Are you assuming the building department will approve the wiring and insulation, etc. without being able to inspect it? I would proceed cautiously.

Why would it be so expensive? Would you be removing the drywall? If not, the cost should a fraction of the estimate.

If new buyers know the living space doesn't have a permit, they're likely to make a permit a condition of purchase. Why wouldn't they?

Does your jurisdiction require covered parking? If so, your "garage converted to living", may require you to build a new garage, or else "unconvert" the garage-to-living back to garage...

When you list the house for sale, legally you must disclose the nonconforming use.

I remember refinancing my first house to an FHA loan (this was in California) and we had to get the converted garage permitted or we wouldn't qualify for the FHA financing. I don't know if this still applies, but if it's true, your buyer would not be able to get an FHA loan for your property. Something to look in to.

Very market dependent. We sold a house last year with an unpermitted basement. We would have had to do some drywall access and upgrading the HVAC. It looked like it was going to be $10k and a mess. And would have taken 1-2 months. We sold it in 4 days at roughly a $10k discount (in our minds - always hard to know value).

They had in their initial offer require that we permit. We said no - they bought anyway. Our market is good but not at that price point. 90 DOM is pretty normal. Our street has two houses 6 months on the market right now.

Don't forget taxes which clearly varies regionally. But almost always, finished square feet is a component of the calculation. For much of us on this forum (anyone with a high income and state income taxes), property taxes went up 30% for 2018 as a component of the the tax reform bill.

This thread is confusing. If the house was recently renovated down to the studs then the contractor must have had a permit that included the room in question and it would have been inspected and included in the new Certif of Occupancy.

I would have had it permitted when the rest of the house was renovated. I completely agree with Sophie on the value of a permit. I personally would never purchase a home that has an unpermitted room.

Do you or your contractor have the inspector’s number from the renovation? Or at least his name so you can call city and leave message? Since he has seen your house, he may have an idea on how far the city may need to go (ie remove drywall to see electrical) to permit it. (Personally, if removing drywall is all they need to do, then I would be okay with it.). I’d be sure to let him know that you did not build this yourself, but purchased it unpermitted.

I've probably reviewed the building department files for a hundred buildings in dozens of towns in several states. It is rare to find complete records of the drawings, permits and the inspectors sign off upon completion. If the house has a valid certificate of occupancy, I would put the house on the market and let the buyers do their own due diligence. Realtors may be responsible for revealing known defects to buyers but they cannot be expected to give advice about how to remedy them.

Real estate property and sales laws may certainly vary, state by state. In my experience, after many state to state moves, I've experienced that a seller must fill out a multi page form listing all conditions known to the seller, under penalty of law. If this applies in your state, you will have to disclose the nonconforming space, and all other known conditions, in your sales contract documents, which will be accessible to every potential buyer and their agent.

Obtaining a new and comprehensive occupancy permit is certainly an advantage in selling an existing house.

The real question is what will your local jurisdiction require in order to get such a permit, and what will be the expense, if any?

Good luck on your project.

I think they will approve it since the entire house and garage were recently renovated by a licensed contractor down to the studs. They have done a great and expensive job.

Did the licensed contractor pull permits? If not, why not?

"...the entire house and garage were recently renovated by a licensed contractor down to the studs..."

Something simply doesn't make sense here. If the "entire house and garage" were recently a part of a renovation, there should be on record a building permit and an occupancy permit if this work was done legally.

What is the OP not telling us?

Yes, very market dependent. The LA area has recently become much more lenient with permit regulations for ADU (accessory dwelling unit or guest house) and converting garages to additional living space.

Was there a Certif of Occupancy in the records? If you don't have evidence that the garage was converted without a permit and the building dept isn't demanding you get one, why worry about it?

There are some really pertinent facts which are apparently missing from this thread...

As a result, everyone is guessing about the best course of action.

And the OP is not forthcoming about all the facts of the situation.

Time to bail out of this thread...

So - things make a bit more sense now. You actually have the entire house with unpermitted work but there was a square footage change with the garage. Have you asked the permitting office what would happen if they came in?

The reason I ask is you are quoting a very specific number - like that is what the actual permit would cost - $6000. It sounds like you are assuming that nothing else needs to be done. That is a huge assumption.

In my jurisdiction (NC), if I were to go to the town and say a permit was not pulled for this major reno and I want one. They would say sure - we will come and inspect. We will ask for holes to be made in drywall and check to see if everything is up to current code. This includes insulation. In 2017, CA updated their wall insulation requirements for the entire state. Walls that you don't have.

When you don't pull permits, you allow the jurisdiction to require current code to get a permit. That can be tremendous. When you alert the jurisdiction that you have habitable areas that are not code compliant, they can condemn them.

But - I have certainly heard that CA permitting is about collecting fees. No one would pay them any money on retrofitting permits if they required current code so there is a good chance they don't. But ask them - just try to avoid giving your address when you do....

Crazy system in my opinion. I would suspect that a large percentage of CA has unpermitted work. Enough that they have "sweeps" to make sure that taxation is correct.

