How to Sell a House with Unpermitted Work

Renovating your home is a great way to add value to your property. While you can undertake some projects on your own, others require permits. Permits take time and money, and many homeowners skip this process but face challenges when it comes time to sell their homes. When this happens, property owners face the challenge of selling a house with unpermitted work.

It doesn’t matter if unpermitted work is new or if it has been in place for years; it needs to be disclosed upon sale. Depending on local laws, selling a house with unpermitted work without proper disclosure can lead to legal action from the buyer post-sale.

But when unpermitted work is disclosed, sellers will find it more challenging to sell their properties. Buyers are hesitant to purchase such properties due to the potential costs of rectifying the unpermitted work, which can lead to lower offers or a smaller pool of interested buyers. Additionally, many lenders are reluctant to finance homes with unpermitted work, further limiting buyer options.

Depending on the type of work done, there can be a safety concern. Unpermitted work may not meet local building codes, posing a risk to the occupants’ safety. This risk can also affect the seller’s ability to insure the home, as insurance companies may refuse coverage if they deem the property unsafe or non-compliant with local regulations.

This guide aims to navigate these challenges by offering practical advice and strategies for selling a house with unpermitted work.

What is Unpermitted Work?

When major home improvement projects take place, they sometimes require a permit from the local building permit office. What kind of home renovations require a permit?

Renovations that typically require a permit vary depending on local regulations, but there are common types of work across many jurisdictions that almost always need approval from local building authorities.

Home Updates Requiring Permission from the Local Building Permit Office

Not all renovations require building permits. If you are painting walls, updating countertops, or even removing a non-structural wall, you might not need to visit the building department.

However, many home updates require permission from your local building department. Here’s a list of common renovations that usually require a permit:

• Structural changes, such as removing or adding walls, changing the roofline, or adding an addition to the home.
• Major electrical work, including installing new electrical wiring, adding new circuits, or significantly changing the existing electrical system.
• Major plumbing work, such as relocating existing plumbing, adding new plumbing fixtures where there weren’t any before, or changing the home’s water supply or drainage system.
• Installing new HVAC systems or making significant changes to the existing system.
• Enlarging or adding new windows or doors. However, replacing existing windows or doors with ones of the same size may not require a permit.
• Significant roofing work, such as replacing a substantial portion of the roof or changing the roofing material, often requires a permit.
• Building a new deck or porch or making significant modifications to existing ones usually requires a permit.
• Adding outdoor structures like gazebos and sheds, depending on their size and structure.
• Demolition of part or an entire building typically requires a permit to ensure safety and compliance with local codes.
• Installing a new fireplace or wood stove or altering an existing one, due to the potential fire hazards and ventilation requirements.
• Sewer line or septic system work usually requires a permit due to the environmental and health impacts.

Why Don’t Owners Get Permits?

Getting permits can be expensive. Not only do you have to pay for the permit itself, but there might also be additional costs for inspections and to bring the work up to code. Some homeowners skip this expense, especially if they think the project is minor.

In other situations, an owner can renovate without the property permits and not even be aware of the mistake. Building codes and requirements for permits can change over time. What was fine to do without a permit years ago might now require one.

Homeowners might not be aware of these changes and end up with unpermitted work by accident. Unfortunately, some homeowners or contractors deliberately avoid getting permits to cut corners or avoid inspections that could reveal substandard work.

When you sell your house, unpermitted work can be a big issue. It can make buyers nervous because they might be taking on the risk of future legal or repair costs. This can make your home harder to sell, reduce its value, or even lead to deals falling through.

Also, if a buyer’s lender finds out about the unpermitted work, they might not give out a loan for the purchase. As a result, it narrows down the pool of potential buyers to those who can pay in cash or are willing to take on the challenge of securing alternative financing.

How to Identify Unpermitted Work in Your Home

Unpermitted work is supposed to be disclosed, however, if the seller doesn’t know a previous owner did that work without the proper permits, then they are not liable for any undisclosed works. However, in most home sales, a home inspector or buyer’s real estate agent will uncover work that doesn’t meet local building codes.

If you’re planning to sell your home, you need to identify any unpermitted work that could get flagged during the sale. Figuring out if permits are missing allows sellers to make strategic decisions. They can either go through the permitting process themselves, disclose unpermitted work to potential buyers, or sell the as-is.

Consult Original Blueprints

A practical first step in identifying potential unpermitted work in your home is to compare the current structure and layout to the original blueprints. These blueprints, or construction plans, show the house as it was initially designed and permitted.

Blueprints provide a clear benchmark of what was originally permitted. Any deviation from these plans might indicate renovations or additions that required a permit. By knowing exactly where your home differs from its original design, you can focus your attention on these areas. It helps assess whether these changes comply with local building codes and whether they were likely to have required permits. 

In the event you discover unpermitted work and decide to rectify the situation by applying for retroactive permits, having the original blueprints can streamline the process. They serve as a basis for discussions with architects, contractors, and local authorities about bringing the work up to code.

If you don’t already have the blueprints for your home, you can get them from:

• The builder or architect who designed your home.
• Your city or county’s building department.
• The previous owner.

Check City Building Permit Records

If you see that work has been done to your property by a previous owner that is not part of the original design, you can check if a permit was provided. When permits are applied for and approved, they are a matter of public record and are stored at the city’s building department.

