Over the years I have experienced various situations where major and minor problems in which the lack of COs (certificate of occupancy) delayed or even lost deals.  The problem is every time you perform an upgrade or improvement, you need to determine do you need a permit.

Some will have done things 10, 20, or even 30 years ago, with or without a permit, but without finalizing the process and not realizing the future ramifications when it comes to selling their home.  Let’s face it. We don’t want to pay any more real estate taxes than we already pay, so adding space or any other item that might increase them without a permit or a final CO is the reason we do it.

I can understand and sympathize with everyone who takes that route as we are being over-taxed, especially today.  But it can come back to cause unneeded stress and complications.   When things are done without a permit, and especially not by code, the potential for harm or death by fire, electrocution or flood could occur.

I am currently involved in a transaction where the seller added a structure without a permit.  They had bought the home from me years ago without any issues.  I did not remember that a structure had been added since he had purchased it.  So a buyer came along, made an offer that was accepted, contract signed and we were on our way in the process.

The inspection was completed without any major issues.  Then the appraisal was completed.  However, the survey revealed that a specific structure was not apparently noted.  A problem arose that had to be resolved.  Although some banks will look the other way in certain situations, this particular bank would not.  It took some time, but the issue was settled by the seller by having to remove the structure and a small adjustment was made to reduce the sale price.

It is imperative that when you want to add something to your home, you need to determine whether or not a permit or a variance needs to be applied for.  A variance is an approval for something that is not within a specific building code.  When you don’t apply for the necessary permits, a municipality and the building department can essentially order you to remove that structure.  Even if you are able to complete a project but get caught, there could be a very hefty fine attached.  When selling, this will cause a delay in closing until the fine is paid.  More importantly, that structure might have to be removed, lowering the value of your property.  This will cause your buyer to either back out or renegotiate the agreed-upon price.

If you add a deck, shed, pool, or any external structure, you might need a permit in most municipalities depending on its height and size.  As I mentioned, some banks will look the other way and not be too concerned.  But if there are fines noted on the title, that will be an obvious sign that a permit was not filed.  Some buyers might look the other way as they are not concerned and surely don’t want their taxes raised.  Also, if you have an above-ground pool or structure that is too close to the property line, that might be another monkey wrench in your transaction that could cause a major delay in closing.

Adding living space without a permit can be the greatest problem.  I had experienced this many years ago when a home we were selling had an extension added without the proper paperwork.   There was a $50,000 escrow that was held until the permit was filed and the final CO was received, which took almost one year.

Unless you are just replacing appliances, but not doing any electrical or plumbing, then there shouldn’t be any problems.  If you are not sure, then seek out advice from an architect who will have the expertise about your local building codes to determine if you need a permit. This will go a long way in eliminating major headaches later on when it comes to selling your home years from now.

Buyers should make sure that their purchase has all the necessary permits and COs.  Ask about any external structures, whether it is a deck, pool, garage, or shed that may not show up on the survey.  Most important are extensions to the home to make sure everything was legally filed and completed.  No one wants surprises and we all want the closing to be a successful event with everyone smiling.

Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck.  For a “FREE” 15-minute consultation, value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: Phil@TurnKeyRealEstate.Com or via https://WWW.Li-RealEstate.Com