Construction permits are required for most remodeling work that is done in homes. Unfortunately, sometimes homeowners fail to obtain permits for whatever reason because doing so just didn't seem important. However, when it comes time to sell the home, those unpermitted renovations can cause a nightmare. Whether you didn't know that you needed to obtain permits, or you simply ignored it, now is the time that you have no choice but to deal with the matter. Here's what you need to know.
There are a number of potential problems that can come up when it comes to selling your home if you have had renovations done without the necessary permits. One thing that can happen is that buyers will be unable to obtain mortgages because homeowner's insurance companies typically will not cover work that was done without necessary permits. For example, a basement that was refinished may not be covered due to potentially hazardous faulty electrical wiring, which means insurance companies deem the house as a high-risk structure and will refuse insurance coverage. Without insurance coverage, mortgage companies will not risk their money.
Another thing that can happen is that the appraisal report that will be used to give an approximate value of the home will be matched with the most recent tax assessment on record. If, say, the square footage of living area is much higher than the tax assessment, you could be liable to back-pay all the property taxes you've missed since the unpermitted renovations were done.
Real Estate Lawyer
It's crucial that you hire a real estate lawyer to help guide you in making amends with your unpermitted work according to the local and state laws. This may mean that you may need to pay a penalty, obtain a permit and have your home thoroughly inspected to make sure the home is up-to-code. If it's not, you may need to hire a remodeling contractor to make the necessary adjustments so that the home meets the standards of the building code enforcement authority before you can put the home up for sale.
Alternatively, you could try to list the home as "as-is" and sell it for a loss. However, you would still need to disclose the unpermitted work during the closing process and make concessions to the buyer, if necessary, but, again, they may still be unable to obtain a mortgage or get homeowner's insurance coverage.
In conclusion, speak with a real estate law office to learn what your options are before putting your house on the market.