What is Unpermitted Work?
Are you buying or selling a home with unpermitted work?
If so, you are not alone. Many homeowners skip the process of pulling building permits.
Unpermitted work is construction on a home that does not carry the necessary permits to make it legal per local ordinances.
Additions to homes and finished basements are some of the most common.
What should you do about unpermitted work when buying or selling a home? Good question, right?
Whether you are a buyer or a seller, improvements without permits can be expensive and time-consuming.
Working as a real estate agent for the past thirty-seven 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 you should do as a buyer or seller when you find work 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. However, the permitting laws differ depending on the area, so what might require a permit in one place may not be in another.
You can run into significant trouble if you violate zoning, such as building a garage over the lot line. Cities and towns can come down hard on someone who doesn’t want the hassle of heading to the building permit office.
Facts on Renovations, Repairs, and Approval
1. Unpermitted work refers to construction or renovations done without obtaining the necessary permits from local authorities.
2. Cost is among the top reasons people skip obtaining permits for renovations. Not only the price of the permits but also not having to pay for the increased property tax assessment.
3. Legalizing nonpermitted work typically involves retroactive measures to bring the construction or renovation into compliance with building codes and regulations.
4. Legalizing home improvement projects usually starts by filing an application with the relevant building department or permitting authority.
5. Depending on the jurisdiction, individuals may be required to pay fines or penalties for nonpermitted work before it can be legalized.
6. Hiring a licensed contractor or a qualified professional is often recommended to ensure the work meets safety standards and the building code.
7. Detailed documentation of the existing structure, including plans, drawings, photographs, and descriptions, may be required during the legalization process.
8. Inspections and evaluations by building inspectors and other relevant professionals are commonly conducted to assess the quality and safety of the construction projects.
9. Additional steps, like securing approval from homeowner associations or community boards, may be necessary for certain types of remodeling, such as illegal additions or alterations.
10. Timeframes for legalizing work can vary depending on the project’s complexity and the permitting authorities’ workload.
11. Once the necessary approvals are obtained and any fines or penalties are paid, local authorities consider the formerly nonpermitted work legal and officially recognized.
Not Pulling Required Building Permits Creates Problems
Getting permits for home improvements where required is vital if you don’t want problems somewhere down the line.
That is why every homeowner should always be aware of local regulations before making significant changes to their home—and why hiring licensed contractors with good reputations who won’t work without obtaining proper permits is essential.
Most unpermitted work is done without permits to save money. However, getting the proper permits and doing the work in a way that will meet current regulations can be more expensive than winging it.
Unpermitted work can seem even more appealing for homeowners who plan to stay in their homes forever. Unfortunately, whoever winds up buying the house and eventually selling it will 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, an owner finishes their basement with a home theater, a full kitchen, and a gym. Sounds pretty impressive.
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 does not collect the value of the basement in taxes.
The property tax assessment will be much lower when the city or town doesn’t know. It is easy to understand why some people try to screw communities out of their money.
Doing so, however, is short-term thinking that will have long-term consequences.
When buying or selling a house, it is vital to have building permits for any construction or improvements.Click To TweetWhat Are a Buyer’s Risks?
Buying a house with nonpermitted work comes with risks.
What should you do when buying a remodeled home without a permit? Good question, right?
With the best deals, there is always a catch. The catch is often nonpermitted work in the case of homes for sale.
A house with unpermitted work is a home with baggage; those homes could sell cheaper than 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.
From experience as a Realtor, I stress the need for proper due diligence.
You Will Take Over Responsibility For The Work With No Permits.
You will be asked to accurately fill out a seller’s disclosure form in many states, answering all the questions.
A seller’s real estate disclosure gives the buyer information that could influence their purchase decision.
One of the questions will likely be, “Was any work done during your ownership that required a building permit?”
When you decide to sell the house, all unpermitted work should be disclosed to buyers.
However, some states are Caveat Emptor, meaning the seller does not have to disclose certain things. You must check with a local real estate agent on the requirements.
