Wednesday, May 30, 2012

Don't get stuck with a bill for $20K when it's time to sell


If you build it, they will come…
and that’s not always a good thing!

The weather is beautiful and you’re contemplating that screened porch or other project you’ve been wanting.  Stop; do not pass go or collect $200!  Lately I’ve been surprised to hear of several home owners who made renovations to their home – lovely renovations – but did not get permits.   Uh-oh!

If this happens, you can be stuck with a bill for many thousands of dollars when trying to sell or, worse, a home you can’t sell!  If you perform work that is not permitted, ultimately you will pay for it, so you might as well do it correctly from the get-go.  All the hard work that you thought would add value to your home could become a giant money pit.

What should you do?  First, sellers and buyers -- make sure you or your Realtor® check the status of permits on the home.  There may have been permits issued, the work done, but it was never inspected, so the permits are now expired and invalid.

Second:  do not assume your contractor knows what to do and will get the necessary permits.  Ask.  If they don’t know what to do, where to go, who to speak with, move on. 

Third:  Be sure to arrange for a final inspection after the work is completed.  This is a must in order to validate the permit.  Renewing a permit after it has expired is more costly.

Fourth:  Unpermitted work done that adds living space to a home cannot be counted as ‘livable’ square feet by lender appraisers, even if it is being used as such.  This means you will not be able to include that beautiful finished attic or basement.  Today, underwriters may require copies of permits for all work that adds square feet, in addition to what shows in the public record – that means Grandpa may have a heap o’ trouble on that sunroom he built in 1970! 

Fifth:  If you’ve followed all the rules, keep those permits in a safe place where you can find them.

Sixth:  Public records are not always accurate (shocking!).  For example, an addition that was done with permits may not show up on the public records.  This error needs to be corrected immediately.  Your real estate agent can help you with this.

Things the inspector is checking:  structural soundness, electrical systems, reliability of fire prevention and suppression systems, plumbing and mechanical systems, and energy efficiency and sustainability.

Takeaway: 
  • Before you swing that hammer, swing on over to your phone & call your town hall.  Who to speak with may vary from town to town, but the information is very easy to get by calling the main number. 
  • You can be sued for misrepresenting square footage – always err on the side of caution
  • If you are thinking of selling or making an offer on a home, make sure your agent discusses this with you.




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