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Selling a House with Unpermitted Work in Minneapolis

May 21, 2021 | For Sellers

Home improvement projects are costly and stressful enough on their own. Many homeowners in Minneapolis are tempted to go without getting a permit or are simply unaware that they need one. Permits are intended to make sure that projects are completed correctly and safely. If you or a past owner ignored getting a permit and modified your home, this could cause problems when trying to sell. Buyers may ask to see details about the completed renovations, including receipts, the permit, and inspection report. If you can’t provide this, it could cause the interested buyer to walk away or present a very low offer. Unpermitted work can be scary and cause your house to sit on the market, unable to sell. Homeowners can also face legal problems if all unpermitted work is not properly disclosed during a sale.

How Permits Work

It can be confusing to know if you need a permit for a home improvement project in Minneapolis. The city’s website is very helpful in determining which projects need permits and which do not. You can also contact Minneapolis 311 for help. The fees for permits are based on the valuation of the job, which includes both labor and materials. There is a list of exempt building work that does not require a permit, such as installing roof gutter systems, installing storm windows, water tank installation under 5,000 gallons and more. Other projects may not need a permit, but need Zoning or Public Works approval. For projects that do need a permit, do some research to make sure you apply for the right one. There are building permits, mechanical permits, plumbing permits, and electrical permits. You can apply for a building permit if you intend to do the work yourself. If you hire a contractor, they must hold a Residential Specialty Contractor, Residential Building Contractor, Residential Remodeler, or Residential Roofer License. When all work is completed, an inspection will be needed to ensure all work was done correctly. When all permits have been filed correctly and the project has been inspected, this will protect the seller in the real estate transaction.

Most Common Unpermitted Work

The biggest problem with unpermitted work in Minneapolis is if the project was not completed to make it legal per local ordinances. The most common projects that fall into these categories are home additions and finished basements. When potential buyers walk into a home with unpermitted work and see obvious signs that the home addition is not up to code, alarm bells will go off. It will be very hard to sell a house that had plumbing or electrical work done, or a remodeled kitchen or basement that was unpermitted and ends up with problems. Even if problems are not obvious to the buyer, a home inspector will find them when looking at the walls, floor, electrical, plumbing, and foundation.

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Retroactive Permits

If you are worried about unpermitted work holding up your property sale, look into retroactive permits. To obtain a retroactive permit, you can allow city inspectors into your home to sign off on the work that was done. The inspectors may do so immediately if everything looks good or require some additional work or improvements to get everything in compliance with Minnesota codes. To get specific details for your project in Minneapolis, email or call 311 or 612-673-3000. If you live in another nearby city, such as Chanhassen, find the local office for building permits. Each municipality will have its own contact information and requirements. This will help ease a seller’s mind by knowing all unpermitted work done has been disclosed and inspected by the proper authorities, allowing the real estate transaction to proceed smoothly.

How to Know When Unpermitted Work has Been Done on a Property

Permits are expensive and building laws and codes are constantly changing. It’s not uncommon for homeowners to skip the permit. Hopefully, a seller will disclose unpermitted work on the buyer disclosure statement, but this can’t always be reliable. The seller could be withholding information or have no clue that unpermitted work has been done on the home. The only way to know for certain if unpermitted work has been done on a house is to go through the records to see if all repairs and additions have permits. Start by looking at the original house plan. Look for additional rooms currently present in the home that are not indicated on the plans. If there are additional rooms, then check with the local authorities to see if permits were paid for the project or not. This can usually be done free of charge. It’s easiest to consult with your real estate agent, as they have much more experience and usually know which types of projects require permits in your area. If you are selling a home, all of this should be done before you place the home on the market. If you are buying a home, be sure to do your research before signing a contract. Keep in mind that these construction permits will prove the safety of the project, which is why they are so important. 

