Recently we have seen a few situations where lenders have reviewed the appraisal and in the appraisal report the appraiser has addressed a recent addition or renovation of the home. The lenders are then in turn asking for a copy of the permits. We have been fortunate that all homeowners have pulled permits, but the question then arises – what if the homeowner did not pull a permit. It could jeopardize getting the loan and the borrower might have to pull a permit after the fact. There can be insurance ramifications and affect the ability to sell a home.
To understand the issue fully, the building departments for Unincorporated Arapahoe County, Denver, Greenwood Village and Cherry Hills were contacted. All building departments had the same advice and a few stories.
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Good reasons to pull permits:
- Lenders are looking harder at the appraisals to see if the appraiser mentions recent improvements or additions to the property. If permits are requested and cannot be produced, this will jeopardize the loan.
- Relocation issues – sellers relocating and looking at a corporate buy-out. Corporations will not buy out homes that do not have permits pulled for work that has been done.
- A buyer for your home may request that permits be produced and if not, this could jeopardize a sale.
- Sellers filling out property disclosures might feel better knowing that permits were pulled and if a question arises they can provide the documentation that shows that the building department signed off on the work. There is always trepidation in filling out these disclosures and this could help.
- Possible insurance issues. Arapahoe County mentioned a situation where a fire occurred in a basement and the insurance company did not honor the claim due to the work that was done was not permitted.
- Trying to rectify the situation and pull a permit and get counties to sign off on the work is expensive due to double permitting.
- Trying to rectify the situation could also mean tearing out walls or taking off a roof.
- The Cherry Hills building department mentioned that the modification of an outbuilding may not be allowed if permits were not pulled when the building was constructed – this could mean tearing down the outbuilding and starting over.
All municipalities stated that it is possible to get a permit pulled after the work has been done:
- It is a similar process as far as getting a permit prior to work being done. One would go to the building department and request a permit.
- The municipality would send out an inspector to inspect the work. If the inspector needs to see some electrical work or see something that is covered, they may need to have walls opened up or corrections made.
- There is a double permitting fee that is charged for this service.All of the building departments were very helpful and easy to reach. If you have clients who are remodeling or constructing an addition it is not a bad idea to remind them to pull permits or ask their contractor to see the permits that have been pulled and ask to see that the work was approved by the city.
While this does not cover the entire state, these are the numbers that we called to research the issue.
Arapahoe County Unincorporated 720-874-6500
Cherry Hills Village 303-789-2541
Denver 720-865-2982
Greenwood Village 303-773-0252
Ann Heinz
Senior Loan Officer
(303) 263-4003
License #100027008 NMLS#360599
AnnHeinzMortgageLoans.com
Mo Robinson
Senior Loan Officer
(303) 478-2136
NMLS #360601 Co MB100033009
MoRobinsonMortgageLoans.com