Your Guide to Selling a House with Unpermitted Work

Understanding the risks, options, and best practices for homeowners

10%
of homes have unpermitted work according to the National Association of Realtors
$2,000
average cost to obtain permits for unpermitted work
15%
of buyers would not consider purchasing a home with unpermitted work
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What is Unpermitted Work?

Unpermitted work refers to any construction or modification done on a property without obtaining the proper permits or approvals from the relevant authorities. These unauthorized changes may affect the property’s structural integrity and have legal implications.

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Additions

Room additions, converted garages, finished basements

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Electrical

New circuits, panel upgrades, added outlets

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Plumbing

New bathrooms, moved fixtures, water heaters

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Structural

Removed walls, altered support beams

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Risks of Unpermitted Work

Legal Consequences

Sellers may face lawsuits from buyers who discover unpermitted work after purchase, potentially leading to costly legal battles.

Insurance Issues

Insurance companies may deny claims related to unpermitted work or charge higher premiums due to increased liability risks.

Financing Problems

Lenders may refuse to approve mortgages for properties with unpermitted work, limiting the pool of potential buyers.

Value Reduction

Homes with unpermitted work often sell for less, as buyers factor in the costs and risks of bringing the property up to code.

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Your Options as a Seller

1
Fix Before Selling

  • Obtain retroactive permits for the work
  • Make necessary modifications to meet code requirements
  • Get inspections and proper documentation
  • Pro: Higher sale price, faster closing
  • Con: Upfront costs, potential delays

2
Disclose and Adjust Price

  • Fully disclose all unpermitted work to potential buyers
  • Provide documentation of what was done
  • Adjust asking price to reflect the unpermitted status
  • Pro: Faster sale process, less upfront cost
  • Con: Lower sale price, smaller buyer pool

3
Sell As-Is to Investors

  • Market to cash buyers or investors
  • Sell the property in its current condition
  • Transfer responsibility for permits to the buyer
  • Pro: Quickest solution, no remediation needed
  • Con: Significantly lower sale price
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Experts to Consult
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Real Estate Agent

For market advice and disclosure requirements

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Real Estate Attorney

For legal guidance and liability protection

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Home Inspector

To identify issues and code violations

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Contractor

For cost estimates and remediation options

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Building Department

For permit requirements and process

What Is Unpermitted Work?

Unpermitted work is when there is construction or modification done on a property that was completed without getting the permits through the proper channels. This can be anything from minor repairs to major renovations that violate local building codes or regulations.

Common examples include:

The Impact on Home Sellers

When selling a home with unpermitted work, you face several challenges:

Your Options as a Seller

Option 1: Fix Before Selling

Obtain retroactive permits and bring everything up to code before listing. This approach:

Option 2: Disclose and Adjust Price

Fully disclose all unpermitted work and price your home accordingly:

Option 3: Sell to Investors

Market your property to cash buyers or investors who specialize in properties needing work:

Assessing Your Unpermitted Work

Before making decisions, evaluate:

  1. Type and Extent: Identify all unpermitted modifications
  2. Severity: Determine if they’re minor cosmetic changes or major structural alterations
  3. Code Compliance: Check if the work, though unpermitted, meets current building standards
  4. Local Regulations: Research your municipality’s approach to retroactive permits

Expert Help You’ll Need

Consult these professionals for guidance:

Final Thoughts

Selling a home with unpermitted work can present both advantages and challenges for sellers.

On the one hand, it offers the opportunity to sell a property at a potentially higher price due to the added features or improvements made without permits.

However, it also comes with risks that sellers need to be aware of.

It is key for sellers to understand the concept of unpermitted work and its implications when selling a house.