Thursday, October 8, 2009

Don't skirt the permit process during home improvements

Batting practice on frozen head
It's penny-wise-and-pound-foolish bottom-line reckoning to circumvent the legal building permit process in an attempt to save money on an otherwise value-boosting home improvement.

by Broderick Perkins
© 2008 DeadlineNews.Com
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Deadline Newsroom - It's penny-wise-and-pound-foolish bottom-line reckoning to circumvent the legal building permit process in an attempt to save money on an otherwise value-boosting home improvement.

Failing to get a building permit when it's required could result in any immediate savings becoming a long term liability.

You must obtain a permit for most home improvements -- do-it-yourself jobs or work that's hired out -- because the permit process triggers building code compliance requirements.

Building codes are a minimum set of standards for the design, materials and building techniques created specifically to protect the health and safety of anyone occupying buildings.

Depending upon the jurisdiction, permits are required for something as simple as installing a dimmer light switch or water heater installation to constructing a 3,000 square-foot-home.

The National Association of the Remodeling Industry (NARI) also says is a contractor asks a homeowner to pull his or her own permits, that should be a red flag for a homeowner to find a different remodeler.

Having the contractor handle the permitting process, however, can save homeowners time, money and stress.

"A reputable contractor should object to a homeowner pulling his or her own permits," says Darius Baker, of D & J Kitchens & Baths, Inc. in Sacramento, CA.

"It's part of the service that a consumer should expect when they hire a contractor," said the certified NARI member.

(Avoid home improvement headaches that cost thousands in overruns)

Generally, to obtain a permit, you must submit a building plan or for smaller projects, a description of the work to be done, something a professional contractor will create for the job anyway.

Provided the plan complies with the codes, the building department issues a permit, for a fee.

That triggers one or more inspections of the work in progress or upon completion or both. Building inspectors give the job the once over to make sure the job complies with building codes and that you are using the proper materials and building techniques.

The process of getting a permit can generate a flurry of questions from the local building department that you may not be qualified or prepared to answer.

"The homeowner then has to run back and forth between their designer, contractor or architect to answer the questions, and that's not an efficient way to spend time," Baker says.

Let the remodeler do the talking

Also, if you pull the permit, you, not the remodeler, will be responsible for the project and have to answer to local building inspectors during home inspections. The homeowner will then need to consult with their remodeler to sort out any problems the inspector finds.

"In our experience, the remodeler can often correct those issues on the spot and get approvals," Baker says.

Beyond the benefits of code-complying building practices, a compelling reason to obtain a permit is the cost of not obtaining one. And all it takes to trigger that cost is for the building department to discover illegal work.

Along with fires, floods, earthquakes and other disasters that prompt a building inspector to come calling, there are a host of other events that could keep your illegal construction from going unnoticed.

Let's say a savvy home buyer hires a home inspector to examine the condition of the house you are selling. The buyer's inspector uncovers home improvement work and, to protect the buyer's investment, he or she seeks the home's permit record.

Each permit typically includes the address of the building, the contractor, the type of work being done, square footage, inspection dates and status of the work. If the proper permits aren't in place, that could kill the deal.

('Not So Big' approach goes great with green remodeling)

Later in the transaction, an appraiser may also seek permit records to learn if significant renovations should affect the value of a home.

Appraisers say in some regions the lack of permits turns up in 20 to 25 percent of homes appraised. Illegal work can stop an escrow cold.

Also, you and your agent typically are legally required by law to disclose any known conditions that could affect the value or salability of a home listed for sale. If the buyer thinks he or she can prove you knew about the illegal work, but didn't disclose it, you could get sued.

If, after close of escrow, the buyer discovers work completed without a permit and the local building department decides not to approve the work, a chunk of the home's value could become a legal issue. Any difference in value based on illegal work can become a point of litigation.

In another scenario, during a building official's scheduled inspection of a perfectly legitimate home improvement, he or she could also turn up older illegal work. The building department could then "red tag" the job and issue a stop-work order.

Danger, Will Robinson, danger

If an inspector suspects illegal work, you could have to pay for the cost of any inspections required to make a further determination. You could have to remove dirt along the foundation so it can be checked or you may have to tear down sheet rock inside so the inspector can look at framing, insulation, wiring, and plumbing.

If the work is deemed illegal, you must legalize the work before you can sell the home and, again, that also could mean tearing out old work.

If the illegal handiwork is yours, costs can continue to mount. The building department could levy higher punitive permit fees as well as fines.

In any event, before you can obtain a legal permit on old work, you'll have to hire an architect, engineer or other professional to help draw up plans for permit approval.

Even if unpermitted work complies with current building codes, building departments often issue only a statement of compliance -- not a permit. Because the statement applies only to the visible work, a lender or buyer may not be satisfied and demand that you obtain a permit.

Again, that could mean tearing out the work and rebuilding with a permit -- which is what should have been done in the first place.

More remodeling, renovation and home improvement tips.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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