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A home that has had substantial improvements without permits can be a huge headache for a subsequent buyer
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A home that has had substantial improvements without permits can be a huge headache for a subsequent buyer

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Q: I saw your recent column about buying a home that might not have all of the required permits for work done. You left out one calamity that can happen if you don’t ensure a proper permit was obtained.

You, the new homeowner, can be responsible for work done without a permit including tearing down the work. It happened to us 15 years after we moved in. The county sued us, insurance did not pay anything, and it cost us a fortune for remedial work and attorney’s fees.

A: You are correct, of course; and what a lousy way to learn that lesson.

A home that has had substantial improvements without permits can be a huge headache for a subsequent buyer. We guess that a prior owner of your home must have built an addition to the home, without filing for the necessary permits. It’s quite unfortunate that you didn’t know about that and that it’s been so costly for you.

Not all homebuyers will face the same sort of issues. Those who purchase condominium units and other common ownership associations are likely to be spared because it’s unlikely that a homeowner would have the ability to make a change to the unit without someone noticing — and requiring permits and other permissions.

Condo or co-op owners can put in new kitchens, bathrooms and do other work within their properties, but they are unlikely to add another floor to their unit or punch out an addition to the back of their homes.

When you buy a newly constructed home or a home that was built during the last 20 or so years, you’re not likely to encounter a hidden problem on that level. If someone has made a significant change to the home, like adding on a room or renovating the kitchen, it’ll likely be evident.

Homebuyers shouldn’t leave anything to chance. While most buyers don’t get that far in their due diligence of their homes, ask to see the building permits and any certificates of occupancy issued by the local municipality.

It’s not always easy to get copies of building permits and certificates of occupancy from local municipalities. Frequently, you must be there in person (designed for a pre-COVID-19 world, we’re afraid) to get the documents; and many times, you must wait hours or days to get the information. So, think about what other information is out there that could give you some insight into possible red flags.

In some places, the answer is the real estate tax bill. The real estate taxes on a home are generally based on the size of the lot, the size of the home, the number of bedrooms and bathrooms, whether a home has a finished basement and attic, and whether the home has an attached or detached garage. All of these elements are factored into the value of the home for real estate tax purposes.

So, the first red flag is whether the real estate tax bill is too low for the home you are buying. When homeowners take out building permits, that information is used to update the property’s tax information. If you suspect that the taxes are too low, you can use the website for your local county or real estate tax office to look up the property’s tax information.

When you go to the website and see that the home is listed as a three-bedroom, one bathroom home with no garage but the home you’ve toured is a four-bedroom, three-bathroom home with a two-car garage, the prior owner likely did not get permits for the additions to the home. At this point, you’d want to request copies of the permits before moving forward with the purchase of the home.

You might also ask your agent. One of the best reasons to work with an agent who has deep experience in and knowledge of the local housing market is that they are usually quite familiar with all of the homes — and have often seen them turnover more than once in their careers. Good agents know about problem houses right off the bat and may be able to give you a heads up if a listing description doesn’t match their own housing knowledge.

Unfortunately, simply asking the seller to confirm that they obtained the permits isn’t good enough. As you found out 15 years later, the seller could have told you that they got the permits (a lie) but it’s been so long you might not find the seller or the statute of limitations might have expired.

While you might not know about building permits from a home inspection, the home inspector might be savvy enough to alert you to large improvements that have been made to the home in recent years. That same home inspector may also put in his report that you should ask about permits for work done. That would be your cue to research more into that issue.

We don’t mean to scare all homebuyers into running down to your local department of building looking for building permits and certificates of inspection. If you’re buying a home on a street of identical homes with similar amenities, you probably have little to worry about. If you are buying a home in an area that has varying types of homes but all of the homes seem to be similarly situated on their lots and the different improvements to those homes appear similar to all others, you might be safe.

But as you’ve discovered, some municipalities will not allow you to keep certain non-conformities: a third floor where the maximum height only allows two stories; a structure that is either too close to the street or too close to a neighbor’s yard; a home that is too large for the lot (if the zoning allows a maximum of 3,200-square-foot homes, a home larger than that will be a problem); a home with multiple residences or apartments where only one is permitted; a shingle roof where clay tiles are required; or a 6-foot fence where fence height is limited or fences are not allowed, etc.

While you can hope that good faith prevails in real estate transactions, it all boils down to caveat emptor, or buyer beware. We’re sorry your home purchase has caused so much unexpected pain and expense.

(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)

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