The neighbors have enjoyed an enclosed patio on their home for the last 10 years.  They are moving and putting the house on the market and have listed the home to include that patio as a fourth room.  Now it is time to face the music.  Was the work done to expand the patio into living space an unpermitted addition?

Permits to do work on your home are required by cities or counties if you are doing an addition, an alteration, enclosing a carport, putting in a pool or spa or building a fence to name a few.  A permit guarantees that the work will be done to code, and each phase of the construction will be inspected to assure that the job is done right and the home is safe.

But why do it right when you can save a few bucks?  Do the work yourself!  Have your handyman pal do it!  Don’t tell the county about the added square feet, your taxes will go up!  Plus the county will make you wait forever while they schedule their inspections.  So easy to just fly under the radar and let it slide.  Until you sell the house.

The seller is required to disclose to the prospective buyer if they are aware of anything that materially affects the value of the property, and unpermitted work can impact the value of the home in many ways.  In addition, if the seller knowingly does not disclose the unpermitted work, even after closing the buyer can seek damages.

So what are the potential financial ramifications of buying/selling a home with an unpermited addition?

• Homeowner’s insurance may not cover any liability due to faulty construction, or cover the repair or replacement if needed.
• The county may seek back taxes and fines and the new buyer is on the hook.
• The discrepancy in square footage may be discovered by the appraiser, and the home may not appraise if square feet and number of rooms does not jibe with county records.

So what are the clues that work may not be permitted?

• The square feet indicated in county records does not match the actual measurements.
• You notice changes in grade when entering a room, such as a slight step-down when a garage was turned into an extra room.
• A wall air conditioner when existing duct work could not be added.
• Funky electrical or plumbing connections.
• The listing states that the buyer is to verify the square footage.
• The listing boasts that the county is unaware of the extra square feet and thus tax savings!

Sometimes the work is of high quality, and the seller may have unknowingly purchased the house with the unpermitted work and they never knew about the problem.  They may have paid cash for the home, thus it was never appraised and the square feet error was never found.  Inspectors may suspect something is amiss, appraisers will notice size discrepancies, but the Title Company and the Real Estate Agent could be totally unaware.  If the unpermitted work is an alteration such as a big kitchen re-model, the square feet would not be altered, so it would be part of the buyer’s due diligence to ask the seller to provide receipts and invoices to verify who did the work.  Once a buyer suspects there may be a problem, time to dig deeper.