Why You Should Read a Home’s Permit History Before Buying It
Considering the costs and hassles associated with buying a home, it’s surprising that most people only scratch the surface of real estate. They might stop several times to walk around; they’ll likely hire an inspector to do a more in-depth inspection (although most home inspections aren’t what you’d call exhaustive ) and rely on a title search as part of the lender’s normal due diligence. Otherwise, the place you’re about to invest a small fortune on is most likely a mystery box.
For example: that back deck, that new second bathroom the realtor kept mentioning, that new pool—were the permits for these projects revoked? Or was this work done by the owner himself on site? A home inspector, no matter how thorough, will not be able to tell whether a permit was obtained simply by looking at the work (although DIY work may alert him to the possibility that the project did not have a permit). And you need to know this, because unpermitted work on that house will become your problem if something goes wrong with it, and could affect the future value of the house.
Required Permissions
Most local authorities require permits for a number of major home renovations. The list of projects that typically require permits includes major changes such as additions, adding swimming pools, changing the roof line, or major electrical and plumbing work. The permit can be expensive and time-consuming, but it ensures the work is done in accordance with local building codes by triggering the inspection process and updating the home’s assessment for tax purposes. In other words, obtaining permission keeps the work at a high level.
But some people avoid getting permits for the same reasons: they don’t want to waste extra time and money, they don’t want to be bothered by inspections (perhaps because they cut corners and don’t do the job properly), and they don’t want to their property taxes went up because they renovated their kitchen. Hiding without permission is not that difficult, especially if the work is difficult to see from the street.
If you buy a home with a lot of unpermitted improvements, all of these potential problems become your potential problems. And these problems can be serious:
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Physical hazards resulting from poor workmanship – such as electrical fires due to poor wiring, gas leaks due to a DIY water heater installation, deck collapse due to poor design.
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Fines and costs if the work is discovered. For example, you may be required to rip out unauthorized wiring and redo it at your own expense—and this will be your responsibility as the current owner of the property, even if you had nothing to do with the original work.
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Tax penalties if the home’s assessment were to increase after major improvements.
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Insurance may deny any claims related to work done without proper permits and inspections, so if a disaster occurs, you’ll have to pay for repairs out of pocket.
Even if the work was performed at a very high level and you have no problems or complaints, unauthorized work can come back to haunt you.
Permission history
Fortunately, it is usually not difficult to review a property’s permit history. Here are the main steps you should take:
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Ask the current owner. If the current owner states that all work on the home has been permitted, they will be able to provide you with permitting documents and inspection information.
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Contact your local builder. Most municipalities have public records available online. You may have to create an account to access them, but then you can search the address and see all the permissions you’ve received. Check them against any work you see that should have required a permit, or anything your home inspector has flagged as suspicious. If there is no online portal, you may have to go to the office in person to request records.
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Square meters. Compare the official square footage of the home on file with the square footage you actually see. Many municipal agencies can provide you with this information; if not, sites like Property Shark may be able to provide it. If there is a significant difference (say, the house has 500 square feet more than what is listed in the official records), it may mean the addition was not allowed.
Next steps
If you discover unauthorized work before purchasing a home, you have several options:
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Ask the current owner to fix the problems: they can retroactively revoke the permits if they pay a fine and arrange for an inspection. If local authorities require the artwork to be removed or replaced, they can pay for it.
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Ask for a price reduction. You may be able to independently estimate the costs of obtaining retroactive permits, as well as the costs of redoing the work or removing unauthorized work, and ask the seller to reduce the sales price to compensate you, or even pay you a sum of money to cover the costs. .
Finally, of course, you can just walk away: if there’s a lot of unauthorized work on the house, it could be more trouble than it’s worth, and if the sellers are already hiding their actions, you won’t be able to trust them. Anyway.