There is real satisfaction in doing a project yourself. But when it comes time to sell, if the work you did, or had done, was never approved by the building department, things get complicated.
Unpermitted work is any renovation, repair or addition that legally required a permit and did not get one. It can be as small as a deck extension or as large as converting a garage into a bedroom or adding a bathroom. You may have bought the house with the work already done, or done it yourself. Either way, if the building department has no record of it, it has not been inspected against the code, however well it was built.
The cost of cutting corners
In the Miami area, NBC Miami reported on two buyers who purchased homes that had been renovated without permits, with plumbing, electrical, windows and roofing all done unpermitted according to the owners. Within months, building inspectors came to the door. One owner spent close to $20,000 on new contractors and permits to bring the home into compliance; the other faced close to $40,000 in county fines. Neither knew the work was unpermitted (“Homebuyers Facing Thousands”).
In New Jersey, Realtor.com reported that a court found sellers who concealed roughly $400,000 of unpermitted renovations on a Jersey Shore home had committed fraud; the $1.5 million sale was unwound and the sellers were ordered to return the purchase price. Avoiding permits had also let them avoid costly requirements for a flood-prone area (“Unpermitted Renovations”).
The hidden risks
Safety
Permits and inspections exist to check structure, electrical, fire safety and drainage against the building code. Without them there is no independent record that anyone checked, and electrical or structural work done wrong can be dangerous.
Appraisal
An appraiser may not count an unpermitted addition toward square footage or value, and may note the uncertainty in the report, valuing the home on the assumption that the work will be accepted by lenders and future buyers (HomeLight; Redfin). That kind of assumption is a flag for a lender.
Financing
Lenders do not like loose ends. Unpermitted work can delay or derail a loan, which can shrink the pool of buyers who can actually close (Redfin).
Insurance
If damage traces back to unpermitted work, an insurer may deny the claim on the ground that the work was never inspected, and in some cases it can affect renewal or premiums (EffectiveAgents). Read your policy and ask your agent.
What counts?
Cosmetic work usually does not need a permit: painting, new flooring, countertops, swapping a light fixture on an existing circuit, replacing a faucet, minor landscaping. Structural work almost always does: adding rooms, changing load-bearing walls, sunrooms, enclosed porches and garage conversions, new bathrooms, and decks above a certain height. New electrical circuits, new plumbing lines, HVAC installations and roof replacements also usually need permits. Requirements vary, so when in doubt, call the city or county building department.
What it means for a sale
You can sell a home with unpermitted work. But in Florida, a seller of residential property generally must disclose known facts that materially affect its value and are not readily observable to the buyer (Johnson v. Davis). Known unpermitted work can fall into that category, even if it was done before you owned the house. Buyers who discover undisclosed problems after closing may sue. This is general information, not legal advice; talk to a Florida real estate attorney about your situation.
In practice, unpermitted work tends to lower offers, complicate financing and insurance, and give buyers leverage (HomeLight).
How to fix it
- Permit it now. Contact the building department and ask about permitting existing work. An inspector reviews it; if it meets code, the permit is closed out. Expect time and cost, sometimes including opening walls.
- Certificate or as-built review. Some jurisdictions have a process for reviewing existing work and issuing a certificate if it meets current code.
- Disclose and price for it. If retroactive permitting is not feasible, disclose it up front and price the home to reflect what the buyer is taking on.
- Remove it. In some cases the only fix is to take the work out.
The bottom line
Permits are third-party verification that work meets the code. They protect your value, your ability to sell, your insurance and the safety of whoever lives in the home. If you are renovating, pull the permits, get the inspections and keep the paperwork.
If you are buying, ask for the seller’s disclosure and check the permit history for the address with the city or county building department to see whether permits were opened and closed. It is a simple step, and it can save you thousands. More buyer questions are answered in the FAQ.