PMI permit screwup?

September 20, 2008 2:17 PM

House appraisers, building permit people, and DIYers: Just how badly did I screw us up?

So we were all set to get our house appraised - we're not moving, but if our value has gone up a tiny bit then our PMI gets taken off our mortgage, saving us about $100/month.

I've done some substantial improvements/renovations to the place, including building an interior, non-load-bearing wall to divide our 10x20' office into two separate 10x10' rooms (I had an electrician friend do the wiring for me). I never got a permit to put up the wall because my dad (an architect) assured me that it didn't really matter since it was an interior wall and I wouldn't get caught.

Except that now I've googled how to prepare for an appraisal, and in a couple places found mention of needing to present permits for changes done if the house no longer matches the original records. Oops. Since our house was originally two bedroom and now it's three, I assume this is a problem.

So what's going to happen to us? I don't want to spend $400 for an appraisal only to have the appraiser decide that he can't give us an answer since we didn't have a permit. Or get reported or something and have to pay a huge fine. Anyone have experience with this kind of situation?

Every month I postpone the appraisal it costs us a potential $100, but I find myself very nervous about proceeding. What should we do?

posted by GardenGal to home & garden (11 comments total)

I had 2 houses appraised this year, no mention of permits. Seriously, call an appraiser and ask. Not getting permits is very common.
posted by theora55 at 2:26 PM on September 20, 2008

So the work was non-structural, non-plumbing, non-electrical? Around here you wouldn't need permit for that unless you were spending more than $1000 on it. Try giving the permit people and/or the appraiser a call to ask (without giving your name and/or without indicating whether you're talking about the past or the future).
posted by winston at 2:43 PM on September 20, 2008

I am a contractor. If the work was done properly, you really dont need to worry too much, there will not be any huge fines. Your real fear in getting reported to the building department is finding out that you voilated a building code, and then being forced to tear out and re-do it all correctly.

Otherwise, it will be a slap on the wrist. You are a home-owner, not a contractor with a license on the line. Dont admit to willfully ignoring the permit requirements - you just didnt realize that you had to do that.

Also, I would not call the building department, nor mention it at all to the appraiser. Play dumb. Especially with the building department. Talking to the building department will be stirring up the bee-hive. During the construction / real estate boom of a few years ago, many towns had to hire lots of extra building inspectors. Now, those inspectors are being laid off. Many inspectors today will nit-pick anything and everything as a way to justify their continued employment. I would not recommend calling the building department.

You should bite the bullet and schedule the appraisal. There is a very good chance that you will be ok. Real estate appraisers are not building inspectors. The appraiser has no incentive to involve the building department either - it only means extra work and effort for him too. (Though, admittedly, I dont know too much about how appraisers work)

Either way, though, you need to resolve it. So, hold your breathe, and call in the appraisal.
posted by Flood at 3:18 PM on September 20, 2008

Play dumb.

This is excellent advice. Don't go looking for trouble — don't call the building department, don't mention anything to the appraiser, don't call the lender.

I've gone through a few appraisals. It's no doubt different in different places, but the appraisers I've dealt with came in with very little information about the place they were looking at, aside from the basics (square footage, number of bedrooms, year built, etc). They didn't have the (usually nonexistent) historical plans, or records of all building permits, or even much knowledge of what is code and what is not.

They mostly just assessed the condition of the house, made note of its location and the property, and found a set of "comparable" properties to justify the value they were assessing it at. They had zero incentive to ask about permits or to go looking for problems.

As always, YMMV, local practices differ, etc.
posted by Forktine at 3:28 PM on September 20, 2008

So the work was non-structural, non-plumbing, non-electrical? Around here you wouldn't need permit for that unless you were spending more than $1000 on it.

No, there was electrical involved in the work, as GardenGal mentions. The other thing a permit-issuing agency might be interested in is whether both bedrooms qualify as sleeping rooms and have big enough windows and have a safe means of egress in case of a fire, but I think that, smoke detectors and the outlet locations would be about all you'd be on the hook for if there were an issue with your local building department.

However, the first thing to do is check the tax rolls at your assessor's office and see what they say about your place. A title insurance company or an appraiser could probably do this for you as well. If the records don't actually mention how many bedrooms your house has, you're probably off the hook. The document you link to specifically mentions "additions" not just changes, meaning increases in the square footage of the home, not adding walls, which makes me think that the appraiser would have no problem with your house.
posted by LionIndex at 3:51 PM on September 20, 2008

They didn't have the (usually nonexistent) historical plans, or records of all building permits, or even much knowledge of what is code and what is not.

Yeah--they're just going to have a printout (basically the assessment tax rolls) with some basic info about the house. Although my local assessor does get copies of any permitted plans, your appraiser probably won't have access to those.
posted by LionIndex at 3:56 PM on September 20, 2008

Nthing not to worry about it. We had an appraisal just last week that we stressed over for months. It took 20 minutes, she didn't ask about any of the extensive unpermitted changes we've made, and it came back $20K higher than we were worried it might. Don't delay, this will be a non-issue.
posted by ulotrichous at 4:03 PM on September 20, 2008

Second ulotrichous, we stressed over our appraisal too and we came in $5k over with nary a word about permits. Of course, less than one month later we received a new property tax assessment. If that happens to you, you might say bye-bye to your $100 a month savings ...
posted by crazycanuck at 4:42 PM on September 20, 2008

Thank you everyone. I wasn't expecting to have every answer confirm what I wanted to hear; how often does that happen?

Well, here I go then come Monday! Guess now I need to clean the house. :)
posted by GardenGal at 7:25 PM on September 20, 2008

Well I guess the real question is the new room an actual bedroom? Does it have a closet? that usually defines a bedroom. the other questionn is the uptick in appraised value going to raise your property tax? the savings may on PMI may go poof when you get the next tax bill.
posted by Gungho at 9:01 AM on September 21, 2008

Does it have a closet? that usually defines a bedroom.

Late to the thread, but I was going to mention this. Our neighbors removed their closets from two bedrooms to make the rooms bigger and got a huge surprise when they reappraised. Whoops!
posted by Big_B at 9:53 AM on September 24, 2008