Have you recently tried to sell your house, but the inspection uncovered unpermitted work? When trying to sell a house with unpermitted work, there are several things you should focus on immediately to protect yourself from lawsuits and losing tens of thousands of dollars.
It is common today to find houses with unpermitted work. A lot of homeowners have unpermitted work done on their home – sometimes unknowingly too.
While having unpermitted work done on your home is fairly common, if you’re looking to sell your house, then there are things that you need to be aware of.
Selling a home without proper permitting can have major legal and financial repercussions. Not disclosing the unpermitted work to buyers can lead to you being sued down the road when they find out that there was unpermitted work done on the home while you owned it.
Even if you sell the house with unpermitted work that was done by the person who owned it before you, you can still be liable.
So, it’s critical to understand what unpermitted work is and everything else about it before you sell your house.
What is Unpermitted Work?
If you’re wondering what unpermitted work is, don’t worry. Unpermitted work on your house can be in the form of an additional bedroom, a finished basement, or tearing down walls. It really varies on your local building code ordinances.
Why Your Home Might Have Unpermitted Work
It’s one thing to knowingly have unpermitted work done to save a few hundred bucks, but it’s another beast to have unpermitted work done and you don’t even know about it. Here’s how you could have potentially ended up with having unpermitted work done on your home.
Construction Permits Are Relatively Expensive to Acquire
Construction permits for houses aren’t cheap. A lot of homeowners will go with an “under the table” contractor who can do the work for cheaper.
But those contractors are cheaper because they are not following through with the correct permitting requirements per local building codes. They are saving money on the renovation costs by not paying for building permit costs.
But sometimes the contractors lie. (Big surprise here.) Shady contractors will charge homeowners for building permits that they never go and get. When contractors charge homeowners for construction permits that were never pulled, it exposes the homeowner to lawsuits and thousands in repairs.
Not only will you have unpermitted work lingering on your house, but you will have to hire another contractor to REDO the work. They have to redo it because the work that needs permitting is usually in the walls – like electrical, framing, insulation, structural, and foundational work.
The new contractor will have to tear apart the work that your first contractor didn’t get permitted to access the parts of the renovations that need to be permitted.
If you ended up buying a house with unpermitted work, the first step is to reach out to the previous homeowners and ask about the repairs that they had done.
The key here is to not approach them in an aggressive manner. Remember, there’s a good chance that their contractor lied to them.
The best way to get their number is to ask your real estate agent to contact the listing agent for your home and have them get the phone number from the listing agent. The listing agent will naturally be on defense when being asked for client information, so make sure you just explain what is going on.
Home Construction Permit Laws Are Constantly Changing
Local building permitting laws change all of the time and, the fact is, that it could happen to you or the previous owners. Local home permitting laws are very local and they consistently change, so keeping up with them can be very difficult.
When you are having work done on your house, ask the contractor about what work needs to be permitted. To stay on the safe side, have the contractor show you the local building codes that prove that you do not need permitting if they tell you there is no need for permits.
If you end up needing construction permits to be pulled, have the contractor show you proof of the permits that they pull. But beware, they can replicate and fake building permits.
So call down to the local permitting office and ask them to verify the permit number that you contractor gave you. This way you ensure that you avoid having unpermitted work done on your home.
Some Homeowners Intentionally Skip Permits
Some homeowners are cheap and a tad rebellious. They don’t feel like spending money on permits. The problem is that there’s no way to tell for sure if they intentionally or unintentionally had unpermitted work done on the house before they sold it to you.
When you call them, as I said before, approach them casually. Approaching them with accusations or hints that they had unpermitted work done on the house will make them put their guard up and you’ll get zero information from them.
You can start by asking who the contractors were that did the house because you want to reuse them for some extra work you want to be done on the house. Then, you can call the contractors and ask about the permits on the property.
If you can’t get any information from the contractor and homeowner, call down to the local building code enforcement office and ask about the permit history on the house.
If work was done without permits being pulled, ask the contractor to provide proof of permits being pulled. Sometimes, they will have it and it’s just a documentation mishap. Other times, it’s going to come to light that the homeowner and contractor intentionally skipped out and saved money by doing unpermitted work on the house.
While all these steps might seem tedious, the fact is that they’re not as expensive as you might think. Also, it’s crucial that you get to the bottom of things, and ideally, get all the permits you need.
How to Sell a House With Unpermitted Work
Selling Your Unpermitted House In As-Is Condition
Most homeowners will pass on buying a house with unpermitted work done on it. Can you really blame them? It’s pretty risky.
The issue with selling the house with unpermitted work (if someone is willing to buy it) is that you will most likely have to accept a lower offer. While you may not like hearing this, the buyer will have to invest their money into having the construction redone and pulling the permits for the work.
I know what you’re thinking. “I can just sell the house with unpermitted work. They will never find out.” Maybe they won’t, but is it worth the risk? You can be dragged into a lawsuit over selling a house with unpermitted work, which can cost you thousands in attorney fees and court costs. THEN, you have to go back and pay for the unpermitted work to be redone properly.
If you are going to sell your house with unpermitted work, you should disclose all of the work that has unpermitted work done on it upfront. For instance, if you have a finished basement that doesn’t have a permit, then you should disclose that the basement is finished, but does not have a permit.
Simply disclosing this information can potentially save you from being sued down the road (consult your local real estate attorney).
If you are selling your house with unpermitted work, pay 3 contractors to give you quotes on how much it would cost to redo the work with permits. You can use these quotes for negotiations later on. Most buyers will low ball you if you have unpermitted work and tell you “OMG this is going to cost me soooo much to fix.”
You’ll know exactly how much the value of the home will drop due to the renovations needed to get permits on the house.
Getting a Permit Before Selling the House
If you want to get the highest possible offer (even if that means dumping thousands into the house to get permits pulled), the having a new contractor fix the property and have permits pulled is the route to go.
But first, call your local building permit office and ask them if you can pull the permits yourself so that you can save some money. Depending on how large the renovations were, you might be able to have the permits done yourself. Once you have applied for the permit, the local building authorities will schedule a building inspector to come out and check out the work.
If there are major issues that need to be resolved, the inspectors will not provide you with a permit. They will give you a list of things that need to be fixed and permitted on the property.
Then you will have to hire a contractor to do all of this work for you.