When considering a home purchase, many potential buyers expectantly look for a finished basement for extra room and living space. This compels many a "weekend handyman" to either "do it themselves" or hire an affordable, and qualified, "independent contractor" to finish the work. In fact, probably 10% t0 15% of all "finished basements" are not properly permitted.
Why would someone not "pull permits?"
1. It is cheaper and faster than going through the process of getting each stage of the basement development (drywall, electrical, plumbing etc...) approved by the county
2. No need to spend extra money on a licensed contractor.
3. Overall tax assessment (and thus, the tax bill) will be lower because tax is only assessed on "registered" finished square feet.
But, seller's beware!
If you did not bother to apply for a permit with your local permitting office, you may end up regretting your decision and spending more money and time than you ever planned before you ever get near the settlement table.
When a contract is put on a home, it is normal to have an inspection completed to ensure the quality and state of the home. If an inspector asks for permits and you did not get them, he or she will likely:
- Tell you that they need to look "behind the walls" to make sure the electrical wiring is properly done. This means cutting holes in your existing walls just so the inspector can "have a look" and then paying someone to redo the walls or worse, having to do it yourself.
- Decide that the electrical plugs were not placed far enough apart or close enough together and recommend that you "redo" the sockets. This also requires more time and money before the buyers are satisfied enough to go ahead with the purchase.
- Recommend to the buyers that they do not settle/go ahead with the deal until the basement is fully "registered" or "permitted" according to code which could kill the deal altogether as buyers look elsewhere or cost you several months of time while the expectant buyers slowly develop a negative feeling about the entire experience.
Why would a buyer care about having a basement built to "code?"
- The number one reason a homebuyer would care is because if a basement is not completed/constructed according to "code", most insurance companies will not cover the damage in the case of a fire or flood and thus, the homeowner must pay for all the damage themselves.
- Secondly, if the new owners do decide to ""pull permits" themselves, then the overall tax bill will be higher than they had originally planned and this will make them very unhappy.
So, given the consequences; it may be better to just invest the time and money up front and get your basement properly permitted instead of having to face the potentially stressful, and expensive, consequences the next time you think about selling your home.
