The statement of “we understand the risks and were willing to take it” is a very common mentality for both homeowners and contractors alike. When it comes to the subject of permits for prospective projects or a homeowner deciding to work with a contractor who is not licensed and insured for the particular task at hand, this statement is pivotal. I think often it’s easier to decide to take the risk when the language of “is something permissible” provokes a less punitive connotation than the reality of what is being started. The reality of what’s being stated, in its clearest terms, is that engaging in an alteration of your home where a permit is required and choosing to not seek a permit is illegal. The same holds true for hiring a contractor who does not possess a license for the task which needs to be completed. In terms of hiring an unlicensed contractor, we’ll briefly touch on that in this article but will examine that topic further in an article titled “Understanding the Nuance”. This article will mostly focus on why permits matter, and why the risk of not obtaining one can be far greater than the benefits.

Before we get into the article, let me begin by saying that I fully understand why most people would want to “side skirt” the permitting process, it adds more to the overall cost of the project and sometimes the project is so simplistic that it seems like a very low consequence move to not permit something as simple as a shower valve replacement. I’ve seen projects where in an older home people simply wanted to add a shower to a basement as it had an accessible floor drain. The floor drain is generally a 1 ½” size pipe and code requires that you have a shower drain with a  2” pipe. Most folks don’t want to go through the hassle of breaking concrete to trace the smaller pipe back to a size that meets code, so they opt into skipping the permitting process to avoid the hassle. It seems like a very low consequence activity. The arrangement works for the homeowners as they get their shower installed at a much lower cost, and it works for the contractors as no one likes busting up any more concrete than necessary. In many cases you can simply get by without dealing with the permitting process and never experience any real consequences of that action. But how wise is that approach really? Are you really understanding the full implications of what could happen if you get caught while the job is in process or long after its completion? The goal of this article is to get into the true implications of what could happen if you don’t obtain a permit and to give you, the homeowner, the proper information to assess if the gamble is really worth the risk to your home. 

“The mark of a good general contractor is one who mitigates risk not only for himself but his clients as well”. My cousin made this statement a few years back as I was driving around downtown Portland shadowing him on the various multi-million dollars high rise construction projects he was managing. Most often we think of a good contractor as being one who does their work to a high degree of quality or who can accomplish a project in a timely manner. Those are excellent traits to have for sure, but what’s often overlooked is construction projects have very high consequences if executed improperly. These consequences are high for the contractor for sure, but the ultimate burden doesn’t fall on the contractor, it always lies with the homeowner. You, the homeowner, are responsible for what takes place on your property, and the three categories with the highest consequences for homeowners are the following:

1. Failing to pull a permit.
2. Hiring an unlicensed contractor, or one who does not possess a license for the particular task.
3. Having uninsured or underinsured workers on your property.

FAILURE TO PULL A PERMIT

Most homeowners and contractors are conditioned to believe that pulling a permit is an expensive task, and something that can cause a lot of potential headaches if the inspector “finds” something. While both those statements can be true it’s often not the case unless you live in a home that was built before building codes were enacted. In most cases the cost to pull a permit can be $250.00-500.00 for small projects, $500.00-1500.00 for large projects, and $2500.00-3000.00 for new builds. The inspection process in most projects I’ve worked on has been simple with most inspectors seeing what they need to see and signing off on properly performed work in less than 10 minutes. In most cases the inspector simply needs access to the home and to visually inspect the work being performed. If the work looks up to code the inspected work is passed with no further instructions. You may receive a partial pass if the inspector needs you to make a small modification (i.e. adding spray foam for fireproofing). Rarely has the permitting process been difficult or complicated to deal with unless something is really wrong with the project.

RISKS FOR THE CONTRACTOR

  What are the risks for a contractor for not pulling a permit? Typically the risk for contractors working on unpermitted work will get red flagged causing all work on the project to cease until the permitting process can be complete. There would also be a fine imposed on them. If they are habitual offenders, they could lose their license to work but that is essentially where the punishment stops for the contractor – unless it is written in the contract with the homeowner that the contractor would pull permits for the project and failed to do so. I am not a lawyer but from what I have researched that is the only circumstance in which a homeowner could legally go after a contractor for failing to pull a permit. Of course this assumes the contractor has a license and is up to date on their bond and insurance.

RISKS FOR THE HOMEOWNER

What are the risks for a homeowner for not pulling a permit? To answer this question I am going to incorporate two of the three high consequence activities I had mentioned above: Not pulling a permit, and hiring an unlicensed contractor. 

One: The project may get flagged and shut down at any point during the construction process. There are a few ways in which a project can be flagged from the start. A neighbor who loves to call the city if there is some random violation he or she finds while roaming the neighborhood. An inspector checking out a project a few houses down sees a lot of construction vans parked at a particular home and decides to knock.  

