Q. I finished my basement without a permit, will it effect my home sale?
A. Doing work without a permit can create a problem when selling down the road. However, there is no straightforward answer as to what to expect when selling. Most municipalities require a permit for finishing a basement or attic, additions, major remodels, pools, fences, and additional structures such as a deck or shed. But some municipalities are stricter and want permits for a variety of jobs (i.e. replacement of windows, roofs, and hot water heaters, and some electrical and plumbing work).
Sellers are required by Pennsylvania state law to fill out a property disclosure. In the disclosure, it asks what changes/additions/remodels have been done to the property, whether or not a permit was required for the work, and whether or not a permit was obtained. So all sellers should expect to disclose this information to potential buyers.
There are three potential areas where the sale could have a problem due to the lack of a permit. First and foremost is the buyer. The buyer (sometimes at the urging of the home inspector) may ask the seller to obtain a permit “after the fact.” This means going to the municipality and applying for the permit. Sometimes municipalities will charge a higher fee and then may or may not have additional requirements to grant the permit.
In the case of a finished basement, the municipality may ask for an electrical underwriter to review the work or require a secondary egress. In the most extreme case, the municipality may not grant the permit and require that the basement be ripped out and restored to its original unfinished state. In the most lenient cases, the municipality will “grandfather” the basement and have no additional requirements.
Even if the buyer is okay with the work that was done without a permit, if the municipality has a Use & Occupancy inspection, they may discover what was done without a permit and require a permit “after the fact.”
Lastly, some mortgage companies are now starting to scrutinize whether or not work was done without a permit. They may require permits after the fact in order to fund the buyer’s loan.
Many sales occur without the lack of permits for work becoming a major issue. But our advice is to get the permits when the work is initially done and save the documentation. It provides peace of mind for sellers and buyers alike.