As a potential Buyer, you may have have no reason to suspect that an outstanding permit exists on a home you intend to purchase. After all, repair or remodel work may not be obvious during a visual inspection of the property and standard purchase contracts often do not include a contingency clause for verification of open permits.
Buyers rarely request that the seller disclose work that was performed years ago. The outstanding-permit issue may lay dormant until the new owner tries to modify an electric meter, remodel a room or repair a heating system, only to find that previous work has not been officially inspected and approved.
Since open permits or building code violations will not be listed in the preliminary title report nor be covered by the title insurance policy, it is important to clear up unpermitted work early on and avoid a possible delay in the closing.
Daniel and Janet were in the final stages of selling their house, when they awoke in the middle of the night to the sound of a loud alarm. Daniel called 911, the fire brigade arrived to discover that the home’s previous owner had put in an alarm system that was hidden from view and incorrectly installed. A permit for the work had never been closed out. Daniel and Janet were obligated to either have the system removed or correct the faulty installation before their sale of their home could go through.
Work done without a permit can also cause problems for a new owner. The residential alteration may have been completed according to the local building code, but if no permit was filed, the new owner may be liable for a fine. And if the work is found to not be up to code, the new owner will be required to fix the problem, bring the alteration up to standard and get a final inspection.
There are several reasons why previous homeowners did not obtain a permit. The owners may have used a local handyman to install a washing machine inside a small closet — a job that required new plumbing and electrical work but that would not be visible when the closet door was closed. The owners may have felt that a permit was not needed because — in their opinion — the job was relatively insignificant and took only a few days to complete.
In another scenario, the owners may have added a fence to their back yard and not have been aware that an ordinance required a permit for fences over a certain height.
Sometimes owners may avoid securing a permit either to get around paying the fees or because they are afraid that their property taxes might rise if the authorities become aware of their remodeling work. Or owners who did the work themselves may have been confident the job was done correctly and didn’t see the need to apply for a permit or submit to an inspection.
Before taking a listing, many real estate agents will ask Sellers if they are aware of any open permits that exist on the property. And then they will inquire if any upgrades or changes have been made that would have required a building permit.
Agents may also ask the local title company to run a courtesy permit history search, which should reveal all permits — whether pending or closed — on a property. In some parts of the country — such as Florida, where weather-related natural disasters have caused large-scale emergency repair work to be done on short notice — a permit search is common practice whenever a property sells.
Buyers can take the initiative and look up the permit history of a property by contacting the local regulatory building department for their area. A municipal search can also reveal unpermitted work.
When you hire a licensed contractor, he or she will be responsible for obtaining a permit for the work to be performed and closing out the permit after the job is completed. If you are doing remodeling work, large or small, remember to ask your contractor to give you a copy of the
closed permit for your files.