Permit check critical when buying home

Open or expired permits can add considerable cost to improvement budget

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Apr. 8, 2013

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Open or expired permits can add considerable cost to improvement budget

Dian Hymer
Inman News®

Most houses are inspected by a home inspector before they're sold. However, home inspectors usually don't inspect the permit record on a house. To be sure you have the complete picture, it's wise to go to the local planning department and check the permit history on the home you're buying before your inspection contingency is due.

Why is this important? Some planning departments require that any open or expired permits that haven't received final approval must be completed before a new permit on the property will be issued. In one case, a seller took out a permit to replace the roof. He never had the job done and the permit expired.

The new owners applied for a permit and were denied. They needed to pay to reopen the roof permit and complete the job before they could obtain a permit to do additional work on the house. This could add a considerable cost to your improvement budget.

You might be able to file a claim against the seller, depending on the circumstances. However, he may not have been aware of the expired permit if a previous seller took out the permit and your seller didn't check the permit record when he purchased the property.

HOUSE HUNTING TIP: Go to the city planning department before you remove your inspection contingency and find out if there are any open or expired permits. You might be able to negotiate an acceptable solution before closing. This would be less hassle and expense than taking legal action after closing.

A good home inspector should be able to point out any glaring building code violations in work done by previous owners. This could be an indication that the work was done without building permits.

For example, a recent homebuyer was informed by her inspector that the relatively new electrical circuit breaker box was installed in a fashion that would not pass a city building inspector's scrutiny. The box had several irregularities.

Further investigation revealed that the seller had recently added the circuit box. Although he used a licensed electrician, the work was done without a permit. The buyer hired an electrician to inspect the box and it turned out it needed to be replaced in order to meet code requirements.

The buyer made a request for a price concession from the seller to compensate for this new information discovered during inspections. He agreed to lower the price. The buyer took responsibility for replacing the box with permit after closing.

Sometimes homeowners bypass the permit process in order to save time and money. Busy contractors don't like to wait for inspectors and sometimes encourage sellers to forgo permits. If you're adding additional living space, don't even consider doing the work without permit.

Appraisers often won't give unpermitted additions full value as livable square feet. This could affect the sale price of the property. It's possible to take out permits after the work is done, but it will cost more in fees, and walls might have to be opened to make sure that any plumbing and electrical work was done correctly.

Don't assume that if work is done by a licensed contractor, it will meet local code requirements, particularly if the contractor is from out of the area and is not familiar with local code requirements. Taking out a permit can provide the homeowner with protection against code violations.

You can run up costs bringing the last owner's work up to code in order to receive final approval on work you're having done to the home. If a building inspector sees something at your home that isn't code-complying when he's inspecting, he's likely to require you to bring that work into compliance before giving final approval to your permit.

THE CLOSING: Play it safe; check the permit history.

Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide."

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