It can be incredibly frustrating to find a perfect house only to discover that work was done on the property without permits. Unpermitted renovations can create a huge headache for homeowners. If you’re in the market for a home, you should understand what unpermitted work is, why it’s risky, and what you can do to address it as a buyer.
What Is Unpermitted Work?
Unpermitted work includes any upgrades, remodels, or additions that have been done without local building permits.
Different states have different laws about which projects require permits, but the following are some examples:
- Extensive plumbing changes
- Electrical work
- Deck or porch construction
- In-law suite addition
- Construction of new windows
- Roof replacement
- Swimming pool installation
- Demolition of sheds, garages, or other large structures
Building permits are provided and enforced by either your local or state government. To get a permit, you must apply with the building department, pay a fee, and have the work inspected to confirm it’s up to code.
Why Homeowners Renovate Without Permits
The permit is a very important part of the building process. Unfortunately, some homeowners try to bypass this step and take on large renovation projects without approval to save time or money.
Getting a building permit can take several days to several weeks, and there are usually fees involved. If a homeowner wants to cut corners, they may decide not to wait for the permit. They might also avoid the permitting process if they know the work they’re doing won’t pass inspection.
Risks of Buying a House With Unpermitted Renovations
If you discover that a house you’re interested in buying has unpermitted work, you should proceed with caution. Here are some of the biggest risks of purchasing a home with unpermitted renovations:
Legal Risks
If your town, county, or state discovers the unpermitted work, you might be subject to fines. Your municipality could charge you a fine for every day the work goes uncorrected. Additionally, you’ll have to pay the permit fee and pay for any changes that need to be made to get the renovations up to code.
You may be able to take legal action against the seller of the house if you find yourself in this situation. However, that will be its own costly, stressful, and time-consuming process.
Safety Concerns
If the seller didn’t follow the correct process to get the permits, they may also have failed to follow the correct process for the renovations. Unpermitted work hasn’t been inspected by a third party, so there could be any number of safety concerns.
For example, improper plumbing work can lead to a dangerous buildup of gases in your home. A shoddy electrical job increases your fire risk significantly.
Problems With Insurance
Unpermitted work can create serious issues with your home insurance. If your insurance provider knows about the unpermitted renovations, they may deny you coverage entirely or deny coverage for any damage related to the work.
If the unpermitted work isn’t disclosed to your insurance provider and they discover it later, they could raise your premiums or cancel your policy altogether.
Should You Buy a House With Unpermitted Renovations
Because unpermitted renovations are so risky, they can result in a decrease to the value of your home. Most buyers are hesitant to purchase a property with unpermitted work, so you may have to sell your home for less or offer more concessions.
How to Research Permit History
Sellers are usually required to disclose unpermitted work, but vague or confusing disclosures can be a sign that renovations were done without permits. It’s also possible that the seller doesn’t know about past unpermitted work, which is why you should research the property on your own.
Local property records are public information, so you can find a home’s permit history by visiting your city or county assessor’s office. Compare the square footage, layout, and photos of the house from its listing to the information that’s on record at the municipal office. If the information doesn’t line up, it’s possible that the seller has done unpermitted work.
Negotiating on a Home With Unpermitted Renovations
If you discover that the home you’re buying has unpermitted renovations, you and the seller should go back to the negotiating table. Here are three steps you should take to re-negotiate:
Get a Home Inspection
A home inspection is absolutely essential if you’re concerned about unpermitted work. A trusted inspector can help you understand what work is or isn’t up to code, what poses a safety concern, and what needs to be done to make the house safe and legal.
Request Retroactive Permits
In most cases, the easiest way to address unpermitted work is to ask the seller to get retroactive permits. This puts the responsibility on the seller to apply for the permits, pay the fees, and ensure the house is up to code. Although this may delay your closing date, it ensures the home you’re moving into is safe.
Renegotiate the Price or Terms
You could also negotiate for a lower price or more favorable terms if the seller doesn’t want to apply for retroactive permits. Reduce the offer price by the amount of money you expect to spend correcting the unpermitted work. You could also ask for the seller to cover your closing costs.
What to Do After You Buy a House With Unpermitted Work
If you’ve purchased a house with unpermitted renovations, fixing them should be a priority. Here are three steps to take after you close:
Have a Contractor Evaluate the Home
A trusted contractor can assess the quality and safety of the renovations and offer a quote for how much it will cost to get the work up to code. If there are any immediate safety concerns, you and your contractor should address them right away.
Apply for Retroactive Permits
Contact your local permitting office to learn what you need to do to correct the unpermitted work. They may send an inspector out to assess the house and make a plan for corrections. If the renovations are up to code, you can apply for a retroactive permit. However, you might have to pay additional fees or penalties.
Correct Code Violations
The permitting office will require you to correct code violations before they grant you a retroactive permit. Hire only licensed professionals for this work, and keep all the receipts and records of the improvements.
What is the best thing to do?
Buying a house with unpermitted renovations is risky. You could face fees or other legal consequences from your city, and improperly done work could pose a threat to your safety.
If you’re interested in a home with unpermitted work, you should first see if the seller can get retroactive permits. If this is unsuccessful, you have to decide whether the stress, time, and money involved in correcting the renovations will be worth it. Some homeowners choose to walk away from the sale. If you do move forward with closing, make sure you have a team of trusted professionals on your side who can help you navigate the next steps.