Non - permitted work, what are my risks?

Question

Hi All,

I recently put an offer on a home in the Greater Boston area and found out that there's work done in the basement which did not have a permit (in law with bathroom and kitchen).  Makes me a bit uneasy and have heard conflicting things like "everyone does it" to "town could ask you to rip everything down and fine you."  Has anyone had this experience in the Greater Boston area? I believe town regulations differ but would love some feedback.

Thanks!

Jim Goebel · Answer

@Zarah Castro

Well, you hit the nail on the head with the town regulations differ.  If you could find someone, better yet, multiple locals who have had the experience to share their perspective, that'd be best.  At least here we've bought at least 20-30% of properties that had a significant change (plus or minus a bedroom or bathroom for instance) that wasn't run through the system.

My take is that the answer is it depends.  In a buyers' shoes, it depends on if the work was done right and will work well.  Can you at least get some information that would help you answer that?  If you can, and there's track record and credibility there, it wouldn't reduce my perception of value much.

Jason Turgeon · Answer

Hi Zarah,

I agree with @Mark Terry. If the illegal basement unit is just a bonus and you can live without it and still have a deal, don't worry about it. If the deal hinges on you renting out that basement unit, then walk away from the deal.

Often I have seen that the town will make you pull out the kitchen (usually this means removing the stove) and possibly pull permits to get the remaining work inspected. Of course if the work wasn't done well, this can mean hiring people to come back in and fix all the mistakes. Since you can't say for sure what will happen, you should plan for the worst case scenario (fully demo the illegal unit).

Dan K. · Answer

Hi @Zarah Castro, welcome to BP.

I know you're looking for a short and simple answer, but unfortunately what's you've heard is correct -- you might need to mostly rip it out, it could be fine, or it could be grandfathered.

When it comes to basements, there are specific concerns regarding egress. You must have some sort of secondary egress if there is a living quarters -- either a door or an egress window.

There is pretty standard wording in P&S agreements that all work has been properly permitted.

If this is a rental property and the basement is rented out as a separate unit I would encourage you to be cautious. Towns and cities in the Boston area tend to have a high level of scrutiny when it comes to basement rentals. There is a long history of people creating "illegal" basement apartments. Boston and other municipalities have been updating their zoning regs regarding basement units, but because of flood, fire, carbon monoxide, and egress issues, there are many potential pitfalls.

Jason Turgeon · Answer

I wouldn't worry about putting the sellers at risk. They're the ones trying to pawn off an illegal, unpermitted basement apartment on you, and they are the ones who made an offer on another house without having a clear plan to unload their current property. None of that is your problem.

Typically the town will only act if they find out about the violation. It's unclear to me what would trigger them finding out about it in the sale process. However, your bank will be more likely to care about the legality of the additional unit. They are the ones you need to keep happy. If the property is being financed as a SFH, they will want only 1 kitchen. If it is financed as a multi, they will want legal units to support the rents that you are planning on collecting to pay the mortgage. Was the extra unit accounted for in the listing and does the bank plan on lending based on it being there?

BTW, you should have a buyer's agent and an attorney at this point in the deal. These are questions that should really be directed to the professionals on your team.

Zarah Castro · Answer

Thanks for the feedback, this is really appreciated ! @Mark Terry @Jason Turgeon I would think that consulting with the town’s building department before agreeing to move forward would be ideal, but I don’t want to put the current owners @risk.  I thought about asking the sellers to require obtaining permits before closing but have not posed that yet.  Sellers have their new house to close on so they want a fast close.

Mark Terry · Answer

Hi Zarah!

Another big concern to consider is the resale. If you are buying this house with this as a feature you need to make sure that is legal with the town as if you try to go resell it a new buyer would have the same concerns. Therefore if the value is there and the apartment is a bonus then I wouldn’t sweat it. If you are counting on it then you should meet with the building department to review status and see if it can be approved. I have owner multis and in laws before and followed these steps. Good luck

Jill F. · Answer

Not in Boston, but out here in the midwestern hinterlands, in places where there is no point-of-sale inspection, things tend to be a lot more lax. No one is keeping track of who did what, when, especially in older homes that have had many owners and/or tenants. If there is a point-of-sale inspection, you're way more likely to have problems with un-permitted work.

Non - permitted work, what are my risks?

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