Homeowners Can Still be Penalized
It is uncommon, but city inspectors occasionally slap homeowners with nonpermitted work. The difficulties could include being required to get the work permitted, including 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; you should never say it won’t happen to me.
The cat will also be out of the bag, so you might be required to pay taxes based on the difference in your home’s 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 result in a complicated lawsuit.
Mortgage Lenders Could Call a Loan With a Nonpermitted Structure.
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.
Remember, the lender owns the house with you until your mortgage is paid off. What happens if a fire occurs in an unpermitted area and the insurance company denies coverage?
Are you getting the picture yet of the importance of pulling permits?
Your Neighbors Can Always Call You Out For No Permits.
You hope your new neighbors will be great, but that is not always true. If the neighbors know the work done without permits, they can always tell the local authorities.
You better not get in a feud with your neighbor because they could be putting in a call to the building department.
What Buyers Can Do
When you discover a home you want to buy has work completed without permits, you have several options. These include:
Take The Deal Without Permits
If the deal seems reasonable enough, maybe it is worth it to you to get the home and accept the risks involved.
You can always plan on correcting the issue later. If you are willing to spend the money, you can usually get a permit.
Most communities would rather have you point out the fact work was done without permits and get the problem squared away.
The town can collect permit fees and reassess the property for increased tax dollars.
Ask The Seller to Get The Permits
If the seller is giving a discount to sell as-is, chances are they won’t be interested in fixing the problem.
But asking if you want the home and have issues with the work not being permitted can’t hurt.
The seller may find that getting their home under contract is worth their time and effort.
Find Another Home to Buy
If the issues associated with buying the home are too much for you, know that you are not alone. Many buyers are not interested in taking on all such a purchase entails. Feel free to keep looking.
You will eventually find the home you want that has no permitting issues.
Selling a House Without Proper Paperwork
Selling a house with unpermitted work can be problematic.
Sellers who know their home has projects without permits usually know they might need to offer a discount to sell as-is.
If you are one of the unlucky ones who discovers you don’t have proper permits when you decide to sell, you will need to determine how to approach the situation.
You do have options, even if none of them are particularly appealing.
Determine if There Was a Renovation Without Approval
Find the blueprints for your home and check them against the current construction to see if anything has been added.
If you cannot find blueprints, you may want to obtain them from the previous owner or from the 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 must 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.
Decide if You Will Sell As-Is or Get a Building Permit.
Selling as-is could require you to offer a discount, sometimes a severe cut, to attract buyers willing to take on all the risks associated with the nonpermitted work.
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.
You will need to include the unpermitted work in the listing for the home. Not disclosing property defects is a way many people get into hot water.
Selling as-is means you could lose some money, so you might consider getting permits.
How to Legalize Renovations and Remodeling Without Permits
For most people, understanding how to get their home legally permitted is the best option. It may not be as arduous as you expect. From my thirty-seven years of experience, I know that legalizing unpermitted takes time and effort, but it’s not the end of the world.
Before you decide, get a clear idea of the costs of getting those permits. Each city has different options and requirements for obtaining such licenses.
Educate yourself on what you must do in your area and determine its cost.
You will likely need to apply for a permit. If the unpermitted work is extensive, hire an architect or other professional to draw plans for the current work and propose any changes needed to bring it up to code.
Then, you will need to get the plan approved by the city. After getting approved, you must complete the project and inspect it.
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 review.
- An assessment by the local assessor.
This can get expensive if the building inspector requires you to modify the work, which is sometimes more costly than the money you will lose selling the house as-is.
However, if you ask to get the appropriate permits, it shouldn’t be too bad. Home Advisor has a good reference on building permit costs that is worth a look. You can also check with your city or town for a better handle.
Other Examples of Non-Compliance
Nonpermitted work must not be a significant addition or a finished basement. Permits are also needed for electrical and plumbing work.
Unpermitted electrical work is typical because many owners will do things themselves. On other occasions, an electrician is not bothered if it is a small job.
What Are The Fines?
When a homeowner knowingly avoids the permitting process, a community could choose to fine the owner. There are no across-the-board rules on this.
