Purchasing a property with unpermitted work.

[Curt Bixel]

I am considering adding some properties to my rental portfolio.  From time to time, I run across a property for sale with significant recent unpermitted work.  I am curious about other's thoughts on this.  I do like the peace of mind that comes with the knowledge that the work has gone through the official permitting process, as this significantly improves the odds that is was done correctly and will not be a problem later.

I am wondering if it is a good idea or a bad idea to purchase a property with significant recent unpermitted work if I can get it for enough of a discount to have all the work inspected, fixed if necessary, and perhaps retroactively permitted.  I recognize that there are difficulties inspecting things that are behind drywall and the like.  With plumbing, I am of the thought that I can get a pretty good feel for the quality of the work by looking at what I can see, and then fix anything that shows up later.  

With electrical, I would suspect that the safest way to go would be to pull permits and do a whole house rewire, even if the wiring looks new.  I suspect it might be allowed for me to reuse most of the boxes, outlets, switches, and lights, but would likely have to replace all the wire that was pulled behind walls as well as the main panel.  

I am interested in feedback concerning legal aspects, insurance aspects, financial aspects, and anything else one might happen to have, and any idea for how to use the unpermitted work as a negotiating point on price.  

[Jonathan Pavkov]

Originally posted by @Curt Bixel:

I am considering adding some properties to my rental portfolio.  From time to time, I run across a property for sale with significant recent unpermitted work.  I am curious about other's thoughts on this.  I do like the peace of mind that comes with the knowledge that the work has gone through the official permitting process, as this significantly improves the odds that is was done correctly and will not be a problem later.

I am wondering if it is a good idea or a bad idea to purchase a property with significant recent unpermitted work if I can get it for enough of a discount to have all the work inspected, fixed if necessary, and perhaps retroactively permitted.  I recognize that there are difficulties inspecting things that are behind drywall and the like.  With plumbing, I am of the thought that I can get a pretty good feel for the quality of the work by looking at what I can see, and then fix anything that shows up later.  

With electrical, I would suspect that the safest way to go would be to pull permits and do a whole house rewire, even if the wiring looks new.  I suspect it might be allowed for me to reuse most of the boxes, outlets, switches, and lights, but would likely have to replace all the wire that was pulled behind walls as well as the main panel.  

I am interested in feedback concerning legal aspects, insurance aspects, financial aspects, and anything else one might happen to have, and any idea for how to use the unpermitted work as a negotiating point on price.  

I've purchased non-permitted work. I just have good insurance, plus an umbrella policy. Also - I permit work that I do, and if it's electrical or HVAC related, I just update w/ permit when purchasing. The seller is legally liable to fill out a disclosure form, so you should know what is / is not permitted.