How to Sell and Legalize Your Unpermitted Work

The best place to start when selling a house with unpermitted work is to hire an experienced real estate agent. They will be able to help you do research and formulate the best plan for selling your house. Know that it is required by law to disclose unpermitted work to buyers. If this is not done, you could be sued. If you know that unpermitted work has been done, there are two options, obtain the necessary permits from the city, or sell your house as-is. The costs of permits are different in each city, so you will need to do some research to find out the costs and if it’s worth going through with this process. Get in touch with your local building permit office. Local authorities will look at the original blueprints of the home and at your structure as a whole. If there are problems, they will need to be fixed, and you will also need to hire an architect to draw a new plan for the building. If this proves to be too costly, your other option is to sell the house as-is.

Sell House As-Is with No Permit

If the costs of getting the proper permits will not pay off, it may be best to sell your house with unpermitted work as-is. This method can usually close quickly, but still comes with drawbacks. Your buyer pool will be smaller, as most average buyers do not want to deal with a home with unpermitted work. Regular buyers may have trouble buying a house as-is because lenders may not allow a mortgage on such a property and home insurance companies may not cover them. Some may be interested, but will offer a low price because of the risk. When selling a house as-is, it’s very important to reveal the defects, DIY repairs, DIY renovations, and unpermitted work. You will want to specify which rooms have unpermitted work. Keep in mind that this will cause the value of the house to drop, but it’s better than being taken to court. Although the buyer pool will be smaller, there are still lots of people out there looking for a great deal. These buyers are usually investors who will go through the hassle of buying a house as-is, but are likely going to present cash offers to buy the house at a low price. If you feel that selling your house as-is is the best choice, find an experienced real estate agent to work with. It’s important to protect yourself from getting scammed or taken advantage of.

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Large Costs to Get Construction Property Permits

Construction permits are expensive, which is the reason why people often choose to not get them. Each city has its own fee schedule based on the valuation of the project. For Minneapolis, if you are planning a renovation project that will cost $25,000, the permit will cost $578 plus a plan review fee and a Minnesota state surcharge, which brings the total to $966.20. This is a large cost to add onto an already expensive project and leads to many performing unpermitted work on their home. Plus, permits require the work to be completed by licensed contractors or for the homeowner to disclose they are doing the work themselves. The authorities will need to inspect the completed work to make sure it’s up to code. Even though it is expensive, when you get a permit, it will help you to get top dollar when selling your house down the road. The cost should usually pay for itself.

The Forever Changing Home Permit Laws

Permit and home construction laws are constantly changing and are very specific to local areas. A homeowner who completed legal unpermitted work in a different state may not realize that local regulations in Minnesota require you to get a building permit for the same project. This can cause confusion. Plus, time comes into play. Perhaps a project was completed 20 years ago and did not need a permit at the time. The results of that project may not be up to current building codes. When in doubt about an aspect of your home, contact your local authorities to get clarification. When you plan to sell, work with an experienced realtor who can help you understand building permitting laws and figure out the best course of action when selling. 

Dangers You Can Face if Selling a House Without Permits

You could be putting yourself at real risk if you do not go through the proper channels when selling a house with unpermitted work. If there is a small project with unpermitted work that you clearly disclose to buyers, the value of your property may not be affected. However, large unpermitted projects can lead to a severely discounted listing. You could also scare away potential buyers, drive down the price or your home, or even end up getting sued if you do not disclose the unpermitted work. Just know that if you do disclose what you are supposed to, once the potential buyers are under contract, they become liable for the unpermitted work. 

Get a Real Estate Agent from TheMLSonline

When dealing with large sums of money and potential legal consequences, it’s best for homeowners planning on selling a house with unpermitted work in Minnesota to get the help of a professional. Protect yourself by working with a trusted and reputable real estate agent, like TheMLSonline team in Minnesota. An experienced realtor can help give you advice about your unpermitted projects and help you still get as much money as possible from your sale. A top real estate agent can help you figure out if you need a permit and walk you through the process. If you decide to sell your house as-is, an agent can help you value the home and come up with the best price to appeal to home buyers, whether paying with cash or seeking a mortgage. A realtor can also help protect you from scams and understand all needed disclosures and paperwork to make sure you don’t face any legal issues. If you are hoping to sell a house with unpermitted work, get in touch with us at TheMLSonline Minnesota to ensure a successful home sale. 

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