Buying and selling houses
What to Do About Unpermitted Work When Buying or Selling a Home
What is Unpermitted Work?
Whether you are a buyer or a seller, improvements done without permits can prove to be an expensive and time-consuming hassle.
Working as a real estate agent for the past thirty plus years, I can’t tell you the number of times someone has asked me if they should pull a permit. My answer is always a resounding YES if it is required.
The question becomes what should you do as a buyer or seller when you find work that has been completed without permits.
Unpermitted work is a blanket term that applies to any modifications made to the home that should have been permitted but were not. The work can include most components of the home—electrical, plumbing, structural, etc. The permitting laws are different depending on the area, so what might require a permit in one place may not in another.
That is why every homeowner should always be aware of local regulations before making any significant changes to their home—and why it is essential to hire licensed contractors with good reputations who won’t work without obtaining proper permits.
For homeowners that plan on staying in their homes forever, unpermitted work can seem even more appealing. Unfortunately, whoever winds up buying the house, and then eventually selling it, is going to have to bear the repercussions of the earlier owner’s decisions.
Some owners intentionally don’t pull permits, so their assessed real estate value remains artificially low. For example, let’s say an owner finishes their basement with a home theater, a full kitchen, and a gym. Sounds pretty impressive, doesn’t it?
Well, it is and today’s basements with all their bells and whistles can be pretty expensive to finish. Now think of the savings each year when the local municipality is not collecting the value of the basement in the form of taxes. It is easy to understand why some people try to screw the town out of their money.
Doing so, however, is short-term thinking that will have long-term consequences.
Buyers—Risks Associated with Unpermitted Work
What should you do when buying a home that was remodeled without a permit? Good question right? With the best deals, there is always a catch. In the case of homes for sale, the catch is often nonpermitted work.
A home that has unpermitted work is a home with baggage, and those homes could end up selling cheaper than their permitted equivalents. As a buyer, you should know what you are getting into before you agree to purchase a home with no permits for work that requires them.
You will take over responsibility for the work with no permits.
In many states, you will be asked to fill out a seller’s disclosure form accurately answering all the questions. One of the questions will more than likely be “was there any work during your ownership that required a building permit”?
All unpermitted work must be disclosed to any buyers when you decide to sell the house. That means that you will need to tell them about it if you sell, and offer a discount just as the current seller is doing.
You can still be penalized for the unpermitted work.
It is not common, but from time to time city inspectors do come down on homeowners with unpermitted work. The difficulties could include being required to get the work permitted—which may consist of hiring an architect, making changes to meet codes, etc.
In some towns, it is entirely possible they could make you rip out the entire project. Can you imagine owning a home where the local building inspector makes you remove your finished basement? It is a nightmare scenario – one that you should never say it won’t happen to me.
The cat will also be out of the bag as well so you might be required to pay taxes based on the difference in square footage.
Your homeowner’s policy may not cover the unpermitted additions.
The insurance policy you rely on to protect you may not do so if something happens in a nonpermitted part of the home. For instance, if someone falls and gets hurt in an unpermitted addition, trying to collect on your insurance policy could see you going through a complicated lawsuit.
Mortgage companies can require an immediate loan repayment due to unpermitted additions.
It does not happen very often, but it is possible that if the lender you used finds out that you knowingly bought a home with an unpermitted addition, it could demand the full repayment of the loan immediately.
Your neighbors can always call you out.
You hope that your new neighbors will be great, but that is not always the case. If the neighbors are aware of the work done without permits, they always can contact the local authorities and tell them about it.
Buyers—What to Do About Unpermitted Work
Take the deal.
If the deal seems reasonable enough, maybe it is worth it to you to get the home and accept the risks involved. You could always plan on correcting the issue later on. As long as you are willing to spend the money, you can usually get permits.
Most communities would rather have you point out the fact work was done without permits and get the problem squared away. The town will be able to collect their fees for the permits along with re-assessing the property for increase tax dollars.
Ask the seller to fix the problem.
If the seller is giving a discount to sell as-is, chances are he or she is not interested in fixing the problem. But if you want the home and have issues with the work not being permitted, it can’t hurt to ask.
Find another home to buy.
If the issues associated with buying the home are too much for you, know that you are not alone. Plenty of buyers are not interested in taking on all that such a purchase entails. Feel free to keep looking. You will eventually find the home you want that has no permitting issues.
Sellers—Finding Out Your Home Has Unpermitted Work
If you are one of the unlucky ones who discovers you have unpermitted work when you decide to sell, then you will need to decide on how to approach the situation. You do have options, even if none of them are particularly appealing.
Determine if there is unpermitted work.
If you cannot find blueprints, you may try obtaining them from the previous owner or through city records. Once you know what has been added, you can determine if a permit was needed and if one was obtained.
You can search for permits through the city’s building department. Some offer online searches. If not, you will need to call or visit to verify the permits on your home. Towns often have what’s referred to as “field cards” that show the permit history for a property.
If you do have unpermitted work, decide if you will sell as-is or get a permit.
It’s not advisable to attempt to sell the home without disclosing the unpermitted work, because doing so puts you at serious risk of a lawsuit. In fact, you will need to include the unpermitted work in the listing for the home. Not disclosing property defects is a way a lot of people get themselves into hot water.
Selling as-is means you could lose some money, so you might consider getting permits. Before you make a final decision, get a clear idea of what the costs will be to get those permits. Each city has different options and requirements for obtaining such permits. Educate yourself on what you will have to do in your area, and find out what it will all cost.
You will likely need to apply for a permit, then if the unpermitted work is extensive, hire an architect or other professional to draw plans for the existing work—and proposals for any changes that will need to be made to bring it up to code.
Then you will need to get the plan approved by the city. After you get approved, you will need to complete the project and have it inspected.
In many communities, you will be asked to go through a series of inspections with various inspectors including:
- An electrical inspection.
- A plumbing inspection.
- A final general inspection.
- An inspection by the local assessor.
All of this can get expensive if the building inspector requires you to modify the work, sometimes more costly than the money you will lose selling the house as-is. If you just asked, however, to get the appropriate permits, it shouldn’t be too bad. Home Advisor has a good reference on building permit costs worth a look. You can also check with your city or town to get a better handle.
Nonpermitted Work Can Cause Secondary Problems
Another problem that occurs in when a previous owner does unpermitted construction adding rooms, and it makes the septic system too small for the property. This situation is what’s referred to as bedroom count misrepresentation with a septic system. In the reference, you’ll see how easy it is to represent your bedroom count when your septic capacity does not match.
See if someone else is responsible for part of the cost.
If you were sold the home without being told about the unpermitted work, you could get some help from the previous owner or the agent you worked with for the permitting. Consult with a real estate attorney to be sure of your options.
Other Helpful Buying and Selling Articles
- Other home selling alternatives via John Cunningham.
- Why home sellers don’t need open houses via Jeff Nelson.
- When hiring an agent ask the right questions via Sharon Paxson.
- Kick up your curb appeal before selling a home via Kyle Hiscock.
- Features worth have when selling a house via Xavier DeBuck.
About the author: The above Real Estate information on what to do about unpermitted work when buying or selling a home was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at [email protected] or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 31+ Years.
I service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.
SOURCE: SOURCE: REMMOMT.COM