How to Sell a Commercial Property with Code Violations Successfully?

Selling a commercial property with code violations is often nothing short of a real estate nightmare for sellers. From facing issues like a limited pool of interested buyers and lower property valuation to challenges with Title and Liens, selling properties that aren't up to code is not a cakewalk. Waiting for buyers, offers, negotiations, and loan approvals can take months. Sellers may need to invest in repairs, repainting, or even major renovations to attract interest. However, selling your property as-is to a real estate buying company like VME Acquisitions offers a faster, more stress-free alternative. 

If you're looking to sell a commercial property with code violations, you're in the right place. In this blog, we'll guide you through the process step by step. First, let's take a closer look at what code violations actually are. 

What is a Code Violation? 

A code violation in commercial real estate occurs when a property fails to meet specific legal standards set by local authorities. These standards, often outlined in building codes, zoning laws, health regulations, and safety ordinances, ensure that properties are safe, functional, and used appropriately. 

Common Types of Code Violations 

• Faulty electrical wiring or outdated systems 
• Fire safety issues, such as missing sprinklers or extinguishers 
• Structural problems, like damaged roofs or unstable walls 
• Inaccessible entrances or restrooms that don't meet ADA (Americans with Disabilities Act) requirements 
• Improper use of space (e.g., running a restaurant in a zone not approved for it) 
• Plumbing issues or a lack of proper sanitation facilities 

Also Read: How to Sell Your Commercial Property Before a Long-Term Lease Expires: A Guide for Property Owners 

The Impact of Code Violations on Commercial Real Estate 

Code violations on commercial properties can bring serious financial and legal trouble. Owners may face hefty fines, stalled sales or construction, and a decline in property value. These violations include anything from zoning disputes and safety risks to unauthorized modifications. They can lead to liens, mandatory repairs, or even court involvement if left unresolved. This blog will inform you of the most common impacts of code violations on commercial real estate. 

1. Reduced Property Value 

Code violations can dramatically erode the market value of a commercial property. Appraisers and potential buyers often view non-compliant buildings as risky investments due to the cost and complexity of bringing them up to code. This perception leads to: 

• Lower appraisals, which affect resale and refinancing potential 
• Limited buyer interest, especially from institutional investors or lenders 
• Negotiation leverage for buyers, who may demand steep discounts or repair credits 

Even minor infractions, like outdated fire safety systems or unpermitted renovations, can trigger red flags during inspections, reducing the property's appeal and market competitiveness. 

2. Financial Penalties 

Unresolved code violations often result in mounting fines and administrative fees. These penalties vary by jurisdiction but can include: 

• Daily accruing fines, which compound quickly if left unaddressed 
• Inspection and re-inspection fees, especially for repeat violations 
• Lien placement, where municipalities recover costs by attaching debt to the property 

In some cities, fines for serious violations (e.g., structural hazards or fire code breaches) can reach thousands of dollars daily. These costs not only strain operating budgets but also complicate future transactions. 

3. Legal Action 

If violations persist, property owners may face legal consequences ranging from civil suits to criminal charges. Common scenarios include: 

• Injunctions or stop-work orders, halting operations or renovations 
• Negligence claims, especially if violations lead to injury or property damage 
• Breach of lease lawsuits, if tenants allege unsafe or non-compliant conditions 

In extreme cases, municipalities may pursue abatement actions, such as entering the property to make repairs and billing the owner. Failure to comply with court orders can escalate into litigation, judgments, or even imprisonment for willful neglect. 

4. Difficulty Obtaining Permits 

Code violations can severely hinder the ability to secure new permits for construction, renovation, or occupancy. Permit offices often flag properties with unresolved infractions, leading to: 

• Permit denials or delays, which stall development timelines 
• Mandatory corrective actions, before any new work is approved 
• Loss of future permit eligibility, especially for repeat offenders 

Contractors and developers may also face scrutiny or license suspension if associated with non-compliant projects. This bottleneck can derail expansion plans and increase holding costs. 

5. Risk of Foreclosure 

When fines, legal fees, and repair costs pile up, some owners struggle to maintain financial solvency. This can trigger: 

• Municipal liens, which cloud title and block refinancing 
• Loan defaults, if lenders deem the property too risky or devalued 
• Forced foreclosure, especially if the property becomes uninhabitable or unsellable 

In foreclosure scenarios, properties often sit vacant and deteriorate further, creating a cycle of blight and financial loss. Some cities even auction off such properties at steep discounts, compounding the owner's losses. 

Also Read: Facing Bankruptcy? Sell Your Commercial Real Estate Property Fast with VME Acquisitions 

Wondering Whether to Fix the Violations or Sell As-Is

Selling a commercial property with code violations presents challenges and requires specific disclosures. Sellers must disclose known code violations to potential buyers. Simultaneously, violations can impact the sale price, financing, and even the buyer's willingness to proceed with the purchase. So, what are your options here? 

1. Fix the Violations 

Repairing the issues before listing the property can be a smart move to eliminate unused real estate, especially if you're aiming for top dollar. By resolving code violations, you can increase the property's value and appeal to a broader range of buyers. It can also make financing easier, since lenders are more likely to approve loans for compliant properties. However, this route requires time, money, and coordination with contractors and local authorities. You'll need to pull permits, schedule inspections, and ensure everything meets current standards. If the violations are extensive, the costs can add up quickly. 

2. Sell As-Is 

Selling the commercial property in its current state is faster and less stressful, especially if you're short on time or resources. This approach attracts cash buyers or investors who specialize in fixer-uppers. In addition, selling as-is avoids upfront repair costs, letting the buyer handle the work and speeding up the sale, since you're not waiting on renovations. It's best when your goal is to move on quickly, avoid repair headaches, and attract buyers who see potential. 

How VME Acquisitions Can Help You Sell Your Property As-Is 

VME Acquisitions is a well-known real estate buyer based out of Chicago. The company possesses decades of expertise in commercial real estate and construction. VME Acquisitions offers property owners no-obligation, all-cash deals. In addition, the company is committed to providing its potential clients with a fast, streamlined selling process. In a nutshell, VME Acquisitions delivers end-to-end service to property owners who dream of a stress-free selling journey. 

Why Choose VME Acquisitions to Sell Your Property? 

• No Middlemen Policy: VME Acquisitions deals directly with property owners, with no brokers, no commissions, and no third-party delays. This means faster decisions and more money in your pocket. 
• No-Obligation Cash Offer: Sellers receive a fair, all-cash offer without pressure or commitment. If you accept, the sale is guaranteed, and there are no financing fall-throughs or last-minute surprises. 
• Any Size, Any Condition: Whether it's a small office building or a multi-family apartment, pristine or needing major repairs, VME Acquisitions is ready to buy. 
• Sell As-Is: With VME Acquisitions, skip the hassle of renovations or code compliance. VME buys properties in their current state, saving you time and money. 
• Streamlined Process: From initial contact to closing, their team handles everything, ranging from valuation to paperwork, so you don't have to. 
• Flexible Closing Timeline: Need to close fast? They can wrap up in as little as 30 days. Prefer to wait? You choose the timeline that works best for you. 

Ready to Sell Your Commercial Property As-is? 

Own a commercial property with code violations and wish to proceed with the sale without any complications or hassle? Get in touch with VME Acquisitions at (312) 543-2729 or email info@vmeacquisitions.com for a free consultation and receive a no-obligation cash offer within 48 hours! Inquire today!