Last updated on April 18th, 2024 at 05:52 am

Quick Facts

  • According to the National Association of Realtors, approximately 10% of all homes have unpermitted work.
  • According to the National Association of Realtors, the average cost to obtain permits for unpermitted work is $2,000.
  • Nearly 15% of buyers would not consider purchasing a home with unpermitted work.

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.

It can range from minor repairs or additions to major remodeling projects. 

The Different Types of Unpermitted Work: Unpermitted work can take various forms, such as unpermitted additions, unpermitted electrical work, or any other alterations that violate local building codes or regulations.

These unauthorized changes may not only affect the property’s structural integrity but also have legal implications. 

The Implications for Sellers: When selling a home with unpermitted work, it is vital for sellers to understand the potential consequences.

Buyers may insist on obtaining the necessary permits or demand a price reduction due to the added risk and uncertainty associated with unpermitted work. Or it may make the house harder to sell.

It is essential to evaluate the effects of unpermitted work on both the property’s value and the overall selling process. 

The Importance of Addressing: Sellers must address unpermitted work before placing their property on the market.

Failing to rectify these issues can lead to legal recourse, damage the property’s reputation, and result in financial loss.

By ensuring that all work is conducted with the proper permits, sellers can protect themselves and attract more potential buyers. 

Options for Sellers: Sellers facing unpermitted work have a few options to consider.

They can attempt to obtain retroactive permits for the unauthorized work, bring the property up to code before selling, or disclose the unpermitted work to potential buyers and adjust the asking price accordingly.

Each choice has its advantages and disadvantages, and sellers should weigh them carefully with the guidance of a real estate agent or attorney. 

Understanding the Risks and Disclosure Obligations: Sellers should be aware that not disclosing unpermitted work can lead to legal action from the buyer down the line.

Full transparency is crucial, as hiding or neglecting to mention unpermitted work can result in costly legal battles.

Assessing the Unpermitted Work

This assessment helps determine the potential impact on the selling process and provides valuable information for both the seller and potential buyers. Here are some important factors to consider:

Identifying the Unpermitted Work: This includes examining all areas of the house, including electrical, plumbing, and structural components.

Consulting with a real estate agent or a professional home inspector can also help in identifying hidden or undocumented alterations.

Evaluating the Severity of: Not all unpermitted work carries the same level of risk or consequence.

Some modifications may be minor, such as a small electrical repair, while others may involve major additions or structural changes.

Research Local Building Codes and Regulations: Each city or municipality may have different requirements, and it is crucial to understand how the local authorities view unpermitted work.

Check if there are any provisions for retroactive permits or potential legal repercussions of selling a property with unpermitted work.

Consultation with Professionals: They can provide valuable insights and guidance on how to address the unpermitted work and navigate through any potential obstacles during the selling process.

Disclosing the Unpermitted Work:  It is essential to be transparent and provide accurate information about the unpermitted modifications or additions.

Failing to disclose the existence of unpermitted work can lead to legal issues and negatively impact the selling transaction.

Examples of work that needs permits

Work without getting permits refers to construction or renovation activities carried out without obtaining the necessary permits or approvals from local government or relevant authorities.

Examples of unpermitted work include building additions, remodeling projects, electrical or plumbing work, and structural changes done without proper permits.

A homeowners should know this will certainly lower the value of the house

Potential Legal Consequences 

Risk of Legal Action: The presence of unpermitted work can expose sellers to legal actions by the buyer or other parties affected by the property.

If a buyer discovers unpermitted work after purchasing the property, they may pursue legal recourse against the previous owner.

Implications for Insurance and Lenders: Unpermitted work can impact a seller’s ability to secure appropriate insurance coverage for the property.

Insurance companies may refuse to provide coverage or charge higher premiums due to potential liability issues associated with unpermitted additions or alterations.

Additionally, lenders typically require certain inspections and documentation before approving a mortgage loan.

Unpermitted work can be flagged during these processes, potentially leading to delays or even the need for immediate loan repayment.

Disclosure Requirements: In many jurisdictions, sellers 

Failure to do so can result in legal consequences and even the cancellation of a sale.

Real estate agents also have a responsibility to inform buyers of any unpermitted work they are aware of. 

Potential Complications for Resale or Future Improvements: Unpermitted work may limit the resale value of a property and make it more challenging to find a buyer willing to take on the risk associated with potential costly remedies.

Prospective buyers often prefer homes with proper permits and legal compliance.

Unpermitted work can also inhibit the ability to obtain permits for future improvements or renovations.

Local building departments may require retroactive permits or demand modifications to bring the property up to code before issuing permits for subsequent work.

Remedying Unpermitted Work

Bring in a qualified home inspector, contractor, or real estate professional to examine the property and identify any unpermitted modifications or additions. 

Retroactive Permitting: In some cases, it may be possible to obtain a retroactive permit for the unpermitted work.

This involves legalizing the modifications by going through the proper permit process after the construction has already been completed.

However, keep in mind that retroactive permits are not always granted, and the process can be time-consuming and costly.

Making the Necessary Repairs: Another option is to address the unpermitted work by making the necessary repairs to bring the property up to code. 

Exploring Alternative Selling Methods: This could involve considering a cash offer from a buyer who is willing to take on the responsibility of addressing the unpermitted work themselves.

Remember to weigh the pros and cons of such offers and consult with professionals to make an informed decision.

Consulting Experts and Professionals 

Real Estate Agent: A qualified real estate agent with experience in handling properties with unpermitted work can provide valuable guidance throughout the selling process.

Additionally, an agent can advise on the appropriate pricing strategy to attract buyers while accounting for the unpermitted work.

Real Estate Attorney:They can provide expertise on local building codes, regulations, and any legal consequences associated with selling a property with unpermitted work. 

Home Inspector: They can identify potential issues and advise on the necessary repairs or remedies to bring the property into compliance with building codes. 

Permitting Agencies: They can outline the retroactive permit process, highlight the necessary documentation, and guide sellers in rectifying the situation. 

Contractors and Construction Professionals: These experts can assess the unpermitted work, provide accurate cost estimates, and ensure that the necessary repairs or modifications are done according to local building codes. 

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.

Disclosing unpermitted work to potential buyers is not only an ethical responsibility but also a legal requirement in many jurisdictions.

Failure to do so can lead to legal disputes and financial repercussions. To protect yourself as a seller, it is recommended to address any unpermitted work before listing your property