Selling a House with Unpermitted Work: How-to Guide

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Making upgrades that increase home value can be a great way to attract buyers when it’s time to sell. While you might think a renovation is as simple as doing (or hiring out) the needed tasks, some projects require a permit before they can happen. Selling a house with unpermitted work could affect its marketability and a buyer’s ability to finance their purchase.

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Even if the unpermitted work was done before you lived there, not disclosing it to buyers could mean possible legal trouble if they discover it after the fact. Before you get too alarmed, keep in mind that unpermitted work is fairly common, and there are things you can do to resolve it.

We talked to real estate agents and translated the legalese from real estate attorneys to give you some of the best options for selling a house with unpermitted work.

Can you sell a house with unpermitted work?

Yes, you can sell a house with unpermitted work, and you are required to disclose to buyers any known unpermitted work done on your house, even if it was done by previous owners. Unpermitted work is anything you do to your house that would normally require a permit from your local city building department, yet the permit was not obtained.

Requirements vary by county and state, but can include improvements like adding a room, replacing windows, or building a garage.

Even some little projects you can knock out in a weekend could require a permit, explains Silicon Valley-based real estate attorney David Roberson, who’s personally been involved with hundreds of real estate transactions.

“There are very few items that you can construct without legally being required to get a permit,” he says.

Projects like interior and exterior painting, new floor installation, and minor electrical repairs probably won’t need a permit, but if you want to add a fence or a window, or do other major renovations to your home, there’s a good chance you will need one.

For many homeowners, this small detail slips through the cracks and then becomes a problem when they want to put their house on the market.

“I would say out of 10 homes at random, at least four of them would have some form of unpermitted work, 40% to 50%,” says Shawn Engel, a top Denver-area real estate agent. “It could be simple stuff like a deck modification or gutters, all the way up to a basement finish.”

What are the risks of selling a home with unpermitted work?

Selling a house with unpermitted work can get a little tricky, especially if you’re not sure how it might affect your sale. Some buyers won’t mind a few unapproved upgrades, but others might see them as a big risk. Knowing what to expect ahead of time helps you stay prepared, handle buyer questions smoothly, and figure out the best way to move forward.

• Lower sale price: Buyers may be hesitant to pay top dollar if they know there’s unpermitted work, which could lead to a lower offer. Or, you may need to reduce your price during negotiations.
• Buyer concerns: Unpermitted work could raise red flags for buyers, especially if they worry about safety or compliance with building codes.
• Financing issues: Lenders may refuse to approve a mortgage if they find unpermitted work, which could limit your pool of potential buyers.
• Future liability: If buyers later find issues with the unpermitted work, you could be held legally responsible, even after the sale.

Unpermitted work can make selling a little more complicated, but it’s not a dealbreaker. With sheer honesty, the right pricing, and the help of a real estate professional, you can still pull off a smooth, stress-free sale.

How do permits work, and why do you need them?

It might sound like a lot of bureaucracy, but permits are meant to safeguard homeowners. They ensure the work complies with local policies such as land use, zoning, and building codes, guaranteeing that the structure will be safe for you and any future occupants.

However, homeowners sometimes forgo the permit process because they think it can be tedious and complicated.

Skipping it might save time now, but it can cause problems down the road, especially once you decide to sell. That small shortcut could easily turn into a big headache when buyers or inspectors start digging into the details. It’s best to get things sorted before any work begins. Here’s how the permit process typically goes.

Process of obtaining a permit

The process for obtaining a permit for work on your house can vary by jurisdiction, but generally looks like this:

1. Reach out to your local building permit office: Let them know which project you’re planning. Depending on the complexity of the work you plan to do, you might need multiple permits for construction, electrical, and plumbing systems.
2. Fill out the permit as completely as you can: Include drawings and schematics when possible.
3. Submit the permit and pay the filing fee: Depending on the complexity of your project, this permit could be approved on the spot or may need additional review. If your permit is approved, you’ll receive an official license.
4. Post the permit on your home or near where you’re completing your project: You must display it before any work is done.
5. Have the work officially inspected: Depending on where you live and the particular project, you may need to get an official inspector to check out the work. If the inspector recommends changes, they’ll need to visit again to confirm you’ve made them.
6. Remove the permit: Take it down after approval from the inspector and completion of the project.

How can I tell if my home has unpermitted work?

When it’s time to sell, having a complete and accurate history of work done to your house can be a crucial part of the sales process. But unless you’re the first person to occupy your home, chances are, you don’t know everything that’s been done to the property.

As a buyer, you might not have thought to ask the seller about permits when looking at all the great upgrades they made to the house, but now is the time to take a closer look.

Does your house have a garage as an add-on, or did the previous owners build on a third bedroom? Were the bathrooms recently remodeled, was the roof redone, or was a brand-new fence put up right before you bought the house? These projects may have required a permit.

