How unpermitted home projects could affect sale
Q: My wife and I own a single-family house in Chicago. Over the past 4 0 years we’ve had remodeling work done, especially in the basement, installing a bathroom, but without a permit. Now we’re thinking of selling but are worried the unpermitted work will cause legal problems during the sale. What should we do about it?
A:
You and your wife are among the many homeowners who decide to undertake work on their homes without building permits. Many municipalities require building permits for things that some homeowners would consider trivial or even inconsequential.
For example, some municipalities require permits for any kind of electrical work. Some require permits for replacing roofs, central air conditioning units, furnaces, installing or expanding outdoor patios, and even replacing plumbing fixtures.
The biggest issue with any work done in a home without a building permit is to determine if the work was done properly. Of course, if you didn’t get a permit and the work was done improperly by a tradesperson who didn’t know what they were doing, that would be bad for you and your buyer.
Many years ago, Sam noticed a neighbor several doors down tearing down a rear staircase and building a small sunroom attached to the home. Sam later learned from the homeowner that purchased the home that the neighbor was only renting the home and decided to put on the small addition on his own without getting a building permit. He also performed
the work improperly by failing to install footings for the addition. Basically, the tenant broke just about every rule there was in constructing that small addition.
We later found out that the new owners discovered these issues during their inspection, so they knew what they were getting into and were prepared.
Back to you. Here’s one risk we see: Your future buyer runs the risk that if the city, town or village you live in discovers the basement was finished without
permits, the buyer can be fined and required to get the property permits for the work that was done. If the work would not have been permitted then and would be illegal to do now, the municipality could force the buyers to tear out the work and restore the basement to its original condition that would comply with the city’s building code and ordinances. As an example, some homeowners finish off a basement to create a rentable space for tenants, however, in many
instances these basement renovations are illegal. For example, if your basement has a height of only 6 feet. You wouldn’t be allowed to create an apartment in that area, much less install a kitchen, bedroom and other living areas where the ceiling height was that low. In addition, municipal codes might require two exits in the basement and other requirements to make that area comply with building codes.
Finally, if you live in a zoning district that does not allow two family
homes, adding a second unit to your home might violate local zoning ordinances. Your buyer could get into a serious jam.
You mentioned that you installed a bathroom in the basement, so you should determine what you would need to do to make that installation comply with the building ordinances. If everything you did was according to the building and zoning ordinance and codes, and the only thing you didn’t do was get the building permit, talk to the local municipality. See if you can pay a small fine (if they’d even charge that) and get the permit now.
You can talk to a real estate attorney who knows your local municipality. If you choose not to move forward and clear this before listing your home, and a buyer wants to do a major upgrade to your home, it may not matter if you got the appropriate permits.
On the other hand, if the buyer is planning to do just a little work, they could get into trouble if a building inspector comes to the home and discovers that the home had improvements made that were not recorded with the building department.
You should know the terms in some contracts have boilerplate language that states that the seller performed all major work in the home with properly issued building permits. Other contracts will have the seller represent that all improvements that the seller made to the home are properly reflected in the real estate tax assessor’s office records. We doubt you could make these representations, and we don’t think you should lie to the buyers on the face of the contract.
We can’t just tell you to do nothing. Our advice is to seek some advice from someone local that you trust who can advise you of your options and what you’ll need to disclose to the buyers.
And, make sure that whatever disclosures you make to the buyer are truthful and accurate. Or, you could wind up writing to us with an entirely different problem after closing.