Permits are a subject that comes up fairly often in my business. Buyers want to know if work on a house was permitted, and sellers want to know if they need to take out a permit. I am not an expert on the permitting process, when they are and are not needed, nor the exact specifics of permits, but I can tell you what I have seen and learned in 28 years of doing this.
Question #1, was the work permitted? Public records are pretty easy to research, both on line and with a personal visit to the local planning department. When you are buying a home and you have this sort of a question, do some research and find out. The owner of the home may have knowledge and they are specifically asked this question on the property disclosure statement. So the seller may know. But it’s also possible that work done pre-dates this owner’s knowledge of the home. So if they have no clue, you should still do your own research.
Should you buy a house where work was not permitted? That depends. How extensive was the work? Were structural changes made or was the electric or plumbing involved? If these were a part of the remodel then you should care if it was permitted. A good home inspector can tell you their opinion of how the work was done. It is also possible that a bank appraiser could find the house suspicious and ask for evidence of permitting, but that is not likely unless it is a total nightmare. What it will more likely come down to is do you accept the fact that work was not permitted and do you still want the property enough to buy it anyway.
I would caution you that it could have an impact on a home owner insurance claim. If the defective remodeling is the source of a house fire, I think it could be possible that it could become a claim issue.
Question #2, do you need to get a permit? I think it varies from jurisdiction to jurisdiction. So what Lake Oswego requires may not be the same as what West Linn requires. I go back to what I stated above. If it is structural, or involves plumbing or electricals, yes, you probably need a permit. I also think it is better to error on the side of caution. I am aware of a very nice home near Lake Oswego High School that had a beautiful bedroom suite addition put onto the house and none of it was permitted. That seller had so much trouble with sales falling through because of this that they took the house off of the market and went back to obtain permits before putting the house back on the market again with the problem solved. So permitting will, in my opinion, make selling your home easier and likely for a higher price.
Now I’m going to share two specific examples of permitting that should have been done and was not.
I sold a house years ago that had a shed built onto the back of the garage. It had a concrete foundation and a composition roof, but no plumbing and no electric. The home owner had built it without permits. We simply disclosed the lack of permits and the house sold easily with no impact on the price. But this was a really low-impact addition that pretty much was for housing a lawn mower. Just not a big deal.
I have also sold a house that had an entire apartment built into what had previously been a tall crawls space of a house on a hillside. This apartment had a separate entry, a full kitchen, and a full bathroom. It was done with zero permits. I contacted the permitting department of the city the house was located in, West Linn, and came clean with a planner. He told me that the city is aware that people do this and that the city did not have the resources to go after people when this happens. The way that the home owner and I handled this is that we did not give any value to the apartment when we priced the house. We then did full disclosure to the buyer who bought it. It was clearly explained in the seller’s property disclosure statement. We were able to find a buyer who accepted this and the house sold with no issues. So lack of permits did not prevent the sale of a house, but it did have an impact on the value because the house was sold without including the value that the apartment would have had if it had been permitted.
So that’s my take on permits. Please let me know if you have any questions,