The Town Broker

Building Permits Part 2: The High Cost Of Doing It Wrong

In Part 1 of “Building Permits”, we reviewed when you might and might not need a building permit for a home improvement project. We learned that failing to obtain the proper building permits can complicate a real estate deal down the line, and can potentially cost the seller a lot of money. But who should be responsible for pulling the permit? And when you’re buying or selling a home, who should check?

Whoever Pulls The Building Permit Takes Responsibility

In most of the country, a homeowner can legally do most home improvement projects on their own (check in your local area). According to Jan Burchett, Executive Director of the National Association of the Remodeling Industry, it’s a good idea to have your contractor pull the building permit. While you might need to pay a little more for their time to do this, it’s worth it. “In most jurisdictions” says Burchette “the person obtaining the permit is considered to be the contractor and therefore the one liable if the work does not comply with building code.”  

Translation: If the job was done wrong, the homeowner will  be held responsible for correcting the problem…NOT the contractor! How many homeowners are prepared to take this on?

And here’s something I bet you didn’t know: If a home renovation project is done without the required building permits, you may inadvertantly VOID coverage for claims under your homeowner’s insurance policy. This issue alone makes the cost of the permit look more appealing, don’ you think?

So when you’re buying a home, how can you tell if the proper permits are in place?

One way to check this out is to review the Seller’s Disclosure Form. It asks whether the proper permits were obtained for a variety of jobs. If the homeowner answers “no”, then be careful. I’m NOT suggesting that the workmanship will always be poor and there is a safety risk.  But I AM saying is that without having an inspector come and check it out, you won’t know for sure. And we already know how complicated and costly that can be!

Another way is to check the home’s Property Card. The local building department maintains a record of permits obtained on every property in town. It is often referred to the “property card” for the home.

One of the most important tasks that a real estate agent can provide (and unfortunately, one that most fail to do) is to get a copy of it for their client. It’s a public record, and is available to anyone. (Here is a copy of a property card that I pulled for a buyer client last week. The identifying information was blacked out, since this is still an active contract)

By reviewing this card, you’ll see which jobs had permits pulled, and which ones didn’t. I can’t tell you how many times I find finished basements or additional bathrooms in a home that the town has no record of. Not only does this raise a safety concern, it also means that when the town catches on, the assessed value of the home could increase…sometimes significantly. And that means the property taxes will too!!

You should also find out if all open permits are CLOSED. I once represented a buyer in a sale where the contractor got all the permits, but never had the inspector come out to sign off that the job was finished.  The job was a large addition, and when the homeowner found out that the permits were still open (10 year later) the builder was out of business!! In the end, the homeowner had to escrow $60,000 at closing until everything could be resolved. What a mess!!

So to me, the takeaway here is simple: Don’t do a home renovation project without getting the required permits. And if they’re not in place, take care of the issue BEFORE the house goes on the market. Believe me, you’ll be glad you did!!

Tags: building permit, Home Improvements, property card