The Town Broker

Building Permits Part 1: What To Know When Buying Or Selling A Home

Building permits are one of the most overlooked parts of many home improvement projects. Why? Because many homeowners don’t know when they’re needed, and some contractors don’t want to deal with them.  But when it comes time to buy or sell a home, the issue WILL come up. And when it does, hang on. It can be a rocky (and expensive) ride!!

When And Why Are Building Permits Needed?

Building permits are required to ensure that construction is safe and meets standard building code. But the problem is that there is never a single code that needs to be met. There are often national, regional and even local codes…which makes sense. Buildings in an earthquake prone region would have different requirements than those that are not, right? But the inspection process can slow things down. Towns often have a limited number of inspectors to do handle the workload. This causes contractors to slow down, which drives costs up. Sometimes, a shady contractor will offer a “discount price” if the homeowner agrees to do the job without permits. (This is a major red flag. RUN…don’t walk…to a more reputable professional).

For the “do-it-yourself crowd”, the best advice is to call your local building office before starting any job you’re not sure about. You probably need a permit if you plan to do something major like:

• Change the footprint of your home,
• Move a load bearing wall,
• Change the roof line,
• Add electrical wiring,
• Open the wall to add a door or window,
• Add or move a fixture that requires venting to the outside – like a sink, toilet or gas burning appliance.

You probably don’t need a permit if you’re doing something small like:

• Replace a faucet,
• Replace floor covering,
• Change countertops,
• Replace doors or windows without altering the structure.

But remember – everything about real estate is local…including the permit process. I needed to get a permit to have a security system installed in my Westfield home. Don’t assume that you know…call the town and find out for sure.

If you are trying to buy or sell a home that has not obtained the required permits for renovation work, expect the transaction to become complicated. Typically, the buyer will want an inspector to come out after the fact, and certify that the work was done properly. This often requires walls to be opened up, and fixtures to be removed. It can be a costly and time consuming process…paid for in most cases by the seller.

A seller can refuse to participate and attempt to sell the home “as-is”. But if the failure to obtain permits was not properly disclosed prior to the negotiation of the contract, the seller should expect the buyer to re-negotiate the price…or terminate the contract. If the buyer decides to walk away, the sellers find themselves in the unenviable position of having to disclose the lack of permits to all future buyers. This is NOT good for your marketing plan!

In Part 2 of this series, I’ll review some of the risks associated with not properly resolving permit issues, as well as a simple way for both buyers and sellers to protect themselves.

Tags: building permit, Home Improvements

This entry was posted on Saturday, August 28th, 2010 at 1:14 am and is filed under Buyers, Real Estate 101, Sellers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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