Renting out units with unpermitted work?

[Brandon Hill]

I bought a major fixer-upper in Chicago a few years back. I completed the rehab in 2021. I got it all done without a permit including electrical, plumbing, HVAC. 

Okay. I know. I know. What I did was not exactly best practice but at the time I just couldn't tolerate the city getting involved, slowing everything down while getting rich off my investments. It's like every year there's new regulations and codes especially here in this corrupted city. Like if the tax hike wasn't enough, they use the codes violations to fatten up their pockets.

During my entire renovation I avoided by all means the city's attention. They would've made me hire an architect, a structural engineer and everyone up and down the ladder with certifications hanging from their office walls, and obviously, I would have never been able to complete my rehab.

So I get that that wasn't exactly legal but I'm confident that everything is up to code. I hired some knowledgeable guys to do the heavy intervention stuff (electric, putting in windows, etc.). 

I've been renting out 2 of the units now 3. None of them have asked me about permits so I have a don't ask, don't tell personal policy. No issues so far but I was wondering what kinds of issues could come up in the future. One of my buddies had a similar set up but he got into a dispute with the tenant about a code violation, the tenant discovered the lack of permits and is threatening to go to the city. If that happens to me, what are the consequences? I think my case might be different because, like I said, I'm sure that I did everything up to code. Also, am I legally obligated to disclose to tenants the permit status of the building? They could look it up but I'd rather not steer them that way if I don't have to. Like I said, all the work is safe and up to standard anyway.

[Andy Sabisch]

I can sympathize with your challenges with the city.  We lived in a town just outside Detroit a few years ago and the permitting process got so frustrating that we sold our primary residence and other properties and moved 5 miles outside of town and found the county process way easier and less restrictive in terms of what they wanted and what they actually knew if they showed up.  Most of the time we paid the fee, they issued the permit and when we asked about getting the inspection, they asked if the work was done to code and if so, proceed . . in other words, simply pay the fees and we will come by if the coffee pot is empty.  The county was 180 degrees apart.  They were helpful, worked with us not against us and supported our schedule . . . projects went smoothly and far less frustrating.

With that being said, if you have done work that bypassed permits, you have two potential liability areas.  The first is if there is a problem and the city finds that the work was done without permits . . . you may find your insurance will not pay off leaving you open to liability claims.  The other is if and when you sell and the buyer finds that work was done without permits resulting in the same problems.  It sounds like you are willing to roll the dice but keep the downsides on your next project . . . and assess if Chicago is the right location for your renos.