“We plan to remodel our bathroom and save some time by not getting a permit from the city. Our contractor said he would do all the work according to code, but our neighbor warned us not to do it this way because it’s illegal. What are the risks involved?”
A local homeowner
Depending on the scope of work someone might wish to do, the city of Santa Monica requires that homeowners obtain a building permit before making various improvements to their property. Although I do not know many building code provisions, I am aware that they are extremely detailed and have heard that projects are often delayed for many days at a time while waiting for inspectors to come out and approve the work in process.
In order for homeowners to receive a permit, they or their representative must file plans and pay a fee to the city. The inspection process may be inconvenient as well as taking extra time, and those reasons are why many homeowners do remodeling without using the permit process. Others do such work with unlicensed contractors in an effort to avoid extra costs and time altogether.
There are some potential risks in doing non-permitted work. For example, if the city discovers this later, getting the work permitted can cost far more and involve challenges that would not have been involved if the permit had been obtained at the start. If the work was not done according to code or if the inspector cannot tell if the work was done properly, the homeowner may need to have walls or floors opened up to enable the inspection.
I recall one home being sold where an entire room was added without a permit. This was discovered during an escrow inspection, and it required several months to re-build with the correct type of electric wiring and proper spacing of studs in the walls. The seller tried to simply give a credit to the buyer, but the buyer’s insurance company noted that if a fire started in that part of the home the company would not pay for the losses. Thus, the seller had to absorb the costs of correcting the work, or risking losing the escrow.
In addition, by California law, a seller must disclose any non-permitted work to any prospective buyer. This could lead to some discount in sale price, require the seller to do costly and time-consuming repairs before the escrow closes or possibly cause an escrow to fall out. We sold one home where the seller had put up a low retaining wall without completing the permit process. The work was properly done and nearly all in accordance with building code provisions. However, the buyer was not willing to close escrow until a permit had properly been processed to completion. It cost the seller thousands of dollars and several weeks of delays to rush through all of the necessary steps.
As that seller sadly concluded, if he had known how much stress he and the buyer could have over this, he would have endured the city bureaucracy and added costs of time and money in the beginning. The far greater costs at the end were clearly not worth it. In the future he will be sure that any contractor does all their work under the permit process.
Michael Edlen provides real estate counseling services to prospective buyers and sellers and helps over 50 clients move each year. Most of his business is derived from a referral base of over 900 past clients. More tips and information are available on his website, www.MichaelEdlen.com. He can be reached at 310.230.7373 or Michael @MichaelEdlen.com.