Often, homeowners make changes and upgrades to their home without securing permit. In some cases, permits are not required, but in many cases they are. When you attempt to sell your home, investigations by the buyer’s real estate agent, inspector or legal representation may discover undocumented changes that could hinder the sale. The degree to which this causes difficulties greatly depends on the types of changes made to the original structure, and whether your buyer’s lender will give a loan on property with unpermitted changes.
Sometimes, the changes occurred even before you purchased the home. Since laws may have changed in your municipality over the course of your ownership, changes that did not matter when you bought your home may be questioned when you try to sell it.
If you believe your home has unpermitted construction, there are things you need to know about it:
- What was constructed? A patio? A second bathroom? A sunroom?
- When was it constructed? Before you bought the home? After?
- Was a permit required and is a permit in place that you are not aware of?
A “grandfather clause” is an exception to a requirement, covenant or restriction that allows those already doing or having something to legally continue to so even if the new restriction would not allow them to do or have it. With regard to an unpermitted home upgrade, if the upgrade was added prior to the change in the law and the law does not require retroactive compliance, then the exception typically is allowed to remain. An obvious exception to this would be a change that posed a danger to anyone living in the home or on the property.
If you discover upgrades, retrofits, additions or renovations in your home you should check city records to see if a permit was required for that type of work in the year(s) you believe it was completed. Then, search municipality records to see if permits were in place. If a permit was required, but you do not find one in place, you can either request a retroactive permit, or sell your home “as is” (see below). Many municipalities have a method in place to obtain retroactive permits. Check to see what the total cost of the permitting process will be. You may have to pay for permits, fines, inspections and other fees. The total cost of obtaining retroactive permits may be greater than the return on your investment.
Selling “As Is”
If you do choose to sell your home “as is,” you do not need to disclose to the city building department that you believe you have unpermitted construction. Therefore, until you are certain that you want to file a request for a retroactive permit, take care in your research not to disclose information when you communicate with municipal offices that might trigger an inspection.
On the other hand, in the selling process, fully disclose to your real estate agent items that you know about for certain—that is, upgrades or additions you initiated during your ownership. You do not want a sale delayed or to fall through because a lender requires a permit, and you want to make sure that an appropriate “as is” clause is written into the sales contract.