Houses with unpermitted work are quite common in Los Angeles. There are many times homeowners do not obtain valid building permits before carrying out a major construction to save their money and/or avoid property taxes.
However, any conversions and additions done without necessary paperwork can not only incur fines and penalties and drive down the price of the house but also complicate the process of selling and buying it.
Fortunately, you do not have to knock down the entire unpermitted structure and start from scratch, as you can obtain a retroactive building permit. It, however, is a lengthy and time-consuming process that involves a lot of paperwork, waiting on approvals, modifications on structural plans, and costs a great deal of money.
Here is everything you should know about buying or selling a house with unpermitted construction.
Can You Sell a House with Unpermitted Addition/Conversion?
It can be difficult to sell a house with unpermitted addition/garage conversion, but not impossible. You have two choices when it comes to this;
Sell it As-Is for Cash
Many buyers walk away once they learn of unpermitted work in a house because of safety concerns and the time and costs involved in the process of getting it legalized.
If you are in a rush and do not want to deal with costly repairs and paperwork, your best bet is to sell your house as is to a real estate investor on a discount to compensate for the costs of work. Real estate investors buy the properties with unpermitted work, get it ractified before reselling them for a profit.
Get a Building Permit After the Fact
The other option is to legalize your unpermitted work and sell your house at its best market price.
You have two options to achieve that:
1) Remove the work done and restore your home to its original condition (In some Cases)
2) Obtain a retroactive permit for your unpermitted work
How to Obtain a Retroactive Permit for Your Unpermitted Construction?
To get your undocumented work permitted, you need to apply for inspection and seek permit approval from the building department. The building and safety department will conduct inspections and may ask for the removal of walls, ceilings, or floors to make sure the work is done correctly. They may also ask for necessary remedial work to bring any violations into compliance.
Here are the steps involved in the process of obtaining a retroactive building permit.
- Meet with the Planning Department
- Hire an Architect or Designer to Draw Plans
- Submit Documents for Design Review
- Schedule Initial Inspection
- Remedial Work & Final Inspection
The costs and time involved in getting your construction retroactively permitted may vary depending on the value of construction done.
Learn about the complete process of obtaining a retroactive permit for your unpermitted construction here.
What Happens if You Do Not Disclose Unpermitted Construction to the Buyer?
Once you know that unpermitted work was done on your house, and you choose to sell it as-is, you are legally obligated to disclose it to the potential buyers to avoid any legal repercussions.
Even if the work was done by a prior owner, once you closed the deal on a property, it is your responsibility to disclose it to the buyer.
If you sell it without disclosing the violations and legal action is taken against you by the eventual buyer, you will be held liable for it and not the previous owner.
Additionally, if the buyer suffers a personal injury or loss of property as a result of the unpermitted work, you will be held responsible for the damages.
Do Appraisers Report Unpermitted Construction to the Building Department?
An appraisal is conducted to determine the value of your house after you accept an offer. The appraiser evaluates the square footage and the overall condition of your home to make sure that everything was done in accordance with the law.
Although the appraisers can verify if building permits were pulled before construction, they typically do not do so. However, if they notice substantial upgrades in your house, they may ask if it was permitted. If they find that there is undocumented work, they will let the lender know about that.
It is pertinent to mention that appraisers are not building code inspectors, and it is not their responsibility to report unpermitted work to the building department. Their concern is with any undocumented work and determine if it affects the final appraisal.
Should You Walk Away from a House with Unpermitted Construction?
Though there are risks to accepting a house with unpermitted construction, you can sometimes secure a great deal.
If you are interested in buying such a house, you have two options;
Ask the Seller to Fix the Problem
You may ask the seller to disclose the unpermitted construction to the city and obtain a permit retroactively. It, however, is unlikely that the seller will go through an expensive and comprehensive remediation process.
Ratify Unpermitted Construction
You can accept the house as-is and ask for a steep discount to take on the additional risk and the liability to obtain a retroactive permit for the unpermitted construction.
What Happens if You Buy a House with Unpermitted Conversion /Addition?
Though you can purchase a house with unpermitted work for a significant discount, there are many risks associated with it that you must know before you make a final offer.
Here are some potential pitfalls of purchasing a house with undocumented construction;
You May Face Fines and Penalties
The building department has the authority to issue penalties and impose fines if they discover unpermitted work on your house. However, the authorities may be lenient with the deadlines to get your unpermitted work legalized and not charge penalties if you had no knowledge of the issue when the property was purchased and you voluntarily seek compliance.
The House Might Not Be Safe
Permits certify that work to be done meets the safety and reliability standards. The work that is done in violation of codes may lead to structural failure, fire hazards, and electrical issues that can result in personal injuries or property damage. A good home inspection is essential to ensure that the work done without permits is not detrimental to the structure of the property and dangerous for the occupants.
The House Can be Hard to Mortgage
It can be extremely difficult to get a mortgage loan on a house with unpermitted additions and conversions. If you do not disclose such work to the lender, but it is discovered later, they may ask for immediate loan repayment.
Undocumented Work Can Interfere with Insurance
Getting a house with unpermitted work insured is almost impossible. Insurance providers would not cover the undocumented work and any damages that occur to the property as a result or could drop the coverage of the house altogether.
Unpermitted Construction Can Increase Property Taxes
A construction that adds livable square footage can increase the assessed value of your house, which in turn could increase your property taxes when legalized.
Skipping necessary permits before performing construction on your house may help you save money and hassle for the time being but can have some long-lasting consequences down the line.
No matter if you did the unpermitted work yourself or discovered it after buying the home, bringing it up to the code sooner rather than later is in your best interest from both safety and financial perspectives.
Navigating the issues arising from unpermitted construction can be extremely complicated. It is therefore important to seek the assistance of professional permit experts who have a proven track record in dealing with unpermitted structures.
Let Us Formalize Your Unpermitted Construction
For years, we at CCS Inc have been helping the homeowners legalize their unpermitted constructions.
No matter what the nature and size of the unpermitted work you are looking to get retroactively permitted, we can work with you at each step of the way to bring it into compliance in the most economical way possible.
Reach out to us today at (323) 405-8909, and we will help you figure out the best solution for your situation.