Your Guide to Selling a House with Unpermitted Work
Understanding the risks, options, and best practices for homeowners
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.
Additions
Room additions, converted garages, finished basements
Electrical
New circuits, panel upgrades, added outlets
Plumbing
New bathrooms, moved fixtures, water heaters
Structural
Removed walls, altered support beams
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.
Real Estate Agent
For market advice and disclosure requirements
Real Estate Attorney
For legal guidance and liability protection
Home Inspector
To identify issues and code violations
Contractor
For cost estimates and remediation options
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:
- Room additions or conversions
- Electrical modifications
- Plumbing installations or changes
- Structural alterations
- Deck or patio installations
- Converting garages to living spaces
The Impact on Home Sellers
When selling a home with unpermitted work, you face several challenges:
- Reduced Property Value: Buyers often factor in the cost and hassle of addressing unpermitted work
- Smaller Buyer Pool: Nearly 15% of buyers won’t consider homes with unpermitted work
- Financing Obstacles: Lenders may refuse mortgages for properties with significant unpermitted modifications
- Insurance Complications: Insurance companies are likely to deny claims that you declare from these specific areas.
Your Options as a Seller
Option 1: Fix Before Selling
Obtain retroactive permits and bring everything up to code before listing. This approach:
- Maximizes your property value
- Attracts conventional buyers
- Eliminates future liability
- Costs more upfront (average $2,000 per permit)
Option 2: Disclose and Adjust Price
Fully disclose all unpermitted work and price your home accordingly:
- Requires complete transparency with buyers
- Necessitates a price reduction to reflect the “as-is” condition
- May limit financing options for potential buyers
- Protects you legally through proper disclosure
Option 3: Sell to Investors
Market your property to cash buyers or investors who specialize in properties needing work:
- Fastest selling option
- No remediation needed
- Significantly lower sale price
- Transfers permit responsibility to the buyer
Assessing Your Unpermitted Work
Before making decisions, evaluate:
- Type and Extent: Identify all unpermitted modifications
- Severity: Determine if they’re minor cosmetic changes or major structural alterations
- Code Compliance: Check if the work, though unpermitted, meets current building standards
- Local Regulations: Research your municipality’s approach to retroactive permits
Expert Help You’ll Need
Consult these professionals for guidance:
- Real Estate Agent: For market advice and disclosure requirements
- Real Estate Attorney: For legal protection and liability guidance
- Home Inspector: To identify issues and code violations
- General Contractor: For remediation cost estimates
- Local Building Department: For information on permit requirements
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.