I would assume the opposite. If no permits were pulled for the 15 year old reno you will need to permit that as well, and bring the entire house up to current codes. Actually in my opinion the 15 year old renovation may be more of a hassle than the garage conversion permit/CO process.

There's got to be some sort of "statute of limitations". Imagine if everyone had to bring their entire house up to current codes. Be careful trying to do the right thing, you might just bury yourself.

Sell the house as is, you don't have to disclose what a prior owner might have done.

Legally, you must disclose everything for which you have knowledge.

Right, so legally it sounds like the OP is all set. Let the new potential owner investigate whether or not permits were pulled decades ago.

I agree with ksc. Don't make assumptions about what the previous owner did or didn't do. Don't assume the previous realtor, owner or assessor was obligated to tell you a permit was not issued for previous construction work. What would the damages be anyway? Don't assume you are obligated to the town or county to get a permit for work you didn't do. Don't assume you can't list the property for sale as it appears just because the previous work was not permitted.

A permit only says you are allowed to do the work described in the permit. What is missing is the Certificate of Occupancy for the garage conversion. It may not have been issued or it may have been issued and lost. All you can truthfully say is you don't know. A renovation should already have a certificate of occupancy so what is missing is an updated C of O and I rarely find such documents in the records. Your only liability should be if a prospective buyer asks you to get a C of O and the building department says you need to have the previous work inspected and you can deal with that when and if it happens by a monetary settlement or asking the building department to explain what is required. Otherwise, its the prospective buyer's responsibility to inspect the house and any public records and then negotiate the terms of the sale.

The most your realtor should tell the buyers is there is no record of work done by a previous owner at the building department since that's all anyone knows. Its not necessary to use the term "permit" or "permitted space". Don't even suggest you might be responsible for the mistakes of others..

Furthermore, it occurs to me that the previous owner twice performed extensive work that must have been obvious from the exterior. The fact that the building department did not stop the work until a permit was obtained suggests that a permit might have been issued and lost or that this kind of activity is common in your area.

Whatever you do, don't pay for something you might not need.

Wait a sec - an interior renovation is not necessarily visible from outside. I certainly know that there are no building department police around here that look for permits when they see evidence of work being done.

The owner knows that extensive renos were done without a permit. To me, the letter of the law states that it must be disclosed. "Direct knowledge" - doesn't mean he was there. Whether that can be proven is hard to say and you could go with that argument I guess but no one on a forum should be suggesting that a law be broken (IMO).

No one has to bring a house up to current codes. That is not the issue here. A permit was not pulled for work - that is where current codes come in. To permit the work, the only standard in play is current codes.

Just so we are all clear here, in most large jurisdictions, absolutely everything you can imagine needs a permit. Move a light switch - permit. Hook up a new gas range - permit. Hook up a new faucet - permit. Sure a lot of that is ignored but technically requires a permit. Permits are not just used when a structure is built or added onto. It needs to be pulled if you do a renovation - with no change in square footage. Now a renovation could just be paint and carpet - but "down to the studs" needs a permit.

OP - at one point you said "recently" down to studs and then later you said 15 years. Are you calling 15 years recent?

Its not possible to do a gut rehab of an entire house without it being obvious from the exterior. The trucks would be in front of the house for months.

I am not suggesting the OP not reveal known defects only that all that is actually known is that there are no records at the building department. An owner is not obligated to share their assumptions nor should a buyer rely on them.

Well...this thread is pretty good evidence of knowledge of prior conditions...perhaps its time for the OP to check with an experienced realtor who has sound knowledge of the real estate regulations in effect in her/his jurisdiction to see just exactly what the OP may be legally required to disclose.

Your buyer is not getting a FHA loan without permitting the garage and interior renovations. If you want that pool of buyers, they come with a LOT (ALLOT according to Robin) of hoops to jump through. An inspection for FHA compliance has different standards than does one gorva standard loan. They want to be sure that their homeowner doesn’t buy something with hidden repair costs that would cause them to default on that loan.

Many property owners don’t want deal with all of that, and don’t. Disclosure still must be made. Selling a property “as is” does not alleviate you from the responsibility of disclosure.

I’m confused to if the renovations were done permitted or not. EIther way, I’d call the city and explain the situation. Make sure they know that the house was sold to you in this condition. I’d also ask if they can search to verify no permits were pulled.

Your buyer is not getting a FHA loan without permitting the garage and interior renovations.

This is incorrect. There is an FHA advisory that clearly states that unpermitted work done in a workman like manner is allowed. There are a few specific requirements for appraisers to determine the value of the work, but nothing needs to be done on the seller's end.

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To answer the OP's question, it is probably not worth it. I am a bit confused why your agent can't include the square footage. So far as I know, they can, as can the appraisal. You are paying taxes on it as a room not a garage, so count it as a room and not a garage.

There is no value for you getting a permit for work someone else had done for which the city is aware of and is not requesting a permit. If the buyer wants the work permitted then let the buyer demand that remedy. Assuming that the buyer is going to care about it, is a bit silly.

