Buying a Home That Was Remodeled Without Work Permits?

You fall in love with a house that has a great addition off the back of the house. Then you find out that the renovation was done without a work permit. Find out what that could mean to your purchase process!

The appraisal

An appraisal will only consider square footage viable if the space is properly permitted. If a new 10×10 living area was built without a proper permit, 100 square feet of your home’s total square footage will not be accounted for in the appraiser’s estimate. That shortfall could realistically have a negative impact on your ability to get a mortgage loan.

Insurance coverage

Contractors don’t always complete a job correctly, or in accordance to the latest safety codes. If an electrical fire or other disaster strikes because of faulty work, a homeowner’s insurance policy is not liable to cover damage costs for an un-permitted space.

Obtaining a permit after the fact

In some cases, a seller will be able to obtain a permit for work that was done without a timely permit, but unfortunately, this is not always the case. If the contractor that completed the work is no longer in business, a seller would need to hire an architect to draw the plans and have them reviewed by the municipality in charge of issuing the permit. This can be a costly and timely process.

City intervention

 Even if the seller is in a position to obtain a permit after the fact, depending on where the home is located, city codes often require certain inspections. Inspections are particularly common on framing. In some cases, the homeowner may be forced by the city to tear down drywall for proper framing inspection, which could lead to costly repair and materials costs.

It is important to understand that buying a home that was renovated without proper permits can be a hassle and cause unexpected issues. Be sure to carefully consider how much you love the home and how much time and money you are willing to invest in a real estate transaction before accepting the additional challenges.