Two months ago, I was speaking to a friend who told me that he just signed a contract to finish his basement. He described in detail how he planned to install the latest and greatest in LED lighting, audio visual system for his home theatre, add 2 bathrooms and 3 bedrooms, and finally, the jewel of his new basement was his man cave complete with a full wet bar, putting green, and pool table. He then gave me a punch in the arm and chuckled, “The best part is the contractors told me that I can save about $2,500 dollars and about a month of time if they just start the work now and don’t wait for the city to issue a permit.”
I immediately put my hands up and told him to stop, call his contractor, and pull the permits with the city. I then went on to explain why…
What is the Purpose of a Building Permit?
A building permit is the authorization by your city or county to construct, remodel, or to change the originally designed and approved structure of your property. The purpose of the permit is to review and ensure the safety of the work that has been completed so that it follows building and zoning codes. The best advice I can give, is if there is a question as to whether or not your project will require a permit, then call your city or county building department and ask.
Why Don’t People Pull Permits?
1. They don’t know they need a permit. Or maybe, they feel It’s better to ask forgiveness, than permission; which is definitely not the way to go in this situation.
Or perhaps, they think the following:
2. Cost – Why should I add a few hundred to a few thousand dollars more onto my project for something I will never see?
3. Time – Who wants to wait for the approval by the city/county, then for the inspection, etc. I just want to get my friend out here to help me get this drywall up and enjoy our new basement!
4. Paperwork – I don’t need actual plans to do my project – I know what I am doing, why does the city need to watch over me?
Now, the real reason homeowners do not pull permits…
5. Property Taxes – Increased finished square footage will most certainly increase the value of your property. “If the city/county doesn’t find out, then how can they assess the value of my home and raise my taxes?”
Inevitably, the city will find out, and yes, your taxes will still go up, if they don’t make you pull down the improvements at your expense for them to inspect.
What Are the Risks of Not Pulling Permits?
Insurance – if something goes wrong and there is damage caused by unpermitted work, your insurance coverage may be voidable. I have spoken to several agents while researching this article and all of them confirmed that when a claim is filed, the adjuster will look to see if any additions to the property were permitted and inspected.
When selling your home, the home inspector and appraiser may check permits and see that the work was not approved.
Buyer’s agents should always ask and verify to make sure that permits were pulled with a basement is finished or other major improvements have been added to the property.
Buyers want certified work and a safe home. If the work is not approved and was put together with duct tape, bailing wire, and bubble gum (I have actually seen this), then they will question what they are purchasing and walk away from the purchase or require a dramatic reduction in their offer price.
Neighbors talk – they know when renovations have been performed on a home. When the new homeowner finds out that a seller who claimed that all renovations were permitted on their seller’s disclosures, did not have permitted changes, they could contact an attorney and file a lawsuit against the seller.
You could get sued – and no one wants to deal with legal expenses and hearings that could have been handled with a little more time and a few hundred dollars more at the beginning of a project.
What Happens If You Don’t Have a Permit and the Work has Already Been Completed?
Although I have never experienced a scenario where the city or county has required a homeowner to tear down all their improvements to evaluate the work done behind the walls of a home improvement, this possibility does exist. This of course, would be the worst possible outcome, but as I mentioned previously, the bigger risk is that a buyer could come back years after a purchase and sue you if damages occur because of unpermitted work.
How Do I Get a Permit?
In today’s age of easy access to information, most cities or counties will have an application for a permit directly on their building and planning commission’s website. If not, a simple phone call will usually lead you to an application to fill out and for a small fee, submit to the building municipality. There is one item to remember after receive the permit – always call the inspector at the appropriate times to sign off on the work and keep a record of their visits – especially the final inspection so that you can make sure the final work is signed off, recorded and the certificate of occupancy is issued.
In conclusion, I spoke to my friend two days ago. He ended up requesting permits for his improvements and it did cost him $800 and delayed his construction by 3 weeks, however he told me that he was grateful that he went through the process because the inspector found an issue with the new electrical work that was not up to code. Nothing may have ever come as a result of this, but it did give him comfort that an issue could have arisen over his impatience and desire to save a few dollars. The same goes for you - get the permit and when you do go to sell your property, you will be happy that you took the extra time to give yourself the peace of mind that things were completed correctly.
I would love to hear your thoughts or have a discussion with you about anything real estate related in Utah County, Salt Lake County, Midway, or Heber City. Please reach out to me at (801) 885-2558 or by email at brandonrwood19@gmail.com.