Pay Now Or Pay Later- Building Permits And Selling Your Home

A real estate agent who has worked on hundreds of transactions and seen thousands upon thousands of homes, I am familiar with all levels of home renovations. Home buyers are more concerned about the quality of work, due to the high cost and involvement of buyers agents and home inspections. They want to be sure that the work was completed properly.

It is one thing to have minor renovations done, but not to need a building permit. This is something most home buyers will overlook. It’s another matter if you, as a homeowner, try to charge homeowners for a fully renovated kitchen or in-law apartment in your basement. However, the work was done without permits.

This is especially true if the home inspector finds renovations that need to be updated. This raises the question of whether the whole job is inferior.

Several Concerns of Home BUYER Of WORK DONE WITHOUT BUILDING Permits

• Are the safety standards and work practices being followed? Building permits are required to ensure home renovations comply with local standards. They also need to be completed to ensure safety for the occupants.
• Are I getting the value for my money? Is one or more of the renovations considered an in-law suite, or a bedroom? A 4th bedroom or an in-law suite can have a dramatic impact on the cost of a house. It would be best to consider whether you can legally label something as a bedroom or in-law without obtaining permits. You might be wrong! This could lead to you being sued for misrepresenting your property. Massachusetts has egress requirements for fire safety and light requirements to call something a bedroom, or an in-law legally. Home buyers who purchase a home believing they have one problem can end up with many.
• Are you infringing upon a neighbor’s property by the work? Additions, decks, and pools are expensive additions that must comply with the town’s zoning laws. They also add to the house’s footprint. You may need to apply for zoning permission to add to your property during the permit process. These renovations may alter the footprint of a property and will require minimal setbacks from neighbors.
• Insurance for homeowners may not cover an issue that is unpermitted. An insurance company could deny coverage if they discover that you are seeking coverage for an issue caused by unpermitted work.
• A building permit may not be included in an appraiser’s account. Appraisers may discount things like the extra bedroom, the in-law suite, or the large sunroom that you want to buy for tens of thousand of dollars more if they discover that there wasn’t a building permit for the renovation.

WHY DON’T HOME OWNERS PULL THE REQUIRED PERMITS FOR BUILDING?

• • Permits for building can be costly. Permits are typically based on a percentage cost of a job. You may need to obtain permission from multiple departments to complete the work.
  • Permits for building can lead to additional work and unreasonable requests. The powers can make you dependent on the permit once you have applied. The home inspector in Essex County may want to see the project in a certain way, but you might need help to see it that way.
  • Building permits cause delay. The permitting process can become complicated if you submit engineering plans and have to go before multiple boards for approval. The approval of the building can be much more complicated than the actual project.
  • It is too difficult to get building permits. It is true that obtaining building permits will take a lot of work. The town will have to approve your application. This will also increase the cost and delay the project.

The tax rates will rise.

• The town may have a track record of improving its homes, which could trigger a tax hike.

PAY NOW OR PAY LATER

It is up to you to decide whether or not you want to go through this process. However, I assure you that you will end up paying for it when you sell your home. It is usually an issue once your home has been sold. Then you will have to rush to fix things and spend money you didn’t think you needed. These are two recent transactions that I was involved in, where the seller needed to obtain the necessary building permits.

Scenario One

The seller completed extensive renovations to a house they bought a few years back. This included adding 2 bedrooms, renovating kitchens, baths, and finishing the basement. He also converted a sunroom into a living area and system upgrades. The seller was a general contractor, and did all the work.

Several problems arose during the home inspection, which raised questions about the lack of building permits. The home was beautiful and the seller got away with it. It cost the home owner thousands to have specialists confirm that the work was done correctly and safely. It also extended the inspection period, almost causing the buyer to resign several times.

Scenario Two

The seller purchased a home with an attached inlaw suite many years ago. She paid a premium to have it professionally done so the mother could stay there and pay the mortgage.

Now it’s time to sell. Keep in mind that the in-laws were professionally completed and looked amazing, but no building permits had been obtained. The property is being offered at a fantastic price. Everyone is happy and the buyers fully understand the work completed without permits. BUT!! BUT! The town cancelled the occupancy permit for the house.

The seller had to take down most of the kitchen and cap the plumbing for the sinks and appliances. He also had to remove a closet from a bedroom to get the town to issue a new permit. This cost several thousand dollars. The home buyer also wanted to reduce the sale price because they wanted to avoid paying for a suite that wasn’t legal. We were also charging a premium for it.