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Selling a House With Unpermitted Work

Trying to sell a house with unpermitted improvements can cause quite a headache for any homeowner looking to sell for a substantial amount regardless of the location or initial value of the house. Renovations, repairs, additions and other kinds of improvements usually require a permit to see to it that they are in compliance with local building laws. These building codes usually vary depending on the area and should be ideally checked out before making improvements to a house. One prevalent issue with unpermitted work is that the quality and safety cannot be guaranteed.

Selling a House With Unpermitted Work

Why Are There Problems With Selling A House With Unpermitted Improvements?

Houses with unpermitted improvements do not usually make for hot properties among buyers because of the baggage they come with. Some of the problems encountered by potential buyers of a house with unpermitted work include:

  • Difficulty getting a mortgage: Most mortgage banks do not grant loans for houses with unpermitted work.

  • Lack of safety of unpermitted improvements: since most unpermitted works do not meet the standards of the local building codes, they may constitute a safety hazard to the buyer.

  • Problems with obtaining insurance: virtually no insurance company will insure a house with unpermitted work in it. Who would? After all, it is just an accident waiting to happen.

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Does The Buyer Have To Know About The Unpermitted Work?

Yes! When selling a house, you will be required to disclose if the house has had unpermitted done in it and what the work done on it was.  Because of the reputation of unpermitted work in a house among buyers, disclosure usually brings about a considerable drop in the fair market value of the house. Failure to disclose this to the buyer can land one a very undesirable lawsuit on account of fraud.

How Can I Sell My House With Unpermitted Improvements?

In the case that your house has had unpermitted work done on it and you want to sell, there are still some options available. Although none of the options is especially pleasant, any attempt to bypass them can result in very extreme consequences.

The first thing you can do is to remove the unpermitted work and restore the house to its initial state. Depending on the nature and size of the work done, this may be the cheapest of all the alternatives for a homeowner. A smaller, uncomplicated job can easily be removed at little cost, however, a large job e.g. a garage door will be very expensive to take out.

Another option is to sell as-is. This means that you sell with full disclosure to the buyer about the unpermitted work done. As explained earlier, this usually comes with a huge discount from the seller. It also means that the buyer, on purchase will take full responsibility for the work done.

The third option is to get the work permitted retroactively. This can also be very expensive because after getting the permit, you may be required to get professionals (architects, contractors etc.) to help you bring the work to the required specifications. 

Before you do anything, however, carefully consider the cost implication of all the choices and consult a real estate agent to help you with the decision.

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