Last week I was involved in two transactions where sellers remodeled a home and permits were required but weren’t pulled. One was a home that my buyer purchased that had a couple of additions put on by the owners, the other was my sellers that gutted and remodeled two bathrooms, and the kitchen with updated electrical, plumbing, and venting.
MN Statutes require that sellers disclose all material facts that could adversely and significantly affect a buyers use and enjoyment of the property. The Seller’s Property Disclosure Statement specifically asks “Are you aware of any work performed on the property for which appropriate permits were not obtained?”
The sellers that did the additions without the appropriate permits, did disclose to the buyer that permits were not pulled. The buyer had the property inspected and found several safety hazards and the sellers agreed to have the work corrected by licensed contractors, pull the appropriate permits, and have the work inspected by the county inspector.
In the other case my sellers did not disclose to me or the buyers that required permits were not pulled and instead of completing the Seller’s Property Disclosure Statement, they completed a Seller’s Disclosure Alternative form. This form is commonly used for bank owned, probate, and investment, properties, or if a seller hasn’t lived in a property for an extended period of time. Both the buyers and the sellers must agree to the use of the Seller’s Disclosure Alternative, however, the seller is still obligated to disclose any material facts they are aware of that could impact the buyer’s use and enjoyment of the property. My sellers are now required to pull the appropriate permits and open the walls to show the inspectors the work that was done behind the walls.
In most cases home owners are allowed to perform work on their homes and they can pull their own permits. There are permit fees charged to the homeowners, and property taxes can increase based on the property value increase, but not pulling a permit can cost more money if you decide to sell your home. If you remodel your home without a permit and you do not disclose this fact to the buyers and something happens after they own it, like a fire or structure failure, you could be held liable for their damages.
An experienced real estate agent can provide you the Disclosure Forms applicable for the sale of your home, but you must complete them yourselves.
Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to firstname.lastname@example.org. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.