Awhile back a client of mine bought a home where some additions were made to the home. However, being a foreclosure, the seller (the bank) claimed they knew nothing. So I made my way down to the building department of Las Vegas to do some research. I was able to find the original blueprints of the home and determined that one of the bedrooms upstairs was originally a loft.
So, what happens when you put up some drywall and call it a “bedroom” but don’t pull the permits? Nothing if you let your house go to foreclosure! But let’s say you were a traditional homeowner who wasn’t distressed.
- You probably didn’t pay a for licensed contractor. Maybe a skilled friend or handyman helped you.
- You didn’t have to pay for the permits or inspection
- Your home wasn’t reassessed for taxes
But what happens when you want to sell the home? You’re best to ‘fess up to your Realtor because it will eventually come out in the open. It’ll come up in the title report and an extra bedroom could create problems for your buyer’s mortgage if they weren’t expecting it. Chances are if the remodel was minor you’ll get a fine from the building department for not pulling the permits at the beginning. Maybe it’s twice the cost of the original permit plus a late fee… but whatever the fine, it’ll be cheaper than being sued later by the buyer after the closing if the remodel was not disclosed.
Yes, you may pay a little more in taxes when you have your home reassessed but that extra room would also be covered if you ever had a fire in the home and had to make an insurance claim. If the remodel included a bathroom, a deferred permit would require an inspector come look at the work and some drywall might need to be removed to be able to see the pipes.
Regarding the foreclosure that took me down to the building department to begin with, the new owner had a choice to make. He could apply for the permits for the home he just bought, pay the fines, pay for the permits, and have the home reassessed for value and therefore taxes. Or… he could wait until he was ready to sell it in the future. What would you do?