The case of the missing “weep screeds” almost brought a San Clemente couple to tears.
They were in the process of selling their house for $735,000 last June when the buyer’s home inspector discovered that the cement deck in their “exotically designed” tropical back yard covered the trim that allows moisture to drain from the home’s stucco walls. Those “weep screeds” are needed to keep the walls from crumbling.
The couple’s contractor had failed to get building permits when he installed a new back yard spa, grotto, waterfall and the aforementioned “Boulderscape” cement deck.
The buyer insisted that the problem be fixed. But at what cost? And who would pay for it? The owners had an offer to buy another house, provided they could sell their their San Clemente home first.
“It was causing a lot of anxiety and sleepless nights,” said Karen Conley, the Keller Williams agent who represented the home’s sellers.
Finally the logjam broke when the contractor agreed to replace a portion of the offending concrete with flower beds — for free.
Out of ignorance or a desire to save money, Southern California homeowners often have repairs or improvements done to their property without getting the required building permits.
Sometimes, it’s no big deal. But sometimes those decisions come back to haunt them.
Buyers balk or demand a price cut. Lenders refuse to fund a mortgage. And if the issue slips past lenders, appraisers, home inspectors and escrow officers during a sale, buyers can sue the sellers for not disclosing any defects beforehand.
“We’ve had (permit problems) kill deals before, and we’ve had them almost kill deals,” said agent Mac Mackenzie of Coldwell Banker in Irvine. “If it’s serious enough, it can stop a transaction from closing.”
In more extreme cases, homes fall apart, agents, contractors and city building officials said. Sometimes, people get hurt.
“There’s an endless number of cases,” added broker Mike Hickman, president and chief operating officer of Seven Gables Real Estate. “Most homeowners don’t know when a permit is required, and that is the root of the issue.”
Structural repairs
Generally, permits are not required for minor repairs, such as fixing leaky pipes, painting, new carpeting or new kitchen countertops, said Dennis Bogle, who oversees Laguna Beach’s building inspection department.
But homeowners and their contractors are required to get city building permits for any alteration, major repairs or new construction. Permits also are required for work affecting a home’s structure or its electrical, gas or plumbing systems, he said.
That means you even need a permit for such small jobs as replacing your garbage disposal, water heater and stove top.
Bogle noted that garbage disposals have powerful motors and require special, heavy-duty cords. Some people install them with lamp cords, he said.
“The building inspector is there to see that work is done to code,” said Luke Zamperini, chief inspector for the Los Angeles Building and Safety Department.
Zamperini noted that there’s nothing inherently dangerous in installing water heaters without a permit – unless there’s an earthquake and the heater has no strapping, and it falls over.
“That can be an issue,” he said.
Nobody knows how common un-permitted home improvements are.
Brad Burgin, owner of Burgin Construction, a North Tustin home remodeling firm, estimated that 90 percent of small jobs – such as window or water heater replacements – are done without permits. About 50 to 60 percent of bathroom and kitchen remodels are done without permits, Burgin guessed.
Higher stakes
The implications of going permit-less are getting more serious in the wake of the financial crisis, which caused banks to raise their lending standards for real estate deals.
In the last five or six years, Burgin said, homeowners or agents have been calling his firm, saying you did a job for us, we’re selling and didn’t keep copies of the permits.
“Now the banks and the escrow companies, they see a remodel and they want the paperwork,” Burgin said. “If you did a remodel without a permit, it could hurt your chances of selling your home — or lower the value.”
Contractors and homeowners both are to blame for the amount of un-permitted work, city and industry officials say.
Getting permits require fees and extra time waiting for a building inspector to show up.
Contractors who get the permits must be licensed, bonded and have workers compensation insurance. Contractors also must pay up to $300 for a one-year business license — often needing separate licenses for each city they work in.
“There’s a lot of fly-by-night guys who, in order for them to bring the job in at a low bid, will want to do the job without permits,” said Zamperini, the Los Angeles building inspection chief. “(It) is in the favor of the property owner when contractors get permits.”
Competition makes it hard for contractors to do work with permits, said Alon Toker of Mega Builders in Chatsworth, 2014 president of the Los Angeles area chapter of the National Association of the Remodeling Industry.
“I’m certain that I’ve lost business by not being willing to compromise on (permits),” Toker said. “People think, ‘Why should I pay more and waste time waiting for inspectors?’ ”
Toker maintains that it’s naïve to think that contractors have the consumers’ best interests in mind.
Sometimes contractors tell clients the permits aren’t needed when they are. Sometimes they say they are getting permits and don’t. Without the building inspector looking over their work, contractors can cut corners.
Homeowners “just don’t see the value of inspections,” Toker said. “They don’t ask for it. They don’t expect it.”
Toker noted that one client hired an unlicensed worker to install a water line to an ice maker in his home’s family room. The worker used plastic tubing instead of copper, and the water line burst, buckling hardwood floors and causing $140,000 in damages.
Often contractors give homeowners two bids – charging extra to do the work with permits.
“Extra,” observed Bob Hunt of Keller Williams Realty in San Clemente, “means following the law.”
Un-permitted work is more common in areas with older homes, agents said. Homeowners associations – often seen as being overly restrictive – tend to be good at preventing un-permitted work problems.
The most common types of un-permitted work are garage conversions and patios converted into rooms, officials said.
Loan appraisers and escrow companies tend to notice when a 3,000-square-foot home has permits for only 2,600 square feet, agents and officials said.
Disclosure the best policy
Several agents cited by number the state Civil Code section requiring home sellers to issue a Transfer Disclosure Statement describing a home’s condition — including work done without permits.
Often sellers can reach an accommodation with buyers by fully disclosing work done without permits, said Mike Cocos, general manager of ERA North Orange County.
“We disclose, we negotiate and we make arrangements,” Cocos said.
That can mean discounting square footage from the value of a home. Or it can mean giving buyers a cash allowance to address the problem.
Mackenzie, the Irvine agent, said an illegal room addition caused one client to whack his $800,000 price tag by $95,000.
In some cases, Mackenzie said, clients had to remove room additions because the city wouldn’t grant permits retroactively.
Other agents noted that cities will grant retroactive permits only if they can open up walls to see what was done. That can be costly for jobs like bathroom remodels using expensive tile or stone.
The National Association of the Remodeling Industry noted also that un-permitted work could invalidate a homeowner’s insurance after a fire or flood.
Of course, getting work done with permits isn’t a guarantee that a home won’t have problems, Toker said.
“But, obviously, you’re stacking the odds heavily in your favor (when you do).”
Contact the writer: 714-796-7734 or jcollins@ocregister.com
