This is actually quite a common occurrence; the buyer agrees to purchase a home, conduct the home inspection, and the inspector finds unpermitted work that was done. Whether it’s electrical work, re-plumbing, or a whole new addition, what happens at this point? This can be an extensive and time-consuming issue depending on the level of work.
Unpermitted work applies to any modifications made to a home that should have had a permit pulled but did not. This could be structural issues, electrical, plumbing, or major remodels. Laws are different depending on the area so where a permit might be needed in one county, it might not be needed in another. However, it does clarify the validity of the work done, giving buyers a piece of mind about the safety and security of the project.
Some sellers can be a little intimidating and seem a little blasé about not needing a permit for this or that. I recently showed a home to first-time homebuyers where the property was being listed and sold by the owner, which was also the agent. The home was priced extremely well and looked like it had undergone a lot of remodeling and renovations. When asked about permits, the agent seemed condescending siting that none of the projects needed a permit. With a little more research, the low price was definitely reflected in the shoddy workmanship and illegal wiring.
So what is the buyer to do?
You have to ask yourself if you are willing to take over responsibility for work with no permits. Most of the time sellers will fill out a seller’s disclosure form accurately answering all questions about the home that they know of. Any unpermitted work must be disclosed to buyers when you decide to sell a house, which in turn means if you choose to buy the house, you will need to tell future buyers about the unpermitted work.
So can you be penalized for unpermitted work?
In most cases no, but from time to time, city inspectors can penalize homeowners for unpermitted work, even if you are the second owner, and not the original perpetrator. This might consist in hiring contractors to make changes if the work does not meet code.
Something else to consider is that your homeowner’s policy may not cover any unpermitted additions. It’s important to talk to your insurance agent before agreeing to buy the house.
Even more uncommon is that mortgage companies may require an immediate loan repayment due to unpermitted additions or major remodels, which sounds very scary, but again is very rare.
As a buyer you have several options:
- Consider taking the home as is and deal with any risks or consequences later on
- Ask the seller to fix the problems or to get a permit for any work done
- Simply walk away.
One of the best things about home inspection is that if you are not satisfied, you have every right to walk away and receive your earnest money deposit back.
Again, it really varies depending on the severity of the work done. Running a simple electrical wire to a new outlet may not be a big deal but installing an entirely new 220 outlet for a hot tub or a whole new electrical box is another story. Full-on additions that need to be inspected are something to consider. If you have any questions about unpermitted work on a home you’re considering buying or if you just like more information give me a call at 248-752-3088. I help buyers and sellers of homes throughout West Bloomfield Township and the surrounding communities.