Selling a Home with Unpermited Work: Seek advice on your options and what you’ll need to disclose to the buyers.

By Ilyce Glink and Samuel J. Tamkin

What to do About Unpermitted Work when Selling

Q: My wife and I own a single family house in Chicago. Over the past 40 years we’ve had remodeling work done, especially in the basement installing a bathroom, but without a permit. Now we’re thinking of selling but are worried the unpermitted work will cause any legal problems during the sale. What should we do about it? 

A: You and your wife are among the many, many homeowners who decide to undertake work on their homes without building permits. Many municipalities require building permits for things that some homeowners would consider trivial or even inconsequential. 

For example, some municipalities require permits for any kind of electrical work. Some require permits for replacing roofs, central air conditioning units, furnaces, installing or expanding outdoor patios, and even replacing plumbing fixtures.

Was Remodeling Work Done Properly

The biggest issue with any work done in a home without a building permit is to determine if the work was done properly. Of course, if you didn’t get a permit. And the work was done improperly by a tradesperson who didn’t know what they were doing. That would be bad for you and your buyer.

Many years ago, Sam noticed a neighbor several doors down tearing down a rear staircase. And building a small sunroom attached to the home. Sam later learned from the homeowner that purchased the home that the neighbor was only renting the home and decided to put on the small addition on his own without getting a building permit. He also performed the work improperly by failing to install footings for the addition. Basically, the tenant broke just about every rule there was in constructing that small addition.

We later found out that the new owners discovered these issues during their inspection. So they knew what they were getting into and were prepared.

Unpermitted Work can Lead to Fines or Remove Work

Back to you. Here’s one risk we see. Your future buyer runs the risk that if the city, town or village you live in discovers the basement was finished without permits. The buyer can be fined and required to get the property permits for the work that was done. If the work would not have been permitted then and would be illegal to do now. The municipality could force the buyers to tear out the work and restore the basement to its original condition. That would comply with the city’s building code and ordinances.

As an example, some homeowners finish off a basement to create a rentable space for tenants. However, in many instances these basement renovations are illegal. For example, if your basement has a height of only six feet. You are not allowed to create an apartment in that area, much less install a kitchen, bedroom and other living areas because of the ceiling height. In addition, municipal codes might require two exits in the basement and other requirements to make that area comply with building codes.

Finally, if you live in a zoning district that does not allow two family homes. Adding a second unit to your home might violate local zoning ordinances. Your buyer could get into a serious jam.  

Unpermitted Work Inspected to Get Approval by Municipality

You mentioned that you installed a bathroom in the basement so you should determine what you would need to do to make that installation comply with the building ordinances. If everything you did was according to the building and zoning ordinance and codes and the only thing you didn’t do was get the building permit. Talk to the local municipality. See if you can pay a small fine (if they’d even charge that) and get the permit now. 

You can talk to a real estate attorney who knows your local municipality. If you choose not to move forward and clear this before listing your home, and a buyer wants to do a major upgrade to your home, it may not matter if you got the appropriate permits. 

On the other hand, if the buyer is planning to do just a little work. They could get into trouble if a building inspector comes to the home and discovers that the home had improvements made that were not recorded with the building department.

Talk to a Real Estate Attorney for Guidance

You should know the terms in some contracts have boilerplate language that states that the seller performed all major work in the home with properly issued building permits. Other contracts will have the seller represent that all improvements that the seller made to the home are properly reflected in the real estate tax assessor’s office records. We doubt you could make these representations. And don’t think you should lie to the buyers on the face of the contract.

We can’t just tell you to do nothing. Our advice is to seek some advice from someone local that you trust. Who can advise you of your options and what you’ll need to disclose to the buyers.

And, make sure that whatever disclosures you make to the buyer are truthful and accurate. Or, you could wind up writing to us with an entirely different problem after closing.

©2023 by Ilyce Glink and Samuel J. Tamkin. Distributed by Tribune Content Agency.