Friday, June 11, 2010

Why Do You Harp On Permits So Much?

I'm constantly getting emails from people asking why I harp on the lack of permits on the houses I review so I thought I'd explain my reasoning.

Why Permits Are So Important.
1. Its the law!! This should be a duh kinda thing but people don't seem to care that they are breaking the law when they do certain kinds of work on their houses without permits. Sure they are saving themselves some money and some hassle but its not worth the trade-offs.

2. Any work done without permits can not legally add to the value of the house. You converted your attic into a fabulous master suite without permits? So what, its not legal living space and can not count in an appraisers view of the house...and that house has to appraise out if you want to sell it.

3. Insurance companies don't cover losses on unpermitted work. If you don't think your average insurance company is looking for ANY reason to deny your claims you are sadly naive. Heaven forbid that your unpermitted electrical work causes a fire and burns down your house...your insurance company won't pay you a dime. This reason alone should make people never want to buy a house with extensive unpermitted work. Go ahead, call your insurance agent and ask him/her what the companies policy is regarding unpermitted work. I'll buy everybody an icecream cone at Tuckers who can get their agent to say in writing that unpermitted work will be covered.

4. Its not safe. With out the benefits of inspections you have no way of knowing if the work was done up to code, better than code, or waaaaaaaay below code. Having the work inspected is no absolute guarantee that the work is of high quality but it should guarantee a minimum standard. How do you know that you won't get electrocuted in the shower or that your furnace is not slowly killing you with carbon monoxide? You can't! and its hopelessly naive to think that, 'most work done with out permits is better than code.' Which is what the realtor showing 1417 Central actually told me!?!?!?!!?!?

5. If you get narc'd on and the city decides to take a hard line they will force you to remove all the unpermitted work, pay fines, pay the permit fees and then pay to have the work done legally! If you don't think that's like 4x as expensive and 10x the hassle of just doing it right the first time you are sadly mistaken.

#4 and #3 Really pertains to the house I recently reviewed on Central.

So that's why I harp on unpermitted work.

One thing that bugs me about people dodging permits is I think that they are trying to get out of paying their correct property taxes. If you do a lot of work on your house the assessor is going to revalue your house and the property taxes are going to increase. People do not want to pay more taxes so they try to cheat. Man, just in my neighborhood there are a multitude of illegal duplex's that if they were legalized would increase their property taxes. I wonder, if across California if all the people cheating on their property taxes where made to pay their fair share how much effect that would have our current budget crisis...?

Can y'all think of any other reasons I might of missed?


Ayse said...

I am with you 100 percent on unpermitted work. It's not worth it. Not to mention that building codes are a BARE MINIMUM to keep you from DYING IN A FIRE, why on earth would you want to pay money for work that can't pass an inspection. I have two friends who have lost family, pets, and all their personal belongings in house fires just this year. It is not worth the risk.

Ragnar said...

Well, I'm not located in the US, but around here (Central Europe) the main reason for old house renovators to avoid permits is: the house was built to ancient construction codes and has survived for decades, if not centuries like that. Modern codes are quite a bit stricter in some regards, and that tends to make people think: "Why on earth should I pay at least 3 times as much for having something done to current code if I could do it much cheaper to original code, all the old stuff works too!".

Besides, permits can really slow down things. Around here you don't need permits for non-structural work that doesn't change the total amount of living space (electricians and plumbers can certify their own work, only gas plumbing is inspected by the gas supplier, non-licensed people aren't allowed to touch wiring and plumbing at all) so I've done my share of work without needing any permits. Then we wanted to do an addition at the weekend house and needed a permit for the first time. A permit requires an architect or GC who draws plans, then you need all kinds of paperwork and finally you can apply for a permit. The permit process involves a public on-site hearing with all neighbours and a bunch of town people. These hearings are only held 3 times a year, so that can slow down you project considerably. We started in November I think, got our permit in July and could have started working probably in August (instead of March or April). Then we decided to ditch the whole addition for financial reasons - 10 months for nothing.

In Italy the situation is much worse - people do everything without permits and then every few years there's a general amnesty for unpermitted work - you just supply plans and have it permitted after the fact, not more expensive than if you had done it before but you can be pretty sure to get a permit for what you want, without limitations and alterations from the construction department.

The MadScientist said...

Hi Ragnar,

I think you win the award for longest comment!
I can't speak for other countries but it sounds like you have it rough with those hearings that only come a couple times a year.

Even in CA we have a historic building code where you don't have to upgrade the house to modern standards...that is unless you do MAJOR structural work (like the house on Central) then of course you are going to have to upgrade.

The class on structural engineering I took was very enlightening as to the evolving of the building codes. After CA had the Northridge Earthquake building officials learned the hard way that certain things that were deemed safe by the current code where in fact not safe at all. Do you know that drywall used to have an official structural sheathing value!?!?!? Not any more. Also after the Northridge quake soft story buildings i.e. apartment buildings with parking on the bottom floor where looked at really hard and now have much more stringent structural requirements.

I can understand where you are coming from because you seem to be in a 'Brazil' style bureaucracy.

But that does not change the fact that building codes and inspections do guarantee a bare minimum amount of safety. In the absence of that motivator don't think that for a second your average shady builder won't cut corners to increase their profit.

Rick said...

Appreciate your blog, it has been educational as I am looking at buying my first home.

On insurance and unpermitted work.... I am not following your argument if you buy a house and then get insurance. Are you saying that the insurance company is going to verify before they insure the house that all the work in the house had permits?

Rick said...

Appreciate your blog, it has been educational as I am looking at buying my first home.

On insurance and unpermitted work.... I am not following your argument if you buy a house and then get insurance. Are you saying that the insurance company is going to verify before they insure the house that all the work in the house had permits?

The MadScientist said...

Nope, what I'm saying is that if you try to file a major claim ie the house burned down. That the insurance company will try to deny your claim by any means. If they can prove that your unpermitted work was the cause then bingo claim denied. Or if a part of the house was damaged that wasn't legal (like a master bedroom suite in the attic done without permits) you won't get any money to fix it.
The insurance company will sure as heck take your money as long as possible....then try their best to deny your claim after the fact.
I've arrived at this opinion by interviewing several people in the insurance biz in other locals ymmv.
Ask your insurance agent, see what they say.