Kathleen Doler (Investors Business Daily)

Are you a doer or a buyer? Either way, you need an inspector and the right permits for home improvements.

Industrious homeowners have built DIY, do it yourself, into quite the phenomenon. Most homeowners who make improvements do at least some of the work themselves, and plenty of ads from chains like Lowe’s and Home Depot show penny-pinchers how cost-effective DIY can be.

But the bargain can come back to bite if do-it-yourselfers skimp on following building codes and getting permits for projects.

It can be a huge gotcha for the sale of a home. And those who unwittingly buy such a home can face safety problems, costs to bring a remodel up to code, even the prospect of having to tear down.

Real estate agents, remodeling contractors, building inspectors and industry groups say it’s a big problem.

“Everybody can get away with buying a house with unpermitted work,” said Rocky Dunn, owner of Greenwood Contracting, in Phoenix. The issue is “whether they get caught (or have a problem) down the road.”

About 52% of U.S. homeowners who spruced up their places in 2005 reported DIY projects, according to an analysis of census data by Harvard’s Joint Center for Housing Studies. The center sees home improvement activity lifting to more than $270 billion by 2015, up 44% from 2005.

Will You Need A Permit?

Does every remodel job need a permit? That varies from county to county and city to city. The National Association of the Remodeling Industry says at its Web site:

“Building codes have been established by most cities, towns and counties. They vary considerably from one jurisdiction to another. A building permit is generally required whenever structural work is involved or when the basic living area of a home is to be changed. A professional who works in your city or town every day will know local requirements.”

What’s a home buyer to do? Hire a top-notch home inspector and ask your real estate agent to pull all the permits from the city and county on a piece of property you’re considering buying. And make sure if there was a remodel, the final inspection was done and signed off, says NARI past president Mark Brick, owner of B&E General Contractors, in Milwaukee.

If the remodel didn’t have a permit, or didn’t get a final inspection, you need your home inspector’s opinion and a contractor’s advice. The inspector will tell you what codes the remodel does or doesn’t meet and if it can even be made legal. If it infringes on the set-back requirements for the lot lines you may be forced to take it down. If it can be fixed, a contractor can estimate what it will take to bring it up to code and get it permitted.

You may also want to contact the local building department to find out what fines you’ll be charged to get a permit for an illegal add-on.

“Home inspections don’t always pick up everything,” said Becky Loar, a real estate broker in Snellville, Ga. She says if the property is part of a homeowners association, you also need to make sure the remodel meets their covenants, or can be made compliant.

Sometimes buyers just walk away when these types of issues are discovered during escrow.

“It will usually kill the deal,” said Ruben Barrera, city building official for Santa Clarita, Calif.

He says some lenders won’t lend on illegal construction, or they’ll only lend on the portion of the dwelling that has proper permits.

Santa Clarita, near Los Angeles, has taken a strong stand on enforcing its building codes.

It sends inspectors out regularly to review reported possible violations, and if it finds a violation, fines are stiff.

Getting an unpermitted add-on in Santa Clarita permitted will cost the current owner a fine of double the regular permit cost, plus the fee for the regular permit, Barrera says. So a permit that would have cost $500 up-front would be $1,500 if obtained after construction’s done.

New Codes Confound

Getting an illegal add-on up to current codes may be difficult as well. California building codes change every three years, Barrera says. So even if a remodel was up to code when built, if it wasn’t permitted then, it now has to be brought up to the standards of the current codes.

In any case, making an unpermitted remodel legal may involve a little or a lot of demolition. If it was a room and included electrical work, the walls will have to be opened and the wires inspected. Walls also may need to be cut open to see the structural elements and if the remodel wasn’t built to the structural standards, if may be a total loss.

Remodeler Dunn is rebuilding a patio that was originally done without permits.

“I’m having to tear the entire thing down,” he said. “The structure was built with too light of wood” to meet applicable building codes.

If the remodel added square footage to the house and you then get a retroactive permit, you’ll also be facing a larger tax bill. Property taxes are typically based on the size of the lot and the size of the structure.

Beware Insurance Snags

Finally, safety is also a concern, especially with a room add-on. You want to have confidence that the wiring was done correctly, the structure is sound and no toxic materials were used. Some real estate agents say if you get a great buy on a home, that can go a long way toward making up for any of the hassles that may come along if the dwelling includes unpermitted space.

But if your new house burns down, and your insurer finds out it included unpermitted space, “they have a way to get out of any of their obligation as an insurance company,” Brick said.

Wiring is just one issue.

“What if the ventilation for a sewer drain wasn’t done correctly and your kids are getting sick?” Brick said.

A permit dictates safety, he adds, and it’s usually a very small portion of the cost of the overall remodel.