Home Purchase On Home Remodeled Without A Building Permit

Home sellers need to disclose everything about the home they are selling including work that has been done without a building permit.  A permit is normally required for all types of repairs including a general repair permit on most municipalities and counties.  Permits have two functions:  Safety and revenue.  Pulling the proper permit will require that all electricians, plumbers, HVAC professionals are propertly licensed and bonded and the municipality will most likely send out a building inspector to inspect the finished product and make sure everything has been done per code.  Building permits also cost money.  The city or county will charge for permits and inspection fees.  Depending on the type of work you do, cities and counties can raise your property taxes also when they see that you have pulled a building permit to do enhancements to your home such as adding a room, remodeled your basement, or turned your attic into living space.

Reasons Why Homeowners Remodel Without Building Permits

In many cities, like Chicago, almost every building improvement requires a building permit.  Whether you remodel your kitchen, bathroom, basement, attic, or even your garage, the city requires the homeowner to pull a building permit.  There are a gang of building inspectors that canvas neighborhoods to catch homeowners do work without a building permit.  The city relies a lot on the fees it collects from issuing building permits.  However, recent studies prove that almost 90% of the  homeowners do work without building permits.  Here are some of the major reasons why homeowners do work without pulling proper building permits.

  • Building permits can be extremely costly. Building permits are normally based on the cost of the project.  The higher the cost of construction or remodeling, the more the building costs will be.  One of the major reasons why homeowners get caught doing work without a permit is because their neighbors report them to the city or county building department.  If you get caught doing work without a building permit, you will get fined and the building inspector will issue a stop order until you go to an administrative hearing and get the proper permit and pay the appropriate fine.
  • Unnecessary stipulations:  The city building code may require ridiculous stipulations on smaller remodeling projects.  A city building inspector may require to redo your whole electrical system for just doing a kitchen remodeling which can add thousands of dollars.  A building inspector may require to strip your roof instead of installing a new layer of roofing shingles to your existing roof.  Most homes can sustain three layers of roofing, however, many municipalities have stricter requirements and may require the homeowner to strip the roof.  A few hundred dollar project can cost thousands of dollars.
  • Building permits causes delays. Dealing with the building department is like dealing with the IRS.  If you have a project that requires multiple inspections before you can proceed to the next stage, a building inspector may not be available to come out to inspect the project for days or weeks.  This will cause delays in the overall project and may cost you more for the project in general.  A project that could have been completed in a week could take more than a month due to having a building permit.
  • Building permits can take weeks or months to obtain.  Dependng on the municipality, a building permit can take weeks or months to obtain. Some cities like the City of Chicago have permit expediters who are ex city building inspectors with a lot of clout who charge homeowners a substantial fee to expedite your building permit request.  Most of these permit expediters know the building inspectors and were their ex colleagues.  Many of them wine and dine the building inspectors and can normally get major favors.  These are strong statements but I know it is true and if you need to have a building permit fast in Chicago, you need to hire a connected building expediter.

Risks Associated With Home Purchase On Home Remodeled Without Permit

Pulling building permits on a remodeling project is always a good idea and it offers the homeowner a sense of security that the contractor has done the work per code.  I strongly recommend those homeowners who have little to no construction knowledge to alway pull building permits even if you have a reputable contractor.  There are many fly by night contractors and comedians who are contractor wannabees.  You should not jeapardize your family’s safety.  There are risks with a home purchase on a home remodeled without a building permit.  The homeowner’s insurance may not cover the area that has been remodeled without a building permit.  If a remodeling project was not done correctly such as faulty wiring without the proper permits, then the insurance company might not cover the loss.  If the city finds out that the work was done without pulling the proper permit, the city might issue a demolition order and require you to tear everything out and restart with a proper permit.  The city can issue extremely expensive fines for those who get caught without having the proper permit.

If you are considering a home purchase on a home remodeled without the proper permits, these are the issues you need to consider.  Plus the appraiser might not count the improvements done without the proper permits such as a converted garage space into living quarters.

By Gustan Cho


The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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