houses?

If you own a condemned property, you can make repairs to the house to cancel the eminent domain transaction and make the home livable again. However, these improvements are often expensive and time-consuming.

If you have home insurance, talk to your provider to see if they will cover any of the repairs. You can also work with your government offices to prove that you are fixing the house and taking steps to make it habitable. 

Most local entities don’t want to condemn houses. These homes aren’t good for local property values and the government has to take over the distressed land. By working with the local housing department, you might be able to delay the condemnation proceedings long enough to repair the home. 

If you are working to address the issues in a condemned house, you cannot continue living in it. You will need to seek temporary housing until the property is considered habitable again.  

Every city and state has its own rules for reversing a condemned status on a home. Some regions have larger time allowances to make repairs than others and different support systems to do so.

However, you will need at least a home inspection by the local authorities to confirm that the house is safe to reside in once your repairs are complete. If your house is up to the expected building codes, the condemnation proceeding will end and you can resume your residency as a private owner.

Can you sell condemned properties?

If you live in a condemned house or a property that will be condemned, you might be able to sell it to real estate investors who can take over the plot. Some investors specialize in buying distressed homes that are about to enter foreclosure, be condemned, or simply require extensive repairs. 

Before you start working with these investors, secure a home appraisal. This will tell you what your property is worth so you can get a fair value of it. Some investors might offer less than the appraisal and it’s up to you to decide whether you want to accept the deal to sell the house. Some people would rather sell a condemned home to a private buyer instead of waiting for the government to close a deal. 

If you know that a house has structural damage but has not been condemned, you might want to sell it before the proceedings begin. Some states have laws about selling condemned buildings and the value of the home will drop when it has been officially condemned. Instead, you can market the property as distressed and meet with buyers who can help you.

You aren’t required to sell a condemned house. You can take steps to repair it or demolish the home and rebuild it. However, these remediations are often expensive and time-consuming. Decide on the best course of action based on your specific needs and capabilities. 

Can you buy condemned properties?

If you want to become a real estate investor or grow your housing portfolio, you might be tempted to buy condemned houses. In many states, it is legal to buy condemned homes if you can rebuild or make the necessary repairs to fix them.

This is viewed as a good thing for community health by government agencies because investors are taking distressed homes and making them desirable through repairs. You could make a significant impact on your surrounding community by investing in condemned homes.

However, it is important to have a clear understanding of any condemned house you want to buy. Learn why it received that status and what needs to be done to fix it. For example, pest infestations might not seem as serious as a house with a poor foundation, but rats and mice can eat through electrical wiring while termites can tear apart a home. Develop a scope for the project before you buy the house. 

In many cases, a condemned house is only valuable because of the land. You might need to completely demolish the property and rebuild the house completely. This might even be more affordable than trying to make repairs. Some real estate investors specialize in buying condemned houses and tearing them down so they can sell buildable land to developers.

Preventing Future Condemnation

It takes a lot for a property to be deemed unsafe. In most cases, houses will have unsanitary living conditions or significant structural damage for the public authorities to get involved. However, many condemned properties were preventable. The homeowners could have made repairs or addressed small issues before they became significant concerns. Here are a few ways to avoid owning a condemned building by keeping your space in good condition: 

• Keep paying your homeowners insurance. Even if you can only afford basic coverage, home insurance will help you make repairs quickly. 
• Set aside a maintenance budget. Try to have enough money left over each month to cover minor home care costs like pest control while saving for unexpected repairs. 
• Identify small issues when they appear. A minor leak can take less than $100 to repair. However, it can easily grow into a major plumbing emergency that causes structural damage to your floors and allows mold to grow in the house. 
• Know your housing codes. Specific code violations can condemn an otherwise safe home. 
• Run background checks on your tenants. If you have an investment property, know who you are renting your house to. Also, check on the home periodically to make sure it is in good condition.

Additionally, check on the homes of your loved ones. Make sure your aging relatives are living in safe, comfortable homes. Visit your friend or neighbor who is having a hard time. The intervention of someone who cares can protect a house and prevent it from becoming a condemned building.

Know Your Rights if You Live in a Condemned House

No one deserves to live in a condemned building. Humans need safe, sanitary shelters to live and raise their families. Know your options if your house is given condemned status. Work with your government offices to get a fair price for the property and meet with a lawyer to discuss your options. You can also take steps to repair the house and make it livable again. 

If you aren’t sure what to do with a condemned private property, meet with a real estate agent. Use FastExpert to find Realtors who specialize in selling distressed properties and reach out to professionals in your area. Know your options when you receive a condemnation notice so you can make smart decisions about your house moving forward.