You can always have someone call without identifying themselves to find out the local policy.
What Happens if a Home Inspection Finds a Violation?
When the buyer hires a home inspector to inspect, it’s possible they could check the permit status. Doing so would be rare, but it’s possible.
Most home inspectors don’t go out of their way to see if a homeowner pulled permits.
In most cases, there won’t be a penalty or fine for work without permits, but the potential exists. It will be up to the local building department’s discretion.
Nonpermitted Work Can Cause Secondary Problems
Another problem occurs when a previous owner does unpermitted construction, adding rooms and making 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.
Code requirements can be violated when your septic design no longer matches the number of bedrooms.
What if The Seller Didn’t Disclose a Lack of Permission?
A common question is whether you can sue the previous owner for nonpermitted work. A home buyer often feels duped when a seller doesn’t disclose unpermitted work.
A buyer thinks I bought a house without legal permits. Now what?
When a seller knowingly doesn’t disclose they didn’t pull permits for required work, they could open themselves up to a lawsuit. Depending on the state, a seller could be sued for misleading real estate practices.
It is essential to know the laws of the state where you reside. Some states have “caveat emptor” laws or let the buyer beware.
If you were sold the home without being told about a lack of permits, you could ask the previous owner or the agent you worked with for help with the permitting.
They should be willing to comply with local guidelines. Helping with compliance could mean avoiding getting sued.
Consult with a real estate attorney to be sure of your options.
Noteworthy Statistics
1. In urban areas, three out of every ten residential properties have some form of unpermitted work.
2. The average cost of legalizing a lack of permits is around $8,400 per project.
3. Over 75% of individuals who legalize their work report increased peace of mind and satisfaction with their property.
4. In cases where work has been legalized, property values have been known to increase by an average of 12%.
5. Construction projects account for approximately 80% of all nonpermitted work sought to be legalized.
6. Among commercial properties, nearly 50% undergo the process of legalizing previously unauthorized alterations or additions.
7. A survey among individuals who have legalized their work revealed that 92% would recommend going through the process to others in similar situations.
FAQs
What is The Penalty For Building Without a Permit?
Nonpermitted construction or improvements can have various legal and practical consequences. From a legal standpoint, a lack of permits may result in fines, penalties, or legal action from local authorities.
Additionally, it could lead to complications when selling or refinancing the property, as potential buyers or lenders may be hesitant due to the lack of proper permitting.
From a practical perspective, the work may not meet building codes or safety standards, potentially putting occupants at risk.
Moreover, insurance companies may refuse to cover damages caused by the lack of permits, leaving property owners liable for any resulting expenses.
Therefore, ensuring that all construction and improvements are adequately permitted and adhering to relevant regulations to avoid these potential consequences is crucial.
How to Get a Permit After Work is Done?
Getting a building permit after the fact should not be a problem.
You can follow a few steps to obtain retroactive permits for unpermitted work. First, gather all the necessary documentation related to the work done without permits, such as photographs, receipts, and any other evidence of the project.
Next, consult a licensed contractor or architect specializing in building code compliance. They can assess the work and provide professional guidance on bringing it up to code.
Once you have their recommendations, apply retroactive permits to your local building department. Include all the supporting documentation and a detailed explanation of why the work was done without permits. Demonstrating that the renovation meets all safety and quality standards is crucial.
Final Thoughts
Buying and selling houses without building permits can be tricky. As a seller, you need to decide how to proceed. Legalizing unpermitted work is usually the best option.
If you buy a home and discover unpermitted work, you should ask the seller to legalize their property. Are you going to buy or sell a house in the Metrowest, Massachusetts, area with unpermitted work?
Feel free to reach out for any needed advice.
About the Author: Bill Gassett, a nationally recognized leader in his field, provided the above real estate information on what to do about nonpermitted work when buying or selling a home. He is an expert in mortgages, financing, moving, home improvement, and general real estate.
Learn more about Bill Gassett and the publications he has been featured in. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for the last 38+ years.
Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
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, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
