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Whether you’re on the buying or selling end of a real estate transaction, unpermitted work on a home—any modification or renovation made for which the right municipal building or other permits weren’t obtained—might cause problems if not tackled right away.

When You’re the Seller
Enough can’t be said for disclosing work you’ve done on the home for which you didn’t have permits. It is incumbent upon your listing broker to divulge all known material latent defects about your property. That could encompass work that was completed without the proper permits in place.

The best thing to do is to give your agent all the building permits you do have for any work done so he or she knows about anything undertaken without required permits. Then they can disclose that to other agents and possible purchasers. This is extremely important since unpermitted work could impact the value of your property.

For Buyers
You need to know there are risks associated with purchasing a property that has had work done on it without proper authorization. If it’s clear renovations have been made, ask your real estate salesperson to make sure they were done with the proper permits in place.

If you buy the property and ever decide to do renovations yourself, any work that was completed by the sellers may affect your own modification plans. Maybe you’re even buying a home with the intention of renovating. You should know, too, that when you know something has been done without permits, you take over the responsibility for unpermitted work once you buy the home and the onus falls on you to tell possible buyers should you ever decide to sell. By the way, unpermitted work is usually not covered by house insurance.

Ask Questions
You or your agent should always ask to see files for building permits. If the seller isn’t the original owner, you or your agent may have to take a trip to your municipal office or regional district office to pull permits.

If there has been work done on a home without the proper permits, it’s likely that they will be reflected in the asking price and will be disclosed by the seller or his or her agent. If you find there has been work done that has not been disclosed, it may give you some negotiating room on the asking price. But even if you’re likely to get the home for what you consider to be a great deal, you might not want to invest in a property with possible permit issues.