Homebuyers have options when it comes to unpermitted work
The home seller never got permits pulled for work he had done on the home, and now he is threatening to sue you if you back out of the contract. What are your options?
This seemingly cavalier seller has absolutely no leverage unless you have contractually agreed to buy his house. Even so, if it was your party that discovered the unpermitted work — because the owner didn’t disclose it, as required by law — that is a clear violation of the contract and an out for you, regardless of whether or not he sells as-is.
Buyer assumes liability
First, realize that buying a home with unpermitted work passes on the legal liability to you. But should this seller offer enough credits to compensate for his oversight, making you want to proceed again, be sure to ask your inspector or a qualified building professional if the illegal work conforms to code standards. If so, you can probably get the city to approve it as built.
But this may still cost you back permit fees and maybe even a modest fine. While most cities won’t force owners to tear down work, unless it’s dangerous, yours may require some potentially costly modifications to conform to 2016 standards, not the standards in the year the house was completed.
Consider legalizing
unpermitted work
It is true that in some heated buying markets, it can cost buyers less to legalize unpermitted work than to purchase and fix up a needs-some-work rehab, or to pony up for a pricier, permitted house of the same size.
Those considerations aside, you’re probably better off moving on to other options because of the risks you’d otherwise be assuming. Also, know that such stealth improvements, when finally brought above board, may raise the home’s assessed (taxable) value, especially if there was an addition. If there was one, you also may be assessed for back taxes on the added square footage. Plus, you, as a buyer, may have trouble qualifying for Federal Housing Administration financing if the bank suspects substandard living conditions.
