Lack of Permits Can Sink a Sale

Lack of Permits Can Sink a Sale

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Lack of Permits Can Sink a Sale

Lack of Permits Can Sink a Sale

By Donna Rolando | Published on July 10,2011 at 12:00AM

Lack of permits can sink a sale

Sunday, July 10, 2011   
BY DONNA ROLANDO
The Record

The Teaneck man was handy with a hammer, and did most of his kitchen upgrade himself.

He was not so good about nailing down a permit for the work, and it when it came to selling that cost him a buyer, and a higher sales price for his Tudor home.

"The deal fell apart," recalls sales associate Barbara Ostroth, who handled the listing for Coldwell Banker, Oradell about a year ago.

How to be permit savvy — tips for buyers and sellers

For sellers:

  • Don’t be in the dark about your permit status. Head off trouble that could come during an inspection by contacting your local building department and finding out whether you have all your needed permits.
  • Be mindful of any open permits and that permits are needed not only for a new kitchen or bathroom, but also for decks, water heaters finished basements, fences, etc. (Check with your town to be sure.)

For buyers:

  • Look to the Seller’s Property Disclosure Form for any red flags about unusual construction work that may be under the town’s radar.
  • Check with the Building Department for information on permits and inspections.
  • Use the report by your home inspector as the springboard to ask questions about potentially missing permits. Home inspectors can spot construction work that is not original to the house and may or may not have been done with a permit.
  • Take advantage of certificate of occupancy inspections, in which the town examines homes for safety issues relating to renovations. A certificate of occupancy is not issued until all outstanding permit issues are resolved.

"When we got a good offer on the house, the buyers checked with the town for the permit record during inspection and found out there wasn’t one for the kitchen," she says.

The sale unraveled, she says, when the potential buyers demanded a town inspection for a permit (which would have meant a sizable fine for the sellers) and a large credit to cover future inspection issues.

The house sold this spring to a buyer less worried about permits, but at a reduced price.

The lesson, Ostroth says, is never to cut corners by failing to obtain a Uniform Construction Code permit for everything from additions and decks to water heaters and furnaces.

"Buyers are increasingly aware of this issue," she says.

For sellers who lack permits, the worst-case scenario — usually tied to safety concerns — is that the town may order a homeowner to deconstruct the renovation. Ruth Miron-Schleider, broker-owner of Tenafly-based Miron Properties, recalls that situation experienced by a Tenafly seller, who was pressed to demolish a bathroom and kitchen in his garage, among other upgrades.

"We thought for sure the buyer would walk away," she says. "Luckily, the buyer still went ahead."

In Wayne, a $2,000 fine and a violation notice is common for homeowners who fail to get a permit, says Construction Official Joe Albanese. And lack of permits is hard to hide because Wayne, like many towns, conducts a Continued Certificate of Occupancy inspection every time a home changes occupants. The town determines what to do about unauthorized renovations or additions on a "case-by-case basis," Albanese says.

Hackensack also inspects whenever there’s a change in home ownership, says Cynthia Woods-Daisley, land use secretary. Tax records tell the inspector what work has been authorized. If the inspector finds unauthorized work, getting a permit is the first step toward a remedy, but fines are also possible, she says.

Other towns, likeOakland, hesitate to fine unless homeowners refuse to work toward getting their permit.

"We always go into it with the premise that they just didn’t know a permit was required," saysOaklandconstruction and fire official Daniel Hagberg.

"Fining and penalties at the eleventh hour [as a house goes to resale] just combines the problem. That’s not to say there’s never a fine."

Kevin Colavitti, Clifton assistant zoning officer, says failure to get permits "is a big issue — people get shafted all the time" when they buy a home in the dark about renovations.

 

Safety comes first

 

Despite enforcement differences, the common goal of the towns is to determine whether work was done safely, and to get a permit in place. Then it becomes part of the town record and serves as a protection for future buyers.

Although towns have enforcement power, Hilda Frisco of Weichert Realtors in Wyckoff says missing permits don’t have to wreck a sale.

"It’s usually resolved very easily [with the seller getting a permit]. I’ve never really seen a code official totally make the homeowner rip down the whole project," she says.

Eileen O’Driscoll, president of the Eastern Bergen County Board of Realtors, agrees that permits are not typically a deal breaker. The most common open permit she has seen is for a water heater.

In cases where a permit is missing, if the construction work was done by a previous homeowner, the state Department of Community Affairs (DCA) advises towns to conduct a Certificate of Continued Occupancy (CCO) inspection limited to visible portions of the home.

"The code official is not compelled to perform a destructive inspection [uncovering the work] unless there is reason to believe that a life-safety violation exists," DCA states in a bulletin sent to towns in 2006.

If the work was done by the current homeowner, it’s at the code official’s discretion whether to offer a CCO inspection. In any case, the homeowner must obtain that permit and correct any construction defects.

There are steps that buyers themselves can take to ensure that renovations are up to code.

First, says Joe Wehrhahn, president of the New Jersey Association of Licensed Professional Home Inspectors, is to look for red flags like bathrooms and kitchens in basements and attics. It’s a sign of upgrades to the house that might not be covered by permits.

 

Common step to miss

 

"A lot of people do renovations; they put extensions on their property. Unfortunately, a lot of them do not get permits," says Wehrhahn, who knows this firsthand as owner of All Systems Home Inspection inSecaucus.

Second, buyers can use their home inspector’s report to find renovations/additions and then check with the town to see if there are permits and final inspection reports, he said.

Third, says O’Driscoll, in towns where it’s done, a certificate of occupancy (CO) inspection is "an excellent way of ensuring the safety of the homeowner. A CO is not issued until all outstanding permit issues are resolved and taken care of."

Finally, she advises buyers to look to the Seller’s Property Disclosure Form, which addresses the issue of permits.

"I have found that those homes with ‘issues’ like this are often distressed properties, and the disclosure is often made that the responsibility of obtaining a CO falls on the buyers," she says.

"This alerts us, buyers’ agents, to check with the town early on in the process, often before we put the offer in on the property to make our clients aware."

Learning of potential snags without delay can keep a sale from falling through as a result of neglected permits since it allows time to work on a remedy, she says.