My Home Has Unpermitted Upgrades. Can I Transfer the Deed?

It’s a common situation. You did some DIY renovating. You didn’t realize you needed permits. Turns out, you did. Or perhaps the person who sold you the home was a DIY buff and did substantial upgrades without permission.

What now? How might unpermitted renovation work affect the title to the home? And will unpermitted work matter if and when you (or your heirs) decide to transfer your deed?

First, Was a Permit Really Necessary?

Sprucing-up work (putting in new flooring material or cabinets, for example) usually won’t require permitting. Small kitchen fixes, indoor painting, and routine HVAC and appliance maintenance generally need no permits.

More extensive work could need a permit. Examples are:

• Changing structural features or modifying load-bearing walls, windows, or entranceways.

• Converting a basement or garage into a living space.

• Enclosing a porch space.

• Building a shed, patio, or pergola. These upgrades could necessitate changes to your plot map and must be within setback limits.

• Working in or around public walkways, roads, lines, and pipes. These jobs can implicate street or building permits.

• Moving substantial amounts of soil, or grading or raising part of your yard.Permits are required in the interest of averting drainage issues that can impact the home and surrounding properties.

• Roof work, antenna or dish installations, or the installation of solar systems.

Working with electrical wiring needs a permit. Otherwise, your homeowner’s policy might reject a future claim, as your insurance agent might tell you. Look up the process for on-site inspections during and after modifications, and be prepared for these inspections.

The Most Often Overlooked Upgrades That Might Need Permits

Anything you do that involves safety or any modification that changes your property value, could implicate your local permit system. So, think about these factors when planning significant work.

Plumbing and electrical work are core examples. If you get a licensed plumber or electrician on the job, you’ll know it’ll be properly done. Plus, you’ll have records showing your repairs or upgrades are up to code. Your buyer’s agent will want to see these.

Working on a gas line is another core example. A licensed pro should be called to install any appliance that relies on gas heating. Not sure if it’s necessary? Contact the local building and licensing department.

People don’t always consider the legal implications of posts or fences. But you should check with your county or neighborhood association for necessary applications before creating your fence. Positioning is critical. Ideally, your fence will be placed just within your property. If you place a fence on the boundary line, both deed holders would apply. Check for any local aesthetic rules or survey requirements for posts or fences on or beside property boundaries.

And consider the steps a permit takes. With certain jobs, you’ll need an inspection by code enforcement during the job and again when the job is done.

How Will Unpermitted Work Affect Me as a Seller?

Unpermitted additions do not count in your property’s value. This is a shame, as a deed holder loses out on the extra value when it is time to sell.

What’s more, you might have trouble selling because your buyer’s mortgage falls through due to the unpermitted renovations.

Oh, and yes, you must inform potential buyers if you have reason to believe someone carried out unpermitted construction on your home. No wonder the best practice is to address this before you need to sell. If the work was unpermitted or not up to code, call licensed professionals for support. A structural engineer can inspect the issue and tell you what you’ll need to do. Contractors can tell you how they plan to carry out the permitting process.

All of this is essential deed protection—for you, and for future owners. Your buyer, the appraiser, and the inspectors will all need information on your home upgrades. They will check prior deeds, surveys, blueprints, and permit records to find modifications you or prior homeowners have made.

Lenders, underwriters, and insurers will all rely on these people to evaluate your home.

Can My Title Insurance Policy Cover Unpermitted Work?

Did you opt to purchase an owner’s title insurance policy when you bought or refinanced your home? If so, you have some protection with regard to title issues.

But whether your title insurance covers fixes for unpermitted construction could hinge on a little-known question. That is, did you purchase standard or extended title insurance?

Find out if title insurance can help. Call the title insurer. Explain your problem. Ask for guidance.

If you hold a deed for a unit in a homeowners association, check the rules before changing doors or windows, exterior walls, or roofs. Significant indoor work needs permission from the property management office.

Does the Job Need a Complete Do-Over? Or Are There Ways Around This?

There are good reasons for not leaving the home as-is. For one, any buyer is going to have to be willing to accept the home as-is. And at any time in the future, your local building authority can technically direct a deed holder to obtain permits for prior unpermitted work.

Fortunately, a “retroactive permit” for completed work is a thing. Note that your authorities could impose inspections and further requirements in any case. You might wind up taking out drywall or installing new wiring.

Sometimes, a complete do-over will be simpler than the workaround.

Can I Sue the Prior Owner for Not Saying Anything?

Did the seller’s listing or disclosures point out the unpermitted work?

If a seller didn’t disclose the work, and you can show they knew about it, you may have legal grounds to recover damages for misrepresentation or failure to disclose, or even breach of contract. Damages could involve the cost of getting the work done and permitted. Or you might be able to get reimbursed for the value your home lacks, which you believed you were paying for at the time of your purchase.

Real estate agents and inspectors could face responsibility. So could a contractor whose work is out of compliance. But you’ll have to demonstrate that the prior deed holder actually did the work or a contractor carried out an unauthorized job, or that the agent knew and didn’t disclose.

An experienced real estate attorney in your state can quickly assess the strength of your case. It will depend on your proof, the purchase disclosure language, and relevant regulations.  

Happy Renovating… With Permission!

As you can see, permitting is complicated. It is based on, and can change with, state, local, and corporate input. While we offer just a brief introduction here, we hope it has raised deed holders’ awareness.

We wish you the best on your next major home improvement plan. And if it looks like a permit is necessary, consider calling a pro to pull the permit and do the job according to code. If you plan to sell the home, be sure to have a permit for any renovations first.