In an earlier post we addressed California disclosure law concerning modifications made to 1-4 family residential properties. It is not uncommon that properties have been modified without a required permit, and it is important to understand the implications when purchasing such property.
The purchase contract in use locally states that the buyer takes on responsibility for work done without permit. For some modifications a buyer may be willing to assume this risk, for instance, if a water heater was replaced by the seller without the required permit. Other modifications, such as a room addition, may be more problematic for a buyer. Risks include:
- Restoration of the property to its prior condition
- Appraiser’s unwillingness to give value for the modification which could preclude the buyer from obtaining sufficient financing in order to purchase
- Insurance company limitations
The existence of a permit means that the proposed improvement and the drawings and specifications were approved by the local jurisdiction. Just as important as securing the permit is verifying that the actual construction conformed to these specifications. This verification is obtained through progress inspections and the final sign-off by the jurisdiction’s building inspector.
Each type of improvement is different and the progress inspections vary accordingly. For instance when adding a room to a home, the building inspector must check the foundation or slab (the prep work) prior to the pouring of concrete, or when re-roofing there is a progress inspection after the old roof is removed prior to installing new materials. The inspector’s review will be noted by initialing the “job card” (the copy of the permit on-site), or by notes indicating what must be corrected prior to scheduling the next construction review. The progressive sign-offs and the final signature are evidence that the completed improvement complied with the standards in effect at the time of construction.
Prudent buyers should carefully evaluate the seller’s disclosures and consult with qualified professionals including the city or county building and planning personnel to fully understand the implications of proceeding with the purchase.
As noted in our earlier post, Realtors are not qualified to evaluate these technical records. However, as a service to our buyer clients, we help them evaluate the home and formulate questions and we offer to accompany them to the local building and planning departments where we have forged helpful relationships over the year of working in the community.
We understand that each situation is unique and each buyer has a different risk tolerance. Our role in serving our buyer clients is to help them obtain the information they need and to put them in touch with knowledgeable professionals so that they can make an informed decision.
In our next post we will share some of our real estate stories about missing permits.