There's a reason your friend is a 'contractor on the side' and not a full-time guy, because many/most customers don't want someone who tells them to cut legal corners. If a job is not permitted, ultimately it's the homeowner's responsibility and not the contractor's, so your butt is the one on the line if there is a problem now or in the future. Figure worst-case scenario: Job is underway, neighbor reports you, inspector comes by. Where I am it's an automatic $5000 fine, a Stop Work Order and a paperwork nightmare to get permitted retroactively for a job-in-progress and clear the SWO. And then you're on the Department of Building's radar, so expect a surprise inspection during work and a final inspection with a fine-tooth comb before you'll be able to close the job. Another scenario: you do all the work unpermitted but have an insurance claim a year down the line. Insurance company asks about this new bathroom which wasn't on their initial survey of the house. Asks for paperwork about when you did the work and city approval for the work to validate the claim. Um.... Third scenario: you install the bathroom without permits, live with it happily, then a buyer flags it at resale. It's now your responsibility to have the work legalized after the fact, which would mean opening walls and re-tiling in the case of a bathroom. If the work fails code - inadequate ventilation, problems with lighting placement - you have to fix it. Delays. Plus you're then in the position of telling the potential new buyers about a property tax increase, which hasn't been in their calculations prior to this. Plus they're wondering, if the owner cut corners here, where else did they cut corners that I'm not seeing? That's going to undermine their confidence and could lose you a sale. We're permitted up the wazoo for our ongoing renovation - general, electrical, plumbing, mechanical. It's cost several hundred dollars overall, but it's minor money and red tape now to save major money, legal hassles and time later.

westsider40: "I wouldn't bet that an insurance company would deny a claim for houses not up to code. Perhaps, but, we have a 1922 cottage where the elec is up to code on the main floor but the second floor still has knob and tube. Very little in that old place would be up to today's code but we filed a claim for a critter chewing up the flexible heating ducts in our 2 foot high crawl space (only flexible ducts would fit!) and it was paid." The claim denial has nothing to do with "being up to code"...it has to do with performing an illegal renovation that may be the cause of the claim. Without permits, there are no verifiable plans...you are therefore out of luck proving that something that was or was not done with the renovation did not cause the fire, flood, etc. That said, knob and tube is "grandfathered" in most if not all jurisdictions in terms of code compliance. However, during the last couple of years, many of the major insurers will not insure a home with K&T once title changes..or will charge a huge premium to insure. That means that if or when you sell, the buyers may not be able to obtain insurance...or they will have to pay quite a bit extra for that insurance, unless there is an electrical upgrade. This is because most K&T is not in perfect condition and/or it is difficult to verify that it is all in good shape, as much is hidden behind walls.It is also difficult to find parts to repair K&T when required..or to even find an electrician willing to do so and who knows HOW to do so...and for a reasonable cost. Last but not least...once you renovate, in most places, grandfathered things such as K&T are no longer "grandfathered" and must be brought up to current code. In our small NJ town, three people who had fires who also had illegally finished basements were denied their insurance claim. For those who can afford to take that gamble..so be it...but bear in mind the cost can be a LOT more expensive than permits...especially if injury and/or death occurs.

Again, no one can answer your questions about your local code and permitting authority without at least knowing where it is. Building codes vary by location, even when the codes don't vary, building departments will differ in responsiveness, prescription of codes and remedy for violations. There are 89,004 different coding districts in the U.S. and while there may be a lot of commonalities there are distinct differences. For example, the fence analogy would not work in my community as any fence under 8ft and without anti-intrusion measures (barbed wire or electrification) doesn't require a permit. Whether you are replacing, repairing, or making it taller doesn't matter. Also, in our city, the building department is easy going, and while there are fairly strict zoning and code rules here, our building department is incredibly responsive and helpful to homeowners. The city we are building in, which is only 1.2 miles from my current home, has fewer codes but the building department isn't responsive and tends to be very adversarial. The city my wife grew up in has no zoning ordinances at all. You can construct an office building in your backyard (and yes, people have), there is a 10 year debate running on the council whether or not a building permit is even required as long as all the individual inspections are done and the CO is obtained. One last time. We can give you general advice, some things are easy - new electric and new plumbing almost always require a permit. Some things are much harder, installing a fence for example. Your only options are either talk to your permitting authority, or an expert in your area (a local contractor). You can be on here all day long, loving some advice, hating some advice and becoming much more informed only to find that much of what you learned here doesn't apply to you.

@Tim Cleary I have to admit, that part of the reasons why I'm reluctant to fill it, is that myself (or future buyer) can have the option to convert it into a underground studio like you said in the future, with part of the "deck" (or ceiling of the studio) being glass.... I have seen something similar in commercial property (like entryway to a subway), but not sure if such thing is realistic in residential...