Permits are important to both buyers and sellers

It can be a hassle to go through your local building department permit procedure when you make changes to your home. You or your contractor must apply for permits, pay fees and meet building inspectors to approve the work in progress. Sometimes there are complicating factors.

Recently, sellers of a home in the Oakland Hills, Calif. decided to have work done to avoid wood destroying pests before their home went on the market to make the property more appealing. The contractor applied for a permit and the plan for the repair work was approved by the city. City inspectors inspected the job twice while the work was being done. When a different inspector came out to give final approval, he refused to do so and required that more work be done.

Why should homeowners go through this aggravation and expense when they can do the work more quickly and save money by skipping permits? Even though the permit process doesn’t always work efficiently, there are good reasons to apply for permits for work that requires permits and to actually obtain those permits.

There is no guarantee that permitted work was done correctly. Inspectors are human and can make mistakes. A certain amount of subjectivity is involved. Two inspectors could have different opinions about how something should be done, as in the case above.

However, permitted work is more likely to meet building code requirements than is work done without permits.

A possible repercussion from unpermitted work is that the next time you or a future owner applies for a permit, the building department might require that unpermitted work be permitted retroactively.

This could result in penalty fees in addition to the permit fee. For example, if an inspector were to notice a new baths in an old house, he might require that the baths be put through the permit approval process before approving the permit on the current work being done. This could involve opening walls so that the plumbing can be inspected.

Permits that are applied for but never receive the final approval can be problematic. In this case, the next time someone applies for a permit on the property, the building department might deny the application until the open permit receives final approval. If the work wasn’t done correctly, it would need to be corrected to receive final approval.

HOUSE HUNTING TIP: It’s a good idea for buyers to check the permit record on a home they’re buying before making an offer or at least during the inspection-contingency time period. Make sure there aren’t any outstanding permits that need final approval. This way you have the opportunity to request that the owner get final approval, if this is an issue for you.

Also make sure that there are permits on record for substantial renovations. Lenders have tightened up on all aspects of their underwriting. Recently, they have cracked down on appraisals. As of May 1, 2009, many appraisers won’t give value for additions that add square footage but were done without permits.

It would make a huge difference in the appraised value of a home if 1,000 square feet was added without permits.

The appraised value could be substantially lower than the price the buyer agreed to pay. This could jeopardize the sale.

Sometimes the square footage represented in the public record is not accurate. Sellers should check into this before putting their home on the market.

If the public record doesn’t reflect additions that were done with permit, do what’s required to have the missing square feet added to the public record.

THE CLOSING: Sometimes all it takes is filling out a form, or having a building inspector measure the house for livable square feet.

Dian Hymer is a nationally syndicated real estate columnist and author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.

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