If you think there might be unpermitted improvements to your home, there are a couple of ways you can investigate further:

Look at the home’s original blueprints

If you aren’t sure what work was done to the house before you bought it, one way to find out is to get a copy of and review the house’s original blueprints. You may have a copy in your purchase paperwork, but if you don’t, try searching city records, reaching out to the previous owner if possible, or contacting the original builder.

If your neighborhood is part of a homeowners’ association, you can also contact the HOA directly to see if they can provide a copy. Once you have the blueprints in hand, you can review them and see if anything that currently exists in your home didn’t exist when the house was built.

Review city building permit records

The best way to find out if your house has unpermitted work is to go down to your city permit offices and look at their records. From there, you can check to see if your home matches the plans of the permits. If not, chances are something was done without approval.

Taking a trip to the city or county building might sound complicated, but “it’s very easy to pull the permits up. There’s no cost to it,” Engel says.

These records can give you the most complete history of your home regarding permits. Pulling the records yourself also means you’re getting in front of the issue rather than waiting for an inspector or potential buyer to bring it up.

My house has unpermitted work: What are my options?

If there’s unpermitted work on your property, you’ve got three main options when it comes to the sale of your home.

Option 1: Obtain retroactive permits

Before listing the property, secure a permit retroactively for already completed projects. The cost associated with retroactive permitting will depend on the scope and value of the construction.

It’s also a good idea to bring in a contractor first to check the existing work. They can estimate the cost of bringing it up to code and have an idea of how much is already built in accordance with the existing code requirements.

An inspector from the city will come to look at the work and will determine if it was done correctly. In some cases, it might be as simple as the inspector asking you to open up some walls. In others, they might ask you to tear down and rebuild portions of the work, based on their feedback.

If you are obtaining a permit for work done by a previous owner, the city or county may be more lenient with you. They most likely won’t charge you for any penalties a retroactive permit incurs and might give you more flexible deadlines in bringing the work up to code.

Option 2: List the house as-is and disclose

If the idea of resolving unpermitted work issues feels like, well, too much work, you could list the house with the caveat that it is being sold as-is. In this case, be sure to provide full disclosure. Disclosing unpermitted work in the listing is important (and legally required in most cases) so that buyers know what they’re getting into.

Small, unpermitted projects (as long as they’re clearly disclosed to buyers) might not affect the value of your property. However, when it comes to large-scale unpermitted work, you may have to consider a lower asking price for your listing since the buyer will have to assume responsibility for the work that was done.

Option 3: Sell to an investor or a cash buyer

Instead of listing your home on the market and selling it as is, consider finding a cash buyer who can help you close quickly without the usual mortgage approval hassles. HomeLight’s Simple Sale platform connects you to one of the largest networks of investor-cash buyers in the country, who specialize in fixing and flipping or buying and holding properties. This enables you to skip the repairs and go straight to the sale.

Decide before you list!

The decision of selling as-is or obtaining retroactive permits should be made before you list your home, recommends Engel.

“Buyers are looking to close usually within 45 days,” he says. “And if you have a big retroactive inspection permit situation, like on a basement finish, you could be looking at several weeks to a few months to get all of those t’s crossed and i’s dotted.”

The biggest benefit of obtaining a retroactive permit is that it allows you to maintain the value of the home, and it makes for an easier sale overall once you know everything is done correctly. "I can tell you from a professional standpoint, it’s worth every dollar,” advises Engel, who says that retroactive permitting can avoid potholes down the road.

Other considerations to keep in mind when selling a house with unpermitted work

Aside from pricing and buyer concerns, there are a few other things that can come into play when selling a house with unpermitted work. It can impact your insurance coverage and even expose you to legal risks if issues pop up after the sale.

• Unpermitted work can affect insurance. “For example, if a new electrical panel was installed, but it is not to code and was not inspected, there could be significant insurance ramifications,” Roberson says. The insurer might increase your premiums or cancel the policy altogether.
• If unpermitted work is disclosed, the buyer will assume future responsibility. If unpermitted work was properly disclosed to the buyer, then it becomes their responsibility after the close of escrow.
• If unpermitted work causes damage to the buyer, it could mean legal recourse for the contractor. Even if the buyer knows about the unpermitted work, they may still be able to pursue damages from the contractor.
• In most cases, you are legally obligated to disclose all unpermitted work you are aware of, even if it’s from prior owners. Make sure to communicate everything you know about unpermitted work on your property. Withhold information from potential buyers, and you’ve got a potential lawsuit on your hands.

Don’t risk delays or legal issues when selling a home with unpermitted work. Partner with an experienced agent to navigate regulations, maximize your sale, and keep the process smooth.