If a project gets flagged, all work has to cease immediately, and a fine is imposed on the homeowner. Depending on how far along the project is, it could be required by the county that you remove the installed finishes so the inspector can visibly inspect the work which was done. This could be extremely costly if expensive finishes have already been installed such as a shower or kitchen counters and cabinets. The county can even impose a lien on the property and if work was not performed to code, the home could be labeled as condemned forcing you to move out till the work is corrected. The long lasting issue is that the threat does not go away once the project is completed and may potentially never go away even if you sell the home. The only way the threat goes away in the event of a sale is if you disclose the unpermitted work at the time of sale which means the new owners now own the consequences of unpermitted work. If you chose to lie on the disclosure notice and it’s discovered that you were aware of the unpermitted work, you could be found liable in a lawsuit. From the start of the project, through completion of the project, and beyond, you have to worry that at some point you may be required to bring everything in your project back up to code should the unpermitted work be discovered. 

Two: Some contractors wish to not pull permits because they want to perform work which they are not licensed to perform such as relocating plumbing lines or adding new circuits to the bathroom or kitchen. To be clear, a general contractor who is overseeing a remodel or new build can manage this process but a licensed MEP contractor must perform the installation. In some jurisdictions a handyman or general contractor can perform simple tasks like replacing a light fixture, however, this is not true in all jurisdictions as it will depend on the county regulations. What is the risk to a homeowner for having a non-licensed contractor perform structural or MEP work on your home?  If there is a catastrophic failure in terms of a plumbing leak or an electrical fire, the contractor’s bond and insurance (if they have insurance) will not cover the damage to the property. The only coverage their bond and insurance will cover is work they are licensed to do. The question then becomes will your homeowners insurance cover the damages from illegal work?

• Consider this article from Global News in Canada: Over 80 per cent of basement fires in Brampton over past 2 years in unregistered units – Toronto | Globalnews.ca. 80% of basement fires in one city occurred from unpermitted projects. Although the article doesn’t specifically state the criminal charges were issued to the homeowners, one would have to assume that the homeowners would be liable for criminal charges and liable for construction damages as well. 

IN CLOSING

From a personal story, my mom was considering renting her basement as an AirBnb. Before she began the process I looked at the county website to confirm the basement had been permitted and was legally safe. The previous homeowner at the time did permit the basement which was great. However, he chose to do the electrical work himself vs hire a professional. I read the comments from the inspector who failed his initial rough-in inspection. The inspector simply wrote, “there are too many code violations to list”. Can you imagine the consequences of renting out a dangerous space or having a visiting guest inhabiting the space and a failure were to occur? Thankfully the work was inspected and corrected, and should any catastrophic event occur my mom’s biggest investment would be protected. 

If you have projects in your home that you haven’t acquired permits for, particularly those of high consequence, you open yourself up to fines and being forced to bring the project up to code which could mean removing much of the completed work done on the home. These issues make the home harder to sell, a potential loss of insurance coverage, and potential criminal punishment depending on the nature of a catastrophic failure. Going back to the concession I made at the start of this article where I stated that I understood why someone would not have wanted to permit a basement shower with an undersized drain. In a real life example I was hired to tile a shower as a subcontractor. The homeowner and general contractor agreed to not pull permits for the shower as they didn’t want to break out any more concrete than necessary to complete the work and getting the project permitted would have forced them to remove much of the concrete slab to get back to a 2” drain. What the clients failed to realize is they would eventually have to do this work anyway as the 1 ½” drain they were tying into was galvanized steel pipe that was on the verge of disintegrating due to 70 years of rust and decay. Instead of bringing the drain to code from the beginning, they will eventually have a leak that compromises the integrity of the slab, enables mold growth, and will be forced to remove all the finishes they installed to break out the slab to remove the old pipe anyway. Far more costly than spending the extra money on the front end to bring the space up to code, and make sure their investment was secure by pulling the proper permit from the get go. 

HOW WE PROTECT OUR CLIENTS

Please note, this article is not written with the intention of passing judgements on homeowners or contractors who do not follow the rules as the law states. I wish I had a perfect track record in this arena, but unfortunately, I do not. In my entire construction career, I can’t say that I have ever met a fellow contractor who followed the rules of permitting to a “T” throughout their careers. Construction and the skills we possess become something which is second nature that you forget that the consequences can be far higher than we realize. For the serious contractors that I’ve met, most of them after years of weighing the risk vs reward have realized, it’s simply not worth it. With a fuller understanding of the consequences, is not pulling a permit still worth the risk?

At Southern Mesa we want to be a company who’s known for producing high quality results, manages their operations and timelines well, and is committed to mitigating the risk for the health and safety of ourselves as well as our client’s. Check out our next article “Understanding the Nuance” to see how we continue to protect our clients by the professionals we choose to hire.