Without Permit, Home Alterations Are Risky
If you own a home or a condominium, you may be a scofflaw without even knowing it.
One of the most common violations of the law--besides speeding--is failing to obtain building permits that are required for almost any alteration to your property.
Most people don’t realize they are breaking the law, however, until it comes time to sell the residence. Buyers, along with their inspectors, real estate agents, lenders and lawyers, are becoming more concerned about any alterations made to a home without a permit. And, what seemed like nothing more than a Sunday afternoon improvement project a few years ago may become a deal breaker when a home is on the market.
Homeowners who don’t get all the proper building permits are “fools,” warned Gene Prowizor, president of Aa Building Inspection Service Inc. While real estate brokers talk about alterations made according to code but without a permit, Prowizor said, “that’s a legal impossibility.”
Besides, building codes are constantly changing. A project completed 10 years ago with a permit is “grandfathered.” But if the same project was completed without a permit, it would need to be brought up to requirements of the most current code.
Not having the right building permits can create all sorts of problems, Prowizor said, adding that, “many buyers also use inspection reports as legal blackmail.” After making an offer and having it accepted, some prospective buyers have the house inspected and present a list of building permit violations to the seller in an attempt to extract concessions.
With an oversupply of homes on the market, buyers are often flexing their muscles and being very picky about details. Many sellers are also more apt to give in on certain repairs and price concessions before letting a potential sale slip away.
Another downside to having work done without a permit is that lenders are asking their appraisers to be wary of any changes made without a permit, Prowizor said. In many cases, the lender will require proof of required permits before making a home loan or remove the value of the unpermitted work from the amount the lender would otherwise lend to the borrower. A home with a $20,000 illegal bedroom addition, for example, may sell for $200,000 but be appraised at only $180,000 by some lenders.
“If the addition or improvement doesn’t violate the local zoning ordinance and it is done in a workman-like manner, we will usually accept it and give it value,” said Richard Beebe, a spokesperson for Bank of America. But, he warned, the bank may also choose to not make a loan on the property, discount its appraisal or reduce the amount of the loan by an amount it estimates is necessary to fix the unpermitted improvement.
Work completed without the proper permits may also create problems between property owners and insurance companies, said Bobbi Miller, vice president and regional manager for Fred Sands Realtors in Woodland Hills. Some insurers may deny coverage for unpermitted improvements or refuse to pay for certain losses--such as an electrical fire caused by wiring that wasn’t installed with a permit. Sellers who want to avoid liability for these types of problems should make sure they disclose to would-be buyers all the improvements made to a residence without permits, Miller said. Buyers can choose to make an issue of the unpermitted changes or ignore them, but at least the buyers won’t be able to claim they were uninformed.
California’s Uniform Building Code--which is the basis for most local building codes--requires a permit to erect, repair, alter, enlarge, move, improve, remove, covert or demolish almost any part of a building structure. This includes not only adding rooms but also changing windows, moving electrical outlets, relocating plumbing or gas pipes, re-roofing, re-stuccoing, replacing drywall, moving a doorway or--in some jurisdictions--even replacing a toilet or a sink.
Permits in most cities and counties start at about $35. All the necessary permits for a new kitchen usually run about $50 to $100. Permits for a room addition cost anywhere from $80 to $600.
Property owners who fail to obtain a permit may one day face a building inspector knocking on their door and asking to inspect some aspect of their property. Inspectors who come to check something out for a building permit are authorized by the permit application to inspect the property. These inspections will be usually limited to the scope of the permit. The owner has a right to refuse the inspector’s request, and the inspector’s only recourse is to get a warrant. Very few inspectors, however, will bother going through the process of getting such a warrant.
In the City of Los Angeles, basically any structural work worth more than $200 requires a permit, said Jim Kaprielian, assistant chief of the City of Los Angeles Department of Building and Safety’s Bureau of Community Safety. Los Angeles has tried to simplify the process for certain projects by certifying some contractors to do certain projects without permits, but permits are still needed for most building projects.
Because each building inspector in Los Angeles covers a territory of several square miles, most small jobs without a permit never come to light, Kaprielian said. “A majority of people are violating the law but we have to allocate our resources and go after the more serious offenses.”
Ron Galperin is a real estate attorney with Wolf, Rifkin & Shapiro in West Los Angeles and a syndicated columnist with the Real Estate News Group.
