Non-Permitted Home Additions: Should You Disclose?

Sellers who have non-permitted additions to their homes face a bit of a dilemma in the Santa Clarita area. If they disclose the additions as non-permitted on the MLS, they may be inviting the City or County inspectors in to assess them for the additions, which may result in penalties and an increase in property taxes. If sellers do not disclose non-permitted additions, there is the possibility that the buyers may sue later if they discover that the additions were either not permitted or sub-standard after the close of escrow.

First of all, if you are planning on making additions to your home, whether it's a room addition, a loft or a patio cover, be sure to obtain the proper permits. Depending on where you live, these will be obtained from either the City of Santa Clarita or Los Angeles County. This article applies to additions that have already been completed, and is not to be interpreted as a way to get around the permit process.

Not all additions that are done without permits are sub-standard. In fact, many are done to code (or better) and would have passed inspection if the owners had followed the proper procedures for obtaining permits and inspections. However, both City and County officials are concerned about the safety of unpermitted additions lately, and are most particularly concerned about garage conversions, so code enforcement has definitely been stepped up in recent months.

Code enforcement officers are concerned about two distinct factors: 1. Making sure that homes are safe; 2. Increasing City and/or County revenues.

The permit process increases City or County revenues in two ways: The permit process itself requires fees, inspections and other procedures, and the permits are used to communicate increases in property values to the Los Angeles County Assessor, which increases your property tax bill.

So, do you disclose non-permitted additions or not?

The answer is YES, but there are proper ways to disclose additions that may be non-permitted to maximize the protection for the sellers. Most Realtors will use the "confidential remarks" section of the MLS to indicate something like "room addition done without permits", which opens the door for the Code Enforcement team to come in and investigate, and also chases away many potential buyers. Assuming that you are not a qualified building inspector, how do you know whether the additions were done to code or not? Building codes are changing constantly, so a procedure that may have been "to code" years ago may not be to code today.

According to Barry Stone of HouseDetective.com, the best way to disclose additions that may not be permitted is to use the following wording: "No guaranty is made regarding compliance with building codes." Also, be sure to notify the buyer in writing that they should obtain appropriate inspections for the home, including the additions.

As a buyer, you have the right to request copies of permits for all additions (including room additions, garage conversions, lofts, kitchen remodels and patio covers). Always have a qualified inspector perform a complete home inspection prior to releasing your contingencies for the purchase of a home. A home inspector may not be able to determine whether or not a room addition was done to code, since he will not be able to look inside the walls, but he will be able to point out any obvious deficiencies.