How can I handle "unpermitted" work before selling my house?

Question

I had a question for you regarding our first deal and hopefully you can help us. We are from San Antonio, TX, we bought a home 1.5 years ago and we are currently living in it. We extended our kitchen into the garage and we added about 250 sq ft to the property. The problem is that we didn't get a construction permit because we didn't know it was that necessary. My step-father is an experienced contractor and he helped us on the construction, so it is not like we did a DIY project. We are getting ready to sell the house but how do we manage the "unpermitted" work we did? Can we list the property with extra 250 sq ft?

Michael Rice · Answer

@Cody Hyman depending on what work your neighbor did he may not have needed a permit. Changing the cabinets isnt a job that requires a permit or any kind of inspection. Im not 100% sure on the jacuzzi removal but Im pretty sure wouldnt require a permit either. You can check permit stuff out at the city website: http://www.sanantonio.gov/DSD/Online/Search

@Juan Mendoza You need to disclose that. Im pretty sure option 3 is illegal here in Texas because on your sellers disclosure, page 3 item #6 you would have to lie on the form..."Are you (Seller) aware of any of the following? Write Yes (Y) if you are aware, write No (N) if you are not aware. Room additions, structural modifications, or other alterations or repairs made without necessary permits or not in compliance with building codes in effect at that time"You might not be able to charge extra money for the addition but you should just chalk that up to lessons learned. Your step-father should have known better if he really is an experienced contractor. I have seen many properties here in SAT that had closed in garage done with out permit and they disclose them in the sellers disclosure then when it comes time to rent them people often list that as "bonus room" or "extra living room" things like that. Its not on the tax roll as extra space and they dont get to include it in the square footage when its being sold or rented out but people can decide for themselves if its worth extra..

Charlie MacPherson · Answer

I think that #3 is a recipe for:

- Reputation damage- Lawsuits- Sleepless nights

So I think your decision is between going to the building dept and trying to rectify things and just disclosing it.

My best guess is that if you disclose it in writing (you definitely need a paper trail, in case it comes back in the form of a lawsuit), most buyers will just shrug it off.  I don't think it will have much of an impact on the sale price.

It would be nice if you could find someone who has been in a similar situation with the current building inspector, just to get a read on how he will react.  Of course, there's a risk that your step-dad will be on the inspectors "naughty list".  You might not want to mention him if you go with Option 1.

Charlie MacPherson · Answer

Options:  (Assuming a permit - and probably multiple permits - were actually required)

1. Go to the building inspector and explain yourselves.  You might get a retroactive permit, which may or may not require tearing out some walls for inspection.  Or it may involve a complete demo of the upgrades.  That's the cleanest way, but entails some risk.

2. Disclose the un-permitted work in your MLS listing and have the buyers sign a disclosure stating that they understand that that the work was done without a permit.  That will make it hard for them to come back later and say that you didn't properly disclose.

3. Don't say anything to anybody - which is what you probably want to do.  Ignore it and hope nobody notices.

That's unethical and probably illegal too, depending on your state's laws.  It could come back to bite you many years later when a future owner tries to sell and a sharp title company notices that the square footage or garage stats on public record don't match the home.

I understand that you're newbies, but your step-dad really should have known better.

Garcia Santos · Answer

If you want to include it in getting a the house sold, I think you should explain it or somehow let the buyer know.

Brian J Cook · Answer

@Michael Rice--"Its not on the tax roll as extra space and they dont get to include it in the square footage when its being sold or rented out"Glad I read this post, I've learned something new today, thanks

"Its not on the tax roll as extra space and they dont get to include it in the square footage when its being sold or rented out"

Glad I read this post, I've learned something new today, thanks

Cody Hyman · Answer

on a side note, but slightly related, is the title company the only way to determine if a house being sold had upgrades done without permits?

I am talking to a neighbor of mine about selling his house to me & I have seen him doing work (tearing out jacuzzi tub, kitchen cabinets left by the trash can) and he is very anti-government, so it is doubtful he got permits.

Is there a way, through the due diligence or real estate agent, that I can see if a house had permits pulled?

As for the question at hand, I would go with option 3. You'll have a slimy feeling if you do and only if the work was sub-par. If the work was done to code, but no permit was pulled, I wouldn't feel too bad about it. Honest mistake.

Juan Mendoza · Answer

Thanks a lot @Charlie MacPherson. We definitely want to avoid a possible demo, so #1 is not an option. We are debating between #2 and #3. Do you think the cost of the house will decrease significantly if go disclose the un-permitted work?

How can I handle "unpermitted" work before selling my house?

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