Will I Be Able to Sell my House if I do Renovations without Pulling Permits?
Carrying out home renovations without permits may look harmless and probably a way of saving costs but in reality, it puts you at risk. For instance, you may incur severe fines and penalties based on your local authorities’ regulations; a buyer may back out of a contract upon realizing that the renovations were executed without permits and it may also lead to reduced value of your property.
So, to answer your question, yes, you will be able to sell your house if you do renovations without pulling permits. However, if your local building authorities require you to obtain building permits in order to do renovations, and you fail to do so, you may be subject to fines and penalties and may also be sued by the buyer.
Scenarios of When a Building Permit is Required & Disclosure of Lack of Permits
If you are planning to sell your home but first want to do full home renovations, you will need to get permits because the health of both current and future occupants has to be protected, safety has to be maintained and the municipal standards too.
- If you are making additions to your current home: According to Toronto’s homeowner’s guide to building permits homeowners should acquire permits when building any additions to an existing property. Failure to do so can lead to legal actions, removal of the completed work or construction delays.
- When installing new or changing the plumbing and electrical or mechanical systems.
- If you are making structural alterations such as enlarging windows, relocating existing doors, removing walls, or when enclosing an existing deck.
- When repairing drainage or when renovating basement finishes.
It is worth noting that the building permits vary based on your location. Therefore you should always consult your local building department and authorities.
Disclosure of Lack of Permits
In most jurisdictions, sellers have no obligation to disclose or provide information about any renovations that might have taken place and the timeline for that. However, that may not be the case in other jurisdictions that uphold moral and ethical obligations.
According to LUMEN Law, it is essential for property sellers in Canada to understand disclosure obligations and provide a SPIS (Seller Property Information Statement) to potential buyers. This helps ensure the selling process is transparent and lawful. Please note that the SPIS is not a legal requirement in all provinces but it helps reduce potential future risks.
On the other hand, it is up to the potential buyer to dig deep and do their due diligence which is basically inquiring about everything to do with the property they are looking to buy. So the buyer has to ask questions about whether any renovations were done, a timeline of when they were done, and any other necessary inquiries such as the current condition of the house.
Here are some of the disclosure obligations for the seller:
- A seller is legally obligated to disclose any latent defect by ensuring the potential buyer knows about the issues that can’t be easily discovered during a casual inspection.
- If the renovations have rendered the property unsafe, then the seller should ensure they disclose that to the buyer.
- An agent that represents a seller should keep the potential buyer in the know of any latent defects. This can happen either during a listing or a showing.
Why May Building Permits Not Be Available?
- Expensive Permits: Sellers may want to skip getting building permits because they are expensive.
- A time-consuming permit obtaining process: Obtaining permits is a long process that can take a toll on the seller, leading to delayed construction hence why sellers choose not to get permits.
- Regular changes in building permit laws: Sometimes the laws change, but the local authorities fail to communicate, leaving it all up to the sellers to ensure they get the right permits.
How Do I Sell a Home With Unpermitted Construction
- Hire a professional who is conversant with the real estate industry: The realtor can give you expert advice on how to go about selling a property with unpermitted works.
- Consider marketing your home to investors who are willing to purchase it as it is: This process includes reaching out to cash home-buying companies or listing your home on real estate websites like Craiglist.
- Offer discounts to potential buyers for the cost of repairs: To avoid the complexities of unpermitted constructions, you can choose to offer a repair contingency to interested buyers, allowing you to avoid handling the repairs yourself.
Can You Be Sued for Selling a Home With Unpermitted Construction?
If you are legally required to disclose any known unpermitted work to the potential buyer and fail to do so, and after purchase, the unpermitted work causes damage to the property, the buyer has a right to sue you.
Secondly, if the buyer purchases the property and afterwards realizes that the renovations were not done up to the building codes and are therefore making the property unsafe to live in, then they can sue you.
Conclusion
We’d like to emphasize the importance of following building codes and obtaining permits, as it will help you avoid future risks and legal issues that come with selling a home with unpermitted renovations.
