Home Remodel Sidetracked by Building Permit Discovery

By Barry Stone

Dear Barry,

When I purchased my home, I hired a home inspector, and only minor problems were found. But now I'm remodeling the interior, and the building department informs me that the addition and the attic conversion were not permitted. Before buying the home, I asked the previous owners and both agents about the legality of the addition and conversion, and everyone said that all of the building changes were permitted. Aren't these people liable for false disclosure?
--Nick

Dear Nick,

For the sake of discussion, let's give the sellers and agents the benefit of the doubt and assume that they had no knowledge of the lack of building permits. A common situation, for example, would be that building alterations were the doings of a previous property owner and that no one was aware of the absence of permits. The current sellers and agents, then, would be guilty, at worst, of making false assumptions. If that were the case, their answer to your question regarding permits should have been, "I don't know." The sellers, then, might have been excused on the basis of not having understood the finer points of real estate disclosure. The agents, however, would be subject to higher disclosure standards, under which an uninformed disclosure of this kind would constitute professional negligence.

Qualified agents know better than to declare the existence of building permits without verifying them at the local building department. In fact, many agents have made it a standard practice to check for permits on every transaction, or to advise their buyers to do so.

Some home inspectors conduct permit searches as an added service for an additional fee, but this is not within the scope of a home inspection itself. However, prudent inspectors make it a practice to recommend to all buyers that they consult their local building department for a permit history of the subject property, prior to closing a purchase transaction.

As to the question of liability, much will depend upon what disclosures were made in writing, rather than verbally. For further advice in this regard, a real estate attorney should be consulted.

Copyright 2006 Barry Stone. Distributed by Inman News.