Renovations,additions with No Permits

Posted by Melina Rissone under For Buyers

"Hi Melina. My wife and I looked at a house that was perfect for us, but the family room didn't have a city permit. What's the risk of not having a permit?"

***ANSWER:
Four factors determine how concerned you should be about un-permitted work:

1. Significance
2. Workmanship & Code Compliance
3. Effect on resale
4. Possible future requirement to permit or remove

1. Significance
If we're talking about an un-permitted patio cover or professionally done kitchen remodel, I wouldn't sweat it. Few people pull permits for them. But a family room addition or extensive electrical work is more significant and cause for concern.

2. Workmanship & Code Compliance
Like any home you buy, hire a professional home inspector. Ask him or her to look extra hard at un-permitted additions. Many are built fine, but others are weekend projects by unskilled homeowners. If well-built but not code-compliant, you could still face problems in #4 below.

3. Effect on Resale
If you know about it, you must disclose un-permitted work when you sell. There's no guideline, but my rough rule of thumb is: if it's well-built, an un-permitted room is worth 50% of a permitted room. Obviously, that means it should have a likewise impact on what you'll pay right now.

4. Possible Future Requirement to Permit or Remove
The city rarely hears about un-permitted additions unless a neighbor complains or a city inspector notices it (typically that happens when checking other work you ARE permitting). Once aware, they'll make you remove or permit the work. Permitting means you'll pay penalties (I know YOU didn't build it, but the city doesn't care) and bring it up to current code, which could be easy or costly.

...After reading what I just wrote, you could accuse me of being a bit (?) wordy, so let me simplify:

When buying...

1. Don't sweat minor un-permitted items (provided #2 is OK)

2. Decrease your offer by appx 50% of the added value of an un-permitted room

3. Have it inspected. If poorly built, ask the seller to credit you the cost of bringing it up to standard