Got Unpermitted Work at Home?
Unpermitted work is construction that doesn’t have the necessary approval by the city. This means the city either isn’t aware of the work, wouldn’t approve the work, or doesn’t know whether it is up to code. Selling a house with unpermitted work can be slightly complicated.
Oftentimes, homeowners will conduct unpermitted work when they want to install an addition or new feature on their own. They either don’t know that a permit is required for the work or know that it will get denied and build, anyway. Unpermitted work ranges in size and quality – from updates to the electrical systems to the addition of a pool or garage. Selling a house with unpermitted work is doable but must be done carefully to avoid liabilities.
Buying a house with unpermitted work can affect your home insurance and ability to seek repairs. It can also hinder the selling process, as selling a house with unpermitted work can be a red flag for buyers.
As a whole, buying a house with unpermitted work is not a great idea. First, you are putting yourself, your family, and your belongings at risk. If unpermitted electrical work causes a fire or an unpermitted porch breaks down, you could be seriously injured. Next, you must pay to get permitted repairs on whatever work was done, which means a seemingly well-cared-for home could have thousands of dollars in damage that needs to be addressed.
Financing and insuring a home with unpermitted work is almost impossible. Home insurers won’t cover the unpermitted work and might drop your property entirely. Meanwhile, lenders won’t approve lending to properties with these unapproved additions. Some mortgage companies will require immediate loan repayment if they discover you completed unpermitted work on your home and are then working on selling a house with unpermitted work.
In some rare cases, the local government may require you to remove the unpermitted work. This could range from tearing down an addition (causing you to lose a bedroom or more) to filling in a pool or removing a garage. Not only will you lose key features of your home, but you could also lose money in the demolition process, in the resale market, and in your property taxes.
In most cases, it’s not worth the risk to buy an unpermitted property.