By Bill Gassett
Are you confused about building permits when buying or selling real estate? When you're a first-time buyer, you may wonder why so many homeowners try to sell a property without all of the necessary building permits. There are many reasons why a homeowner may pass on selling a home without the necessary paperwork required by state or town planning laws.
It's all very well to throw your arms up in the air and say that you're not buying a home without building permits; however, what you should do is to look into why there aren't building permits and determine if there's a reasonable remedy.
Cost of Building Permits
The cost of building permits around the U.S. varies a great deal. Some homeowners simply find it too expensive to pay for the necessary paperwork. What we really should be asking ourselves is if it's justified to charge a homeowner for remodeling a bathroom or a kitchen.
Sometimes permitting fees can cost owners hundreds of dollars, if not more. The thinking of many homeowners is: "Do I really want to deal with the hassle of filling out all the complicated paperwork at town hall and then be charged for it?"
Right or wrong, sometimes a small amount of money makes people make the wrong decision when it comes to following the law.
Complicated Laws and Confused Building Inspectors
The law on building permits and buildings which meet regulations can seem confusing, as well. One city building inspector can have different opinions from another in a neighboring city or town. Shouldn't they all follow the state building code on how things are built? The answer, of course, is yes!
For homeowners who have run into troublesome inspectors in the past, the temptation for skipping the permitting process can be significant. For example, you ask a contractor to build a garage and, by the end of the project, an inspector may not agree with how the finished product was constructed. That can leave you in a very difficult and likely expensive situation.
One inspector may inject his or her own opinion on the way they want things done, rather than following the building code.
Not Getting Caught
Another reason many homeowners don't apply for building permits is simply that they don't believe that they are going to get caught. In fact, there are times when you are likely to get away with it, especially when it comes to indoor remodeling projects such as kitchens and bathrooms.
A reputable contractor may not work without a building permit. On the other hand, there are shady contractors that'll do whatever they can to put more money in their pocket. Sometimes homeowners will do the work themselves, either not realizing a permit is needed or just skipping out, as well.
Too Much Hassle Applying for Permits
Applying for permits isn't easy. You'll have to submit detailed plans and may be asked to carry out alterations other than the ones you have planned. That all costs money, and this is another reason why so many homeowners avoid getting building permits.
Sometimes homeowners make home improvements that'll help sell the house and don't want to be held up waiting for permits to be granted. This can be more common as the spring market approaches and timing is critical for sellers. If an owner is in a rush to get their home listed, they may say to themselves "Forget about it."
The Downside of Buying a Property Without the Necessary Permits
There can be major downsides when buying a property that doesn't have the required permits. One of the most obvious issues is when it comes time for you to sell the home. In many states, homeowners are required to fill out disclosure statements. Within the disclosure, quite often sellers are asked if they completed work to the home that required a permit.
For obvious reasons, lying about permitting is a major problem. You could easily be sued by the new homeowner for making false statements about the home.
Imagine this—you misrepresent the fact a permit wasn't pulled for the deck you built off the back of the home. The new buyer has a 4th of July party and the deck collapses, injuring multiple people. Guess who's going to be sued for misrepresentation? Ding ding ding!
You can personally become liable for any work carried out without permits. It doesn't have to be as tragic as the example above, either. Maybe the finished basement built by the previous homeowner with the fancy kitchen that sold the home has to be ripped out or you'll have to pay a penalty. Don't think this can happen? Locally, here in my area of Grafton, Mass., this is exactly what they'll make a homeowner do without permits being pulled.
Fines levied by the town soon add up, and you should remember that they can be legally enforced by a court.
You Could Have Insurance Issues
Your home insurance can be affected, as well. If there's some sort of incident, and you need to make a claim, your insurer can refuse to pay out. This isn't at all uncommon. In most cases where home remodeling projects concerning electricity, gas or water have been undertaken without a permit, it's likely the insurance company will not pay out in case of an incident.
Should the matter of building permits arise during an inspection, it's a good idea to talk it over with the homeowner. In a perfect world, all of the necessary permits should be in place before you buy the home.
When buying a home, this is the perfect example of why you should have a buyer's agent looking out for your best interests. Exceptional buyer's agents will ask questions about permits. They will inquire with the listing agent when it is apparent the current owner has done a lot of work.
Most great real estate agents do try to make sure that everything is correct; however, there are occasions when things are missed, or even a real estate agent may not receive the correct information from the homeowner.
Buying a new home is a challenge, and you need to ensure that you dot your i's and cross your t's, or you could end up being the one out of pocket. Always remember that buying a home without the proper building permits is risky business.
Nancy M. Alexander - Stone Harbor and Avalon NJ Real Estate NancyAlexander.com
