Buying a house with an unpermitted addition? (San Diego, Encinitas: real estate, insurance)

[limitup]

We are looking at buying a house in Encinitas and during the disclosure process we learned that an addition to the house was made with no permits. Where I'm from this is a big no-no but our realtor says it's pretty common in SD, especially in places like Encinitas.

I was just curious what people think about this. Is it no big deal? Is it really a commonly "accepted" practice that no one really cares about? Should we ask the sellers to get everything permitted, etc. before we buy the house?

Out here if you add on to your house without permits, as soon as you try to sell the house the inspector and/or appraiser will figure it out and report it to almost everyone. You face HEAVY fines, and the city actually doesn't even have to grant you permits after the fact and take your money - they can actually force you to tear down whatever you built if they feel like it.

On the other hand our SD realtor made like it's no big deal. He said a small percentage of potential buyers might have a problem with it when we turn around and try to sell the place, but other than that it's no big thing. (This is all assuming the work was done up to code and correctly, etc. etc.)

[SoCalCenteroftheUniverse]

Two things:

1. Fire your agent

2. Run away from this as fast as possible.

It is NOT a commonly accepted practice even if it IS built to code. A kitchen or bathroom remodel without a permit is common, but not an entire room addition.

[limitup]

Thanks for the reply. I'm actually unclear about some of it and waiting to find out the details now. I should have been more specific though - it's not an actual "room" that was added on to the house. The space in question is a guest house above a garage. What's unclear is whether they added the whole thing without permits, or if the room was there and just the kitchen area, etc. was added without permits.

We do like the house. I assume if we got the seller to go through the process of getting everything approved/permitted after the fact, paying all the fees and penalties, etc. that would be OK?

[cruitr]

Here's a discussion on another forum that may interest you:
Question about 'unpermitted' square footage | Piggington's Econo-Almanac | San Diego Housing Bubble News and Analysis

[limitup]

Thanks, that is a good thread. I guess I have some work to do. I'll start by finding out exactly what was permitted and what's not, and then I'll make an "anonymous" call to the town of Encinitas to see what their policies are and how they deal with this kind of thing. The work appears to be done up to code and the electrical looks good, but I'm not going to just take my home inspector's word for it and call it a day...

[cruitr]

Here's another thread on the same topic: unpermitted additions | Piggington's Econo-Almanac | San Diego Housing Bubble News and Analysis

Permits are a common discussion on Piggington. Just search their forums and you'll find others.

[totsuka]

Your agent is like alot of real estate agents..it's all about the money. Walk away from that place and find a new agent. If the city/county finds out..wham...fines...and the owner pays..they don't care if you just
bought the house...

[limitup]

I am going to be talking to the town tomorrow, but it's not really like that. The fees and fines, whatever they might be, would be a very small number compared to the price of the property in question. It's not so much about the money...

I found out that the "granny flat" space above the garage was originally permitted, but the kitchenette portion was added at a later date with no permit.

I'm guessing the seller would have got the permit(s) if it was going to be an easy thing to do. The fact that they didn't leads me to believe they thought the town would probably deny the addition of the kitchenette or they just didn't want to go through the hassle of convincing the town they were not trying to turn it into a rental, etc. They could have just been lazy, but based on what I know about the sellers I don't think that's the case.

The work was all done by licensed contractors according to the sellers, and my inspector said everything looks good. Seems like it should be relatively easy to get the permit(s) after the fact, unless they just flat out deny it in which case I guess technically they could require the owner to rip out the kitchenette. Although I've never heard of a town actually making someone rip down unpermitted work unless it was extremely shoddy or unsafe...

I still feel good about our agent. He has informed me that a huge number of houses in the area have unpermitted granny flats like this, and it's not a huge deal. They are bought and sold every day. Obviously I am going to do further research and make a few calls to the town, my insurance agent, etc.

My primary concern was that an insurance company could easily use unpermitted electrical work as grounds to deny a claim should the house burn to the ground, but he swears that's not the case. As an example he talked about how a huge number of houses in Rancho Santa Fe have "illegal" granny flats, and when a bunch of them burned in 07 no one he knows of had any insurance issues (he lived in RSF at the time)

[totsuka]

Good thinking about insurance...you could try to get the permits..don't roll the dice with insurance companies...get everything done legal...you might get caught up in a zoning problem..if the property is
not zoned for that type of building, addition..you can never tell until you ask for the permit...if it's not legal..wham!!!...

[SoCalCenteroftheUniverse]

I don't know. If there was wiring and plumbing done with the original remodel and all of that was inspected and signed off then MAYBE you are OK.

You seem in love with this house and hooked on your agent, so proceed accordingly.