Constructing a building isn’t as straightforward as buying a parcel of land and starting construction immediately. In order to legally construct a building in Los Angeles, you will be required to obtain a building permit for the job. A building permit is an approval that you will need to receive from a government agency for a development project that you would like to work on. Whether you’re looking to build a new shopping center or are thinking about making a large addition to an existing home, a building permit is necessary before you will be able to start working on the project.
It’s legally required to obtain a building permit for most construction jobs because this type of approval is designed to make sure that the building meets all of the local building and zoning codes in your area. As such, building plans must always be provided when applying for a permit. In the event that you decide to forego obtaining a building permit in the hope that no one will notice, it’s important to understand that there are costly penalties for doing so.
This article takes an in-depth look at what these penalties are and why you should avoid them.
Selling a House Without Permits
For homeowners, there are many renovation projects that would require a building permit. If you decide to convert the use of a room or make an addition to your home, the work will need to be permitted before you start the project. Many of these renovations are easy to obtain a permit for at the LADBS, which is why it’s highly recommended that you apply for the necessary permits. If you’ve performed work on your home that isn’t backed up by a building permit, you’ll almost certainly run into problems when you attempt to sell the home.
In the event that you somehow find a buyer who is willing to pay for the home entirely in cash, non-permitted work may not be a problem. However, it’s exceedingly rare for this situation to occur. In most instances, the buyer of the home will require a loan in order to pay for the property. When a loan is requested, the lender will order an appraisal on the property in question. A home appraisal is a very common process wherein an unbiased professional takes an extensive look at the home before identifying the value of the property.
If you have completed work in your home that wasn’t permitted but should have been, the professional who performs the appraisal will catch this issue during a visual inspection of the property. The city has records on hand that tells the professional what your property should look like. When they notice that the property has changed from what it once was, they will include this in their report. Even though the work you performed may have resulted in a higher value for the home, there will be stiff penalties for not receiving a building permit.
The penalties of attempting to sell your home without a permit include the fact that the buyer may no longer want to purchase your property. If they find that the value of the home is larger than what they’re willing to pay because of the changes that you’ve made, they could back out of the deal. Even an addition of 1,000 square feet to the property could add $20,000 to the value of the home, which wouldn’t be caught until the property is being closed on. If you want to avoid hassle and frustration when selling your home, it’s important that you obtain a building permit when necessary.
Homebuyers and Non-Permitted Work
Buyers will also run into problems when attempting to purchase a property that has had non-permitted work done to it. For one, they may have concerns regarding the quality of the workmanship for any changes that have been made to your home. If this work wasn’t permitted, the buyer can’t be confident that it’s up to code and will be safe for them and their family.
Even if the work is at a high enough quality to meet current codes, the buyer might automatically assume that the homeowner avoided obtaining a permit because they knew the work wouldn’t be up to code. If the non-permitted work is first brought to the attention of the buyer when the appraisal occurs, this means that the home is being closed on. At this point, it’s possible that the buyer would back out of the deal that they’ve already made, which would require you to go through the process of listing your home on the market again.
Likely the best way to mitigate these issues even if the work has already been completed is to apply for a retroactive permit. In order for the LADBS to grant the retroactive building permit, they will likely require an inspection to be done on the changes that have been made to your home.
As long as the work is up to code, the building inspection should help you obtain a permit. If any corrections need to be made to get the work up to code, the inspector should provide you with a list of these corrections. If you have performed any sizable electric or plumbing work in your home, the inspector may require that you get a plumber or electrician to sign off on the work before they complete the inspection.
Permits and Refinancing
If ever you decide to refinance your home, an appraisal may be required. A home refinance is typically requested by homeowners when they want to replace their existing loan with a new loan that has better terms. In many cases, refinancing is used to lower monthly payments and can be very beneficial when a homeowner has lost their job or is finding it difficult to make the currently monthly payments.
If you have performed non-permitted work on the property in the past, your request for refinancing may be turned down based on the appraisal, which is why it’s always recommended that you take the time to apply for a building permit before completing renovations on your home.
Homeowners Could Be Fined
Among the larger problems of performing non-permitted work on your home is that you can actually be fined by doing so. When a building permit is required in Los Angeles, avoiding seeking a permit for a large renovation in your home goes directly against the city regulations and codes that everyone must adhere to. If the city finds that you haven’t received the appropriate permit, they will likely assess a fine, which could be the original cost of the permit along with a small fine for not obtaining the permit in the first place.
If the work is still in progress when the city identifies that a permit hasn’t been obtained, you would likely be asked to stop working on the project until you have paid the necessary fines and have received the proper building permit. When the building inspector performs an inspection, they could ask you to remove the work that you’ve done to your home, which typically occurs when the work isn’t up to code. You can avoid being fined and wasting money on making the necessary corrections by seeking a permit before the project begins.
Homeowners May Be Vulnerable to Hazards
A significant concern of making changes to a home without a permit is that homeowners may be vulnerable to various dangers and hazards by not first obtaining a permit. The entire reason that the city requires homeowners to obtain permits before changing certain aspects of their home is to make sure that the work is up to code when it comes to fire hazards and structural failure.
When you don’t apply for a building permit, there’s a possibility that the work isn’t up to code, which could create an unsafe environment caused by poor electrical wiring or shoddy craftsmanship. Poor electrical wiring alone can cause an electrical fire to break out and put the lives of everyone in the household at risk.
Lenders May Not Approve a Home Loan
A common penalty of building without a permit is that lenders may not approve a home loan when requested. If non-permitted work was done on the home, the lender may believe that significant problems could arise in the future, which could make them wary about providing a potential buyer with the loan that they’re seeking.
Higher risk for the lender always results in the lender becoming less likely to approve a loan application. The lender could also tell the appraiser not to include the changes in their value estimation on the property, which could lead to you getting less money that you want from selling the home.
The Bottom Line of Building Permits
The bottom line is that the penalties that come with building without a permit are extensive and not worth the hassle that comes with remedying them. If you’ve made numerous non-permitted alterations to your home throughout the years, it’s possible that fines could be assessed, your work could be reversed, and you could have difficulties selling your home at the price you want. Building permits for home renovations, conversions, and additions are relatively inexpensive and can be obtained from the LADBS in a matter of 30-45 minutes.
If you’re about to start work on a project and want to first apply for a permit, you can get started by going to the LADBS website. From here, it’s easy to find the permit application section, which will provide you with links to downloadable applications that you can fill out and take with you to one of the five LADBS offices in Los Angeles.
For the kind of work that you want to do, you may only require an express permit, which can be submitted online. The main advantages of obtaining a building permit include:
- You’re able to add value to your home without running into problems later on
- You can make sure that the work is up to code
- Building permits are relatively inexpensive with significant upside
- A building permit can help you avoid fines and having your work demolished
Receiving a building permit means that the work you want to perform is legal and legitimate in Los Angeles, which is enough to avoid any future fines and penalties.
Jason Somers, President & Founder of Crest Real Estate
With over 15 years of professional experience in the Los Angeles luxury real estate market, Jason Somers has the background, judgement and track record to provide an unparalleled level of real estate services. His widespread knowledge helps clients identify and acquire income producing properties and value-ad development opportunities.