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Bypassed Remodeling Permits Pose Risks
Most cities, by law, require homeowners within their jurisdictions to apply for building permits before making modifications to their homes. Precisely what projects require permits varies from one city to the next, as does the vigor of enforcement.
Fees are charged when a building permit is issued. A value is attached to the improvements, which often triggers an increase in the assessed valuation of the property, so work done with a building permit can result in an increase in the homeowner's property taxes.
The permit process can also involve inspections to make sure that work is done correctly and in compliance with relevant building codes. Depending on the building department, scheduling inspections can be a hassle. And waiting for inspectors can be inconvenient.
Trying to save time and money, some homeowners and contractors skip the permit process. However, doing work without a permit can have serious consequences.
One East San Francisco Bay homeowner hired a contractor to convert a shed to a studio apartment for his daughter to live in. The contractor did the job without a city building permit.
When the property was sold, the seller disclosed to the buyer that the work was done without a permit. California law requires that homeowners disclose to prospective buyers any work they have done without a permit.
Before going through with the sale, the buyers talked to a city building inspector to find out what it would take to make the converted shed into a legal structure.
The building was so far from complying with the building code that the only economically feasible alternative was to tear it down. Consequently, the seller had to lower his price to reflect the loss of the apartment and the cost of demolition.
Before you commit to buying a home, it's a good idea to get a history of the permits on the property from the city building department. If permits for significant work are missing, ask the sellers for an explanation. Also, find out what impact this might have on you.
You may incur costs in the future if you buy a home that was renovated without permits. For example, let's say you plan to remodel the kitchen and you plan to obtain the required building permits.
If a city building inspector finds code violations from past work when he's inspecting your kitchen remodel, you may have to correct these violations before the inspector will sign off on the kitchen project. You might also be liable for penalty fees.
Appraisers often want to know that significant renovations were done without building permits. One couple found this to be the case when they sold their home in the Oakland hills.
They had added a bedroom, a bath and a family room without permits. The addition doubled the square footage of the house. Without permits, the appraiser wasn't willing to give full value for the improvements. So the property appraised for significantly less than the purchase price.
To keep the sale from falling apart, the sellers took out permits, which involved paying penalties. For the city inspector to confirm that the work was done properly, some walls had to be opened to expose plumbing and electrical work. The sellers' efforts to save money by bypassing the permit process ended up costing them much more in the long run.
Don't be lulled into a false sense of security if you discover that the building department isn't enforcing the permitting process. This policy could change in the future.
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