The simplest way to access permit records is to visit your city or county’s building department in person. Staff there can help you navigate their archives and find the permits related to your property. However, as government bodies modernize, many jurisdictions now offer online access to building permit records. Check your city or county’s official website to see if this option is available. Online databases allow you to search by address, making finding records specific to your home easy.

When reviewing permit records, compare the details of each permit with the changes you’ve identified in your home. Confirm that:

• The scope of work described in the permit matches the modifications made.
• The permits cover all major renovations, including structural changes, electrical upgrades, plumbing alterations, and additions.
• The city or county inspected and approved the work, as indicated in the permit documentation.

Can You Sell a House with Unpermitted Work?

While selling a house with unpermitted work is not ideal, it is possible. Most jurisdictions require sellers to disclose known issues with the property to potential buyers, including any unpermitted work.

Failure to disclose such information can lead to legal action from the buyer, including lawsuits for nondisclosure.

If you discover that your home is missing permits, you have a few options, such as:

• Obtaining Retroactive Permits: Some jurisdictions allow homeowners to apply for permits after work has been completed. This might involve inspections and bringing the work up to code.
• Disclosing to Buyers: If obtaining retroactive permits isn’t feasible, you can disclose the unpermitted work to potential buyers and adjust the sale price accordingly.
• Selling As-Is: When you sell a property as-is, it indicates to buyers that there are issues with the property. These sales typically require a significant discount.

The Best Options for Selling a House with Unpermitted Work

If your home has unpermitted work, whether it was done by previous owners or yourself, it’s now your issue to handle.

In some cases, dealing with unpermitted work can be fixed by removing whatever changes were done without a permit or retroactively going through the permitting process.

Alternatively, sellers can disclose unpermitted work and potentially sell their home as-is.

Selling As-Is

If you want a simple way to sell a house without the proper permits, then consider selling as-is. Selling a home “as-is” means putting the property on the market in its current condition, with the understanding that no repairs or improvements will be made before the sale. This approach allows sellers to avoid the cost and hassle of fixing the property.

However, if you choose to sell as-is, you must be aware that it comes with some downsides. Properties sold as-is often fetch a lower price since buyers will need to account for the cost of repairs and permitting.

Furthermore, many potential buyers will scared by an as-is sale, fearing whatever is wrong with the property will result in costly repairs and that they are taking on all the risks. As a result, sellers will have a smaller buyer pool than a traditional sale. They need to understand that selling as-is can lower market value and weigh that cost against going through the permitting process.

Securing Retroactive Permits

Another option is to secure retroactive permits for the work completed without authorization. This process involves making the unpermitted work compliant with current building codes and regulations, which can vary significantly depending on the extent and type of work done.

There’s always a risk that the local building department may not approve the retroactive permits, especially if the unpermitted work significantly deviates from current codes.

In some cases, getting a retroactive permit can be fairly easy, especially if the work undertaken follows the current building code. However, if the renovations are extensive and don’t follow local guidelines, you are looking at a time-consuming and expensive process.

To get started and assess the extent of work required for the retroactive permit, hire a licensed contractor or a building inspector to assess the unpermitted work. If no changes are needed, you can apply to your permit office. The permit process requires the property to be inspected by local building officials. This may involve opening up walls or floors to examine wiring, plumbing, or structural work.

Based on the inspection findings, some parts of the unpermitted work may need to be modified or completely redone to meet code requirements. Once the modifications are complete, a final inspection is conducted. If everything is compliant, the permits are issued, legitimizing the previously unpermitted work.

If you’re trying to decide if selling as-is or getting a retroactive permit is right, talk to your real estate agent. Your agent understands local market conditions and how buyers will perceive an as-is sale. Furthermore, they can provide insight into the cost and expense of getting a permit.

Preparing to Sell: Steps to Take Before Listing

If your home is missing permits, then selling will be more challenging. Review any unpermitted modifications or additions to your home and evaluate their impact on the property’s value and safety.

First, you should see if you can fix your permitting issues. Engage a licensed contractor or a building inspector to understand what would be required to bring the unpermitted work up to code, including the feasibility and cost of securing retroactive permits.

Based on the professional assessments and your financial situation, decide whether to apply for retroactive permits, undertake repairs, or sell the house as-is. Consider the return on investment for each option and choose the one that makes the most sense for your circumstances.

Work with an Experienced Real Estate Agent

As with any difficult property sale, your realtor’s experience is paramount. They will guide you through the implications of selling your home, from legal considerations to market expectations. With their help, you can ensure you meet all legal requirements for disclosing unpermitted work to potential buyers, protecting you from future liabilities.

Your agent can develop a marketing strategy that highlights the strengths of your property while managing the potential drawbacks of unpermitted work. They will know how to address potential buyers’ worries about the unpermitted work, including safety, financing, and insurance issues. Having detailed information and documentation ready can help alleviate these concerns.

Connect With the Right Agent to Sell Your Home

Selling a home with permitting issues presents unique challenges and the potential for legal trouble. Sellers must understand the risks and their options for disclosure, rectification, or selling as-is. As you prepare to sell your home, it’s extremely important to seek professional advice. Real estate experts can provide the guidance and support you need when unpermitted work is involved.

If your property has unpermitted work and you’re unsure how to proceed, FastExpert can help. FastExpert connects you with real estate agents, making it easy to find a local realtor with specific experience handling properties with permitting issues and navigating the permitting process. FastExpert features verified reviews and helps you find a realtor who is well-equipped to manage the unique challenges of your situation. Don’t let unpermitted work ruin your home sale.

Take the first step towards finding the right agent to sell your home with FastExpert.