If you’re a Silicon Valley homeowner, you will sometimes need to replace elements of your home, such as the roof or water heater, or do repairs or remodeling to keep the home functional, comfortable, and efficient. Kitchens and bathrooms need to be updated from time to time, and sometimes remodeled. These repairs and remodeling projects often (if not always) require permits and finals.

Will you apply and pay for the required permits and finals?

What difference does it make if you do or do not get them?

Will it matter when you sell your home?

If you’re a Silicon Valley homebuyer, the whole idea of buying a home without all the necessary permits is a bit spooky.  My buyer clients often hear or read something like “garage conversion done – permits unknown” or “kitchen remodel done by contractor but without permits”.  They worry about the consequences of buying homes with non-permitted work, so let’s talk about the issues involved.

What is the risk in having non-permitted, non-finalled work done in a home (for both buyer and seller)?

Having non permitted work is risky for a few reasons.

One of the biggest risks is safety.  Although there’s no guaranttee that work with permits and finals was done properly, the odds that the work is properly and safely done are improved that this is the case with a second set of eyes and an official standard at hand.  Non-permitted work is lacking the checks and balances that having a city, town, or county inspector invovled provides.

Another big risk is that the insurance may not cover a claim if damage was caused by non-permitted work.  For instance, let’s say you had some electrical work done that wasn’t permitted, and a fire was later caused by faulty wiring.  Your insurance company may not pay out on your policy if the cause was something non-permitted, non-finalled.

What about resale?  Other issues with non-permitted work involve  selling the home later. Buyers can get spooked by non-permitted work, and this can pull the price down (it’s a bit of a stigma).  Appraisers and realty professionals typically will not value non-permitted remodels as highly as remodeling done with all the required documentation – this can be a huge problem.  Some appraisers will count a remodeled kitchen as worth ZERO dollars if there are no permits and finals.  (That’s extreme.)   More typically, non-permitted remodeling may count at half the value of a properly documented job. Lastly, not to be underestimated in the current climate, there are  lender concerns (they may not fund if there’s a worry about the home, legal square footage, or value of improvements).  FHA appraisals and loans have very stringent standards so this could be a problemmatic area.

Why would a homeowner NOT get permits and finals?  Sometimes property owners skip the paperwork and “hoops” because they are ignorant and do not know any better. It is not always intuitively obvious when something needs a permit, and requirements vary from place to place. Sometimes they want to just do a job themselves (this is not uncommon with electrical engineers here in Silicon Valley doing a little wiring of this or that in their homes) or feel it’s just another cost and don’t want to bother.

Also it is not unusual for contractors to quote two prices: one if the seller has the contractor deal with permits and finals, and a different, lower price if that element of the project is skipped.  Tight on money? (Who isn’t, these days?) That’s a place someone might elect to cut a corner. So economics sometimes plays a role in the choice.

What about the government? In terms of city, town, or county government, usually there’s not a threat that non-permitted work will be removed,  but there’s no guarantee of that in terms of room additions or home expansion. Sometimes other work may be done that requires a permit, and perhaps the inspector won’t “final” that until everything is in compliance. Early in my real estate career I had a listing with an illegal addition and that room had to be removed before we could close escrow.

How hard is it to fix non-permitted work later?  Truthfully, it varies. Sometimes it’s simply a matter of paying a few dollars more. Other times, though, the code may have changed and you’ll get stuck ripping out what would have been ok when the work was done but forced now to bring it up to “current code”.  It is a whole lot easier, and cheaper in the long run, to simply do it right the first time.

Any other words of advice with permit paperwork in Santa Clara County? Yes: if you do the work and get it “signed off”, KEEP A COPY IN A SAFE PLACE. Government offices, like any office, sometimes misfile, lose, or accidentally destroy critically important information. Do not, under any circumstances, rely on someone or some office to keep accurate records on your behalf.  If you cannot later prove that you did the work with permits and finals, you’ll be at a major disadvantage. Keep copies in a safe place!

Related articles:
Building Permits Are Online and Easy to View in San Jose
Monte Sereno Building Permit Nightmare (on my Live in Los Gatos blog)