Bank requires signed permits and works plans for draw?

[Jesse Johnson]

*Please forgive any vagueness and/or misuse of terminology in the story below, as I am just the tech guy, and don't follow the financing or permit rules.  

An offshoot of our partnership has decided to try a few houses in Colorado(we're from Iowa), and has run into a major snag at the first one.   Because the home is in one of the partner's name, and the licensed contractor is his son, they decided to skip the permits(we assumed they had been getting them).    Now they are trying to draw from the bank, and the bank is asking for signed permits and work plans.  This comes as a surprise to everyone on our end, as apparently they've never encountered it before. 
Is this normal in Colorado, or likely just a policy of this bank?
Does anyone have any suggestions as to how we should proceed, hopefully in a way that doesn't include huge fines or undoing work?  (Aside from the obvious "get permits next time.")   It seems they work they've done is significant, though no additions.

Thanks for reading, and for any help.

[Frank Chin]

How this is handled is particular to your jurisdiction, and the procedures of the office issuing permits.

I'm in NYC, and it is possible to pull a permit after the work is down. Yes, there are fines, not bad, with the fine equal to the permit. I hired a consultant doing permits that's crafty enough to skip the fines, knowing how to file the permit. 

In one case, the work didn't have to be redone, but inspected. If it's up to code, it's no problem. If any plumbing work was done, and not inspected, the wall has to be opened up and then closed again. We had cases where it was the contractors fault not getting the permit, so the do over is not on us.

It also helps if contractors used pulled permits and knows the inspectors and inspection routine. I hired a new cheaper plumber to do work that failed inspection more than once. I had the permit transferred to my regular plumber who seems to be on friendly terms with all the inspectors in the county, Says he regularly pulls permits and have his jobs inspected. After I had the permit changed, the inspector came, told my plumber that the permit switch paperwork was incomplete, if it was someone else, would be rejected. The inspector came only because he noticed it was for my plumber, Cliff. Then the inspector and my plumber then spent the next half hour catching up on their recent vacations while doing the inspection. 

Yes, the cheaper plumber cost me more when it's all said and done.