Selling Your House with Unpermitted Additions

by Marianna E Perez 05/24/2020

Image by Sue Smith from Shutterstock

House owners frequently remodel, upgrade, or otherwise make changes in their homes for which they do not secure a permit. While some changes do not require permitting, others do. The challenge comes when you attempt to sell the home. You may run into a problem when a buyer makes an offer on such a property, and their inspector discovers unpermitted changes. Their mortgage lender may be unwilling to give them a loan until you remedy the permit issue.

Additionally, since building codes often change from year to year and certainly from decade to decade, and the property may have changed hands more than once before it came to you. Even if the upgrade occurred before you purchased it, you might be the one responsible for fixing it with your municipality.

What can you do? When you believe your home has unpermitted construction, learn as much as you can about it:

  • When did installation take place? Before you took ownership of the house? After? 

  • What is the construction? A pergola? A sunroom? That necessary second bathroom?

  • In the year or era of construction, was a permit required? Is there a permit in place of which you're not aware?

  • Can it be grandfathered?

What is “Grandfathering”?

The term “grandfather clause” refers to an exception to a code, restriction, or legal requirement. It allows anything already done legally “at the time” to continue even if a new limitation would not allow it. Regarding unpermitted home upgrades, if the construction was before the change in the code, check to see if the code requires retroactive compliance. In that case, exceptions typically pose a danger to anyone living in the home or on the property and need remediation. When code changes do not require retroactive compliance, knowing the date of the construction puts you in the clear.

Retroactive Permitting

When you discover retrofits, additions, upgrades, or renovations in your home, search city or county records for a permit. Ask for help to see if that type of work in the year(s) of its completion required one. If it needed a permit, and you do not find one in place, either request a retroactive authorization or plan to sell your home "as is" to a willing buyer. Municipalities often have methods in place to offer retroactive permits. Check to determine the total cost of the permitting process. In addition to the permit fee, you may have to pay fines, inspections, and other fees. Any modifications required because of the permitting process become your responsibility. When the total cost of obtaining retroactive permits and related fees and construction costs is higher than the return on your investment, consider the “as is” process.

Selling Your Home "As Is"

When you choose to sell your property "as is," you no longer need to disclose to the municipal building department that you may have unpermitted construction. Until you are sure you want to request a retroactive permit, do not disclose information when you communicate with building code offices that might trigger an inspection. 

In the selling process, however, fully disclose to your real estate agent all items you know about for certain. That is, tell them about additions or upgrades you installed while in ownership. Make sure a sale is not delayed or falls through because a lender requires a permit. Have an appropriate "as is" clause written into the sales contract. 

Confer with your real estate agent to determine if seeking a permit is in your best interested when selling with unpermitted additions.

About the Author
Author

Marianna E Perez

Marianna E. Perez is a Real Estate professional with over 20 years of experience. A lifelong resident of South Florida, she keeps her finger on the pulse of the latest trends and movements in the real estate market. She offers clients top-notch guidance from start to finish, ensuring the entire process is seamless, efficient and rewarding. Prior to entering real estate, Marianna was Senior Vice President of Commercial Real Estate Banking at City National Bank of Florida. She provided strategic leadership facilitating profitable and efficient origination of real estate loans. Marianna was a trusted advisor to clients and to the bank growing a real estate portfolio to over $300 million. She is firmly committed to the philosophy “not quantity, but quality,” which she practices in both her personal and professional life. Marianna is a graduate of FIU where she earned a bachelor’s degree in business management. She is a member of the Miami Association of Realtors, a lifetime board member of the BASF (Builders Association of South Florida), a member of CREW (Commercial Real Estate Women), and ICSC (International Council of Shopping Centers). She is also involved with the Women’s Leadership Council (United Way TNC). In addition, Marianna has received these special industry accolades: Housing Hall of Fame inductee 2017 Builders Association of South Florida, Associate of the Year 2017 Builders Association of South Florida, Florida’s Best Awards Chair 2016 and 2004 Builders Association of South Florida, Vice President 2008 Builders Association of South Florida, President’s Award 2008 and 2003