The California real estate transfer disclosure form is going to ask you if you are aware of any "room additions, structural modifications, or other alterations or repairs made without necessary permits." I would write in the words, "see attached" and then disclose I am unsure whether or not the original garage conversion was permitted, as that was done by a previous owner. Then note all work done by you, including work on the garage was permitted and inspected.

Until you are absolutely sure that the work wasn't permitted and this wasn't an oversight on the city's part, asking the buyer's to satisfy themselves is appropriate. You have to disclose what you know, but you don't have to do an investigation on behalf of the buyers.

Good luck

That's a better explanation of what I was trying to say. The OP should follow bry's advice word for word.

I would personally advise you to stop looking, the odds looking further into this helping are exponentially lower than the odds of it hurting. I know there are completionists out there who find it hard to leave things unanswered, but I suspect that is your best option.

You have been made aware of a possible permit issue, so indicating otherwise would be dishonest. Simultaneously, you have reason to believe that the previous owners went through a reputable remodeling company and did pull some permits. So stop digging! Proving to your jurisdiction that a previous owner properly permitted a remodel is quixotic, there is no winning that fight, only degrees of losing.

While I respect many of the previous posters who have advised you to correct the problem, I believe they are wrong. All things being equal it would be better if there was no question to the permit issue, but that isn't the question. The question is whether or not there is value in your investigating and correcting the issue, I don't think there is. It is easy to take a righteous approach with someone else's money.

I would count all the square footage as legal square footage because it is legal square footage. If the appraiser has a problem with counting the square footage, then that will come out in the appraisal, I wouldn't try to anticipate a problem that may not exist. If it exists, I would deal with it then.

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Since you found permits I would change my disclaimer to, although I have found permits for the remodeling and garage conversion project done by previous owners I am unsure whether or not those permits are complete. All necessary permits were issued for work we completed, including updates and improvements to the converted garage.

Agree with Bry911.

Out of curiosity, what floor area has your tax assessor been using for your house? That is probably what a realtor would use if the house is listed for sale?

You are your own worst enemy.

You are struggling to just forget about it. You are currently in the best position that you can be in, and any movement out of that position is worse. You have been told unofficially that there was a permitting problem, but have reason to doubt the accuracy of that information. Every step you take toward assurance is a step towards losing money.

You need to act as if the space was properly permitted because so far as you know it was, don't hire a code inspector, don't change the remodeling you do in the future. Simply assume that everything is in order until such time that you have evidence that it isn't.

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I am not sure what a 3rd party building code inspector does. However, it sounds like a giant waste of money. An addition done 15 years ago is not up to current codes, and making it meet current codes is going to be a lot more expensive than you hoped it would be. Do you want my mailing address to send me payment for my building code inspection services?

The concern with permits is usually those renovations without them fall short in doing the work to safety requirements. That is why the increasingly unhandy, unskilled, and undercalitalized, home buying public has latched on to the presence of permits as one avenue of assuring themselves that the home won’t suddenly cost them massive amounts of money that they don’t have. That overlooks the fact that permits, just like a home inspector, don’t catch everything.

Once you found out that the contractor who did the renovation was still in business, (didn’t fold, or flee immediately) seems to have a good reputation, and that some permits were applied for, that is all you need to know in order to have good faith that the renovation was properly done.

Any further digging or poking around that increases your knowledge of the situation is only likely to result in additional disclosures needing to be made that may harm you or your sale. This isn’t a case of deliberate concealment of improperly done work. Let the potential buyer do their due diligence, just as you will do on any new house that you buy.

Ask what you want to ask for your listing price. The market itself will tell you if it thinks your price is in error. If you get 4 offers at 100K under list price, all citing the fact that they feel the garage conversion needs work to bring it up to code, then you have a problem. Right now, your good faith assumption is that it met codes when the project was permitted and done 15 years ago. Deal with that issue if it crops up. But as long as your preliminary research has lead you to believe that it’s fine, they have to prove it is not.

Just take to heart in the search for your new house. Even permitted work can be done incorrectly and cost you money to correct. Yes, even in a brand new house. Life is not idiot proof. A better idiot 2.0 comes along all the time.

I wouldn't buy they house. It is like buying something without a home inspection (no one has or can inspect behind the garage walls)

Assuming the original structure and exterior cladding was not substantially altered, the code/safety issues include:

1. untreated floor framing should not be in contact with the old slab, (can be verified by small openings)

2. vapor retarder below the floor and on the warm side of the walls if required for the climate (can be verified by small openings)

3. floor and wall thermal insulation as required at the time of conversion (can be verified by small openings)

4. proper stapling of electrical wiring to the framing. (difficult to verify)

5. Proper electrical wiring (can be verified at the panel and outlets).

6. large enough window openings for required natural ventilation and, if the space is used as a bedroom, size and height for emergency escape and rescue. (easily verified)

7. off-street parking required at time of conversion (easily verified)

You can buy an electronic inspection camera scope at Home Depot for $90 to $240 but I've never used one.

The issue for the OP is whether to do these tasks now or wait to see if a prospective buyer asks for them to be done. If they are done now, they should be documented preferably by the building department.

But remember, all you know of this matter is that there are no permit documents on file at the building department therefore you cannot tell a buyer more than that in regard to the code compliance of the house.