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Phillip C. Querin
Partner - Portland, Oregon Office
philquerin@dwt.com
(503) 241-2300
Unpermitted Remodeling Work
[June 2004]
What Must Sellers Disclose?
Oregon’s Property Disclosure form asks sellers whether they
have had any additions, conversions or remodeling to the home. If
the answer is “yes” the form asks three follow-up questions;
(1) Was a building permit required? (2) If one was required, was
one obtained? and (3) If a permit was obtained, was a final inspection
secured?
Listing and selling agents should always be mindful of the fact
that a seller’s answers to these questions can vary greatly
depending upon how the question is interpreted:
(1) Since the seller’s answer are provided upon the basis
of the his/her actual knowledge at the time of disclosure,
Sellers who have lived in the home for a comparatively short period
of time, may have little or no knowledge about what additions,
conversions or remodeling occurred prior to their ownership;
(2) Even if they are aware of such work having occurred either
prior or during their ownership, they may have no knowledge about
whether a permit was legally required for the work to be done;
(3) If work was performed, the seller may regard it as merely
“cosmetic” and therefore not qualifying as an “addition,”
“conversion” or a “remodel;”
(4) If the work was performed by a contractor, the owner may
incorrectly assume that it was legally permitted and inspected.
For all of the above reasons, Realtors® should be alert to
the distinct possibility that a seller’s answers to questions
concerning remodeling may not always be totally reliable, even when
made in good faith.
While Oregon law does not require that real estate agents be “experts”
on the issue of code compliance, it does not permit them to close
their eyes to the obvious. If the home’s garage or attic has
been converted to a sleeping area, an older home is advertised as
having been “updated,” or the style of kitchen or bathroom
obviously post-dates the home’s original construction, the
question must be asked whether the work was permitted and inspected.
This question should be asked regardless of the seller’s
answers in the property disclosure form.
There are three major reasons for following this practice: (1)
From the listing agent’s perspective, knowing this information
in advance can avoid unpleasant problems later in a transaction
- and also reduce the risk that a buyer could later argue that the
lister was complicit with the seller in a cover-up; (2) From the
selling agent’s perspective, it can eliminate the risk of
claims by buyers that their Realtor® should have advised them
of the potential problems that can ensue if/when the local building
officials discover that unpermitted construction work was performed
on the home; and (3) Most importantly, verification reduces the
danger that illegally or poorly performed work could result in a
catastrophic fire or other disaster causing injury or death to the
buyer or buyer’s family.
When is a Permit Required?1
The answer to this question is not always clear and sometimes confusing
- which is why sellers’ answers in the property disclosure
form can vary dramatically.2
First, owners themselves may perform certain work on their own home,
without hiring a licensed contractor.3
However, homeowners performing their own work are still subject
to the same permit requirements as required of licensed contractors,
i.e. they all must apply for and obtain a permit and have the work
inspected for code compliance.
If the work involves interior plumbing, e.g. repair, replacement,
or relocation of lines, chances are a permit is required. The same
holds true for new plumbing fixtures, such as toilets, sinks, tubes,
etc. Even replacing an existing fixture, such as a tub or shower,
can require a permit, if it involves concealed plumbing
connections. A permit is not required to replace accessible
plumbing fixtures or to make certain emergency repairs. If a bathroom
is added to a home, this may involve obtaining not only a plumbing
permit, but a building permit, an electrical permit and mechanical
permits.
Work involving exterior plumbing such as sewer lines, septic systems,
cesspools and drywells can require a permit. In some instances,
the contractor must also be licensed by the Oregon DEQ.
Repair, replacement or installation performed on heating, cooling
or ventilation systems is known as “mechanical” work
for which a permit may be required. This can include installing
or changing any part of a home’s heating or cooling systems,
wood stoves, fireplace inserts, gas piping or fuel oil tanks.
When electrical work is done on a home by the owner, he/she must
also be the occupant – otherwise a state licensed contractor
must perform the work. A permit is required to install, change or
repair any hard-wired system. This includes additional wiring, adding
an electrical outlet or light fixture, or changing a fuse box to
circuit breakers. Even installation of low voltage systems such
as phone or security systems can require a permit.
Building permits are required almost any time a dwelling is enlarged
or altered in any material way. Examples would include finishing
an attic, garage, basement, moving or adding walls, some deck and
porch construction, etc. When building permits are not required,
but there are concerns about how the site is used, a zoning permit
may be required. For example, enlarging a driveway or paving a parking
area, may require the owner to obtain a zoning permit.
Permits, if required, must be purchased before the work is performed.
Any work performed under a permit must be inspected for code compliance.
The permit expires after 180 days if it has not been inspected.
If the city or county becomes aware that work has been performed
without the necessary permit(s), the homeowner will be notified
by mail to either purchase the necessary permit, or in the case
of more complex work, to submit plans to the proper authorities.
If the requested action is not obtained, the matter is turned over
to code compliance authorities for follow-up. If necessary, the
authorities have the power to take administrative action or issue
fines against the owner of a home if the necessary permits were
never issued. Since the enforcement action is against the record
owner of the home, in those cases in which the home has been sold,
this means the innocent buyer is saddled with his/her seller’s
noncompliance.
Getting Legal
There are many reasons why homes may not be code compliant, ranging
from a failure to realize the need to obtain a permit, to acquiring
a home containing alterations that were performed by a prior owner.
The Portland Bureau of Development Services, which is charged with
responsibility for ensuring that construction is properly permitted
and code compliant, has a “Get Legal Program.” Although
it is not an amnesty program, it is specially designed to assess
each situation on a case-by-case basis and develop a plan for legalizing
the property. The scope of work is evaluated, assistance provided
in securing the necessary permits, and the homeowner is given up
to one year to have the required work completed and approved.
In jurisdictions outside of Portland, those wishing to determine
the availability of a similar program should check with the appropriate
governmental officials. Getting legal prior to placing
the home on the market can avoid the unpleasant experience of either
losing a sale, or having to make a substantial reduction in the
price to accommodate the buyer’s anticipated cost of getting
legal later.
Conclusion
After a home has been sold, the new owner may be saddled with the
expense and responsibility for making a home code compliant. In
some cases, the time and cost can be substantial. Now that seller
property disclosure is required to be given, owners have very little
“wiggle room” to avoid addressing the issue of whether
any remodeling was ever performed, whether a permit was ever issued
and whether the work was ever inspected and passed. The longer the
owner owned the home, the greater the likelihood he/she knows the
true history of its improvements.
In this litigious society, Realtors® cannot act on blind faith
alone. Listing agents should make sure their sellers understand
the risk in giving untruthful answers, and selling agents should
make sure their buyers understand the need to verify with the local
jurisdiction exactly what work has (or has not) been permitted,
inspected and passed. It is this type of information that Realtors®
can bring to a transaction, and in so doing, justifiably earn their
commission.
FOOTNOTES
1
Much of the following information was obtained from the Portland
Bureau of Development Services. Their website is http://www.bds.ci.portland.or.us/.
It can be a very useful resource for both Realtors® and their
clients.
2
Remember, the form only requires that the seller’s answers
be based upon his/her “actual knowledge.” If the seller
truly doesn’t know whether a permit was required, or
truly believed one was not required, it will be very difficult
for a buyer to prove that the seller knew they were not telling
the truth at the time they completed and signed the disclosure form.
3
The “owner” is the person named on the title –
not a family member or friend of the owner.
© Copyright 2004. Phillip C. Querin,
Davis Wright Tremaine. No part may be reproduced without the author’s
express written consent.
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