Navigating the waters of building permits is no fun. As a buyer, it's crucial to know whether the home you’re purchasing includes permitted work. If not, it’s even more vital to figure out what risks you could face going forward and how you should go about remedying the issue.
In an effort to help you sort this issue out once and for all, we took the liberty of answering some of your biggest permitting questions so you’ll have a much better sense of where your responsibility lies.
Q: How do you know if a space is permitted?
Luckily, building permits are public information. That means that anyone can access them at any time, including potential buyers.
If you’re interested in a home that features some substantial improvements and want to make sure that the work was done to code, your best bet is to check in with your local government. If permits were pulled at the time the work was done, they'll be on file with the building and zoning department. Alternatively, some municipalities may also offer the option to check public records online.
Q: What does it meant to have unpermitted work?
Accepting a home with unpermitted work -- or choosing not to pull permits on your own home improvements -- essentially means that you’re taking a risk. Building permits are put in place for your safety. They’re an assurance that the work was done by a professional who adhered to current safety codes. Unpermitted work is unregulated. While it may be just fine, there’s also a chance that the work was done improperly.
Aside from the structural risks to accepting unpermitted work, there’s a financial component to consider as well. Most homeowners insurance companies will not cover unpermitted features, meaning that if you ever have to submit a claim that includes the unpermitted area, it could get denied.
Additionally, you could face penalties on a local level. If your municipality finds out about the work, they could issue a fine or even demand you get rid of the feature entirely. In the event that your future home includes unpermitted square footage, you could be subject to back taxes on the added space.
Q: How can I get permits for work done on the property?
Fortunately, there are ways to pull permits, even if you’re not the one responsible for the improvement in the first place. Again, this can be done by getting in touch with your local building and zoning office. If you’re working with a licensed contractor, he or she will likely take care of this step for you.
However, getting a permit is not always the easiest process, which is why many homeowners decide to risk going without one.
Though the exact steps you need to take will vary, depending on where you live, there are a few similarities.
Usually, the process will involve paying a fee, submitting the plans for your project to be approved, and having inspections done during and after construction to ensure the work is done to code.
Be aware that these steps have a tendency to slow down construction considerably.
Additionally, if part or all of the project fails inspection, the necessary changes will have to be made at your expense. That said, most buyers find it’s better to be safe than sorry.
Q: Which home improvements require permits?
This question is tough to answer. Since permits are handled at a municipal level, there can be a huge amount of variance in what’s required. You’ll need to call your local building and zoning office for specifics.
However, as a general rule of thumb, any new additions to the property need to be permitted. For example, increasing the square footage, adding another bathroom, or putting a deck on the backyard. Anything that requires a specific skill set -- such as redoing extensive amounts of electrical wiring -- may also be subject to permitting.
Q: Will permits affect my financing ability?
That depends. While unpermitted work is often accepted by mortgage companies, the work itself will need to meet certain qualifying standards. Those standards will vary, depending on the type of financing you’re using.
The final determination is usually made by the appraiser. VA loans and conventional loans tend to have the loosest requirements. Often, as long as the work done doesn’t change the building’s zoning and is done to a “workmanlike standard,” it can be given a pass. FHA loans feature additional regulations on whether or not the work done significantly changes the property value and, strictest of all, USDA loans do not allow for unpermitted additions.
If you find that a property you’re interested in includes unpermitted work, your best bet is to talk it over with your loan officer. He or she can help you determine the specific guidelines in your loan program and assist in figuring out the best next steps.