December 2, 2015 by Leave a comment

Looking for a new home is an exciting undertaking, but there are many things you should consider carefully. If the home you’re falling in love with has had improvements, you look into whether or not those improvements were permitted. Here’s why:

How Do Renovations Get Completed Without Permits?

There are several ways that a home could end up with unpermitted renovations. The owners may have wanted to avoid paying extra property taxes that would result from increasing the value of the house. Sometimes, people who flip houses go without permits to save time and money.

Sometimes do-it-yourselfers may not realize when they need a permit, or a homeowner might have been lied to by a contractor who said he pulled permits when he didn’t.

What Are the Risks of Buying a Home With Unpermitted Renovations?

Your city or county building inspectors are responsible for ensuring that renovations to a home meet all existing laws. The building inspectors also have the authority to enforce the laws. Here are some risks you may run into:

You won’t know about renovations.

State laws are different when it comes to things a seller must disclose to a buyer. It would be wonderful if a seller always provided a buyer with the appropriate documentation, but that doesn’t always happen.

You will be responsible for fixing the problem.

If unpermitted renovations are discovered by the code enforcement department in your area after you’ve purchased the home, you may be responsible for paying for the permits and penalties.

Fixing the issues could require you to make minor changes or partially tear down and rebuild. In the worst-case scenario, you may be required to remove an unpermitted renovation altogether.

You may be liable for back taxes.

If the taxing authority in your area discovers that your home has unpermitted renovations, you may be liable for paying back taxes on the increased value of the home. There could also be associated interest and penalties.

Unpermitted renovations may not be covered by your insurance.

If a tree falls on an unpermitted addition to the home, your insurance company may deny the claim.

You may end up with shoddy construction.

Without permits, there’s no guarantee that renovations to a home have been done by skilled professionals. You may find that the renovations to your home were done using inferior materials or methods, and that could cost you money to fix.

What Can You Do to Protect Yourself?

First, identify areas of the home that don’t look like the construction was done when the home was built. Ask the seller to provide information about any work that has been done to the house and get copies of permits.

If you’re not sure you have the right information, talk to the building inspector in your area. Find out if there were ever work permits pulled for the house and get copies if they exist.

If you’re still not comfortable, update your sales contract. You can lower your offer to account for the expenses that you’ll pay to bring the home up to code.

Because it can be difficult to estimate what those expenses will be, you can also require that the seller remedy any permit issues as a condition of closing on the house.

Don’t be shy. If you purchase a home with unpermitted renovations, you will be the one who will bear the burden, so make sure you follow these tips to protect yourself.

Eric Khan is a Senior Mortgage Banker licensed in 23 states. Eric has been in the mortgage industry for over 10 years, and can be contacted by phone at 203-783-4593 or by email at [email protected] NMLS# 184348.


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