One of the things that can make a closing a nightmare (or not occur) is finding out that the house is not in compliance with municipal code. It could be a deck, finished basement, extra bathroom, or any other improvement that the current owners have done or that they inherited from a previous owner. With the number of older homes we have in Westchester, this is not a rare issue.
In past years, illegal improvements haven't been a huge deal 100% of the time. Most of the time they had to be corrected or made legal, but upon occasion a few slip through and the home changes title without proper certificates of occupancy. This leaves the current owner with a problem if they want to sell, because they can't get anything to "slip through" like when they originally bought. In the current paranoid lending environment, it is pretty much impossible to close a sale with outstanding permits or illegal improvements.
When we list a home, we go to the town or city building department and pull the "property card," which has the record of all improvements made to the home. If the deck is missing or the bathrooms don't add up, we have work to do. I can't market a home as a 3 bathroom home if only two baths are legal. But worse, with an illegal bathroom for example, the title company will not insure the buyer's mortgage without full code compliance.
Most of the time, the remedy is simple: the code inspector comes out, signs off on the improvement, and everything is fine. Other times, work must be done to undo poor, sub code workmanship. In severe cases, I have seen entire sheds, bathrooms and other improvements have to be ripped out to get the closing to happen. Worse yet, many of these problems have shown up at the 11th hour, delaying and sometimes cancelling a closing. And that is awful!
If you are considering selling, make sure the home is up to code. Violations, open permits, and illegal improvements won't go away if you ignore them. Buyers and title companies want homes with clear title and no compliance issues. Don't worry about raising the taxes or value. The buyers have the best evidence to grieve taxes going, which is a recent closing. But take care of things early so that closing can be made a reality.