Newbie mistake - risks associated with installing unpermitted bathroom?

[Laura Winegardner]

Hello! Newbie here - 2 weeks into my first property, I plan to house hack short-term rental (live in basement, rent main house) in Nashville. I'm doing some improvements before listing on Airbnb, including installing a small half bath in the attic bedroom. I didn't do my due diligence to learn about permitting before my contractor started work.  I'm now hearing an unpermitted bathroom could cause issues with insurance claims, city fines, and resale. Oof. 

Some tell me it's not a big deal and everyone does it. Others say I definitely need a permit before proceeding. The space will not have head clearance to meet code (only 6' 4" like the bedroom) so my options are to cancel the project or proceed unpermitted. What would you do?