Finishing Basement Without Permit [Risks and Consequences]


It’s one of the most common home renovations: finishing a basement. While you might not think that hanging some drywall or adding a room or two necessitates getting a building permit, you are wrong. Failure to obtain a building permit for basement finishing could result in serious consequences.

If you finish your basement without getting a permit, your house may fail future inspections. The permitting process ensures the job gets done properly, so you also run the risk of completing work done to code. This could result in a fine or the removal of any finishing work you’ve already completed.

In this article, we’ll take a look at the risks and consequences of finishing a basement without a building permit. As well, we’ll go over when a permit is and is not required for basement finishing.

Finishing Basement Without Permit

Do You Need a Permit to Finish a Basement?

Whether or not you need a permit to finish your basement depends on the level of “finish” you intend to complete. Are you simply adding some carpet or are you adding walls and electricity? Is your basement already partly finished, or is it completely unfinished? Depending on your situation, you may or may not need a permit.

In most instances, you will need a permit to finish a basement. Many municipalities require permits for finishing a basement if you install a new wall. The definition of a wall includes installing drywall over a previously existing framed wall. Any type of plumbing, electrical, or HVAC work will also require a permit. Carpet and painting do not require a permit.

Even though the act of installing drywall might seem straightforward, building inspectors want to inspect what is behind the wall before it gets covered up for good. This is why any creation of an extra room, or just one side wall, in a basement requires a permit.

The language of when you need a permit to finish a basement varies depending on your geography. For instance, in New York state, you need a permit if you intend to do any framing or drywalling. In Colorado, you need a permit to finish a basement “when any walls are constructed or electricity is added to the basement.”

Is It Illegal to Finish a Basement Without a Permit?

First of all, failure to get a building permit to finish your basement or any other home project is not breaking an actual law – it is breaking a bylaw. In most jurisdictions, you are breaking a by law. Bylaws are essentially local laws but are not enforced by the law (police) but by the municipality itself. Some states make it a misdemeanor for neglecting to get a building permit.

Failure to get a building permit when required does break the law – a bylaw – and is thus illegal. While police are not involved in bylaw enforcement, a municipality creates building codes that it considers bylaws. These are created to ensure safe building practices, such as when finishing a basement. When these practices are not followed, there are penalties.

Most municipalities in the US will follow the building code outlined by their state government building services department. Some smaller jurisdictions may add some extra language here or there, but most locales in a state follow the same guidelines.

Similarly, in Canada, most jurisdictions follow the provincial building code. Canadian building code is also a bylaw enforced locally by municipal building inspectors and/or bylaw officers.

What Happens if I Finish My Basement Without a Permit?

If a person finishes a basement without a permit, the municipality has several avenues to punish that person. While arrests and imprisonment are not applicable in these instances, severe outcomes such as monetary loss and penalties on the home can be very difficult to overcome. Let’s take a look at the possible penalties below:

Fines

One of the most common penalties for failing to obtain a basement finishing permit is fine. These are easy for a municipality to levy and often are issued in conjunction with an order to either remove all unpermitted work.

For first offenders, many municipalities will allow homeowners to submit a retroactive permit application instead of removing the work already completed as long as the fine is paid. The permit still must be approved and the necessary site visits must be completed. However, this is a better result than having to tear a recently finished basement back down.

How much are the fines? It depends, of course, on where you live. In Florida, for instance, failure to obtain a building permit for renovations is $200. At the same time, in Baltimore County, Maryland, the fine starts at $1,000 for not getting a building permit to finish your home.

Removal of Work Already Completed

Many municipalities will require a homeowner who has finished their basement without a permit to return the basement to its “former condition”. That means even if you’ve gone to the trouble to turn a completely unfinished basement space into a fully finished area with rooms, you’d be forced to remove all of it if you did not obtain a building permit.

It should also be noted that the homeowner is liable for all the charges relating to returning the basement to its former condition. If the homeowner does not comply, many jurisdictions will apply more fines or pursue more drastic legal action, such as charging the homeowner with a misdemeanor.

Reduced Value of Home

A reduced home value is an indirect result of failing to obtain a permit for basement finishing. Building permits act to ensure homeowners properly complete home renovations.

Without the approval of an inspector, there is no second opinion to see that all the work has been done safely or correctly. This could potentially jeopardize the safety of people in your house or cost you more money down the road to rectify problems that could’ve been identified at the outset. This lowers the value of your home.

Secondly, when you go to sell your home, there is a chance potential buyers may ask their lawyer to pull any permits that were submitted for your address. If no permits are evident yet work has been completed, the potential buyers may back out of their deal or submit a lower offer.

Increased Insurance or Lack of Coverage

A finished basement that did not acquire the appropriate permit would not be covered by insurance in the event of a disaster. Even if you finished your entire basement and spent thousands of dollars, your insurance company may not cover the cost of replacement for those items if there was no permit acquired for that work.

On the other hand, your insurance provider may do the opposite – raise your rates higher than usual – to cover your new finished basement without a permit. Why? To them, there is a much higher likelihood of damage or disaster to space not properly assessed by a building inspector.

The result would be a higher home insurance rate than your rate if you’d taken out the proper permits. Insurance companies value permits as a sort of guarantee that the work done on your house is safe and unlikely to fail, break down, or cause some other type of insurance-related disaster.

House Condemned

An unlikely, although possible, the result of failing to get the necessary inspections could result in your house being condemned. How? For those who choose to finish their basement and do not complete the work properly, it could potentially result in major, major damages.

What kind of damage would result in a home being condemned? Typically very bad cases of black mold or infrastructure failure would be grounds for condemning a house. Many municipalities would simply use this as a threat, and the homeowner would then have an opportunity to fix the problem.

But there is a chance that the problem is larger than can be fixed, or the homeowner does not have the money to correct the problem. Also, remember that insurance won’t cover damage due to renovations that did not obtain proper permitting. In this (rare) instance, a home can be condemned.

Mortgage Refinancing Jeopardized

If you need to refinance, or your mortgage term has finished and you need to reapply for a new mortgage, then be advised that mortgage lenders will only lend based on recorded square footage. Thus, if you’ve added living space to your basement with a permit, then this will not count towards your overall square footage.

Note that most states do not count basement square footage – finished or unfinished – so adding a finished basement won’t affect your remortgaging efforts. On the other hand, some counties will count a finished basement as “gross living space”. In this instance, your basement could be added to the square footage.

If that is the case, your mortgage lender will not acknowledge that finished basement. This will reduce the amount of the home appraisal, enabling the lender to pull out of any deal.

Can I Get a Permit for Already Finished Basement?

You can get a permit for a basement that is already finished. If you move into a house only to discover a permit was never applied for, you can go to your local building services office and apply for a retroactive permit. An inspector will come out and tell you what you need to fix or simply sign off on the permit – for a price.

Note that you may have to remove drywall for the inspector to see behind the walls – insulation may also have to be removed. If you did not complete the work, your title insurance might be able to cover the repairs. If you did the work yourself, then you will be liable for all costs.

Do I Need a Permit to Remodel My Basement?

A basement remodeling project will need a permit if any walls are constructed – or removed. Any modifications, including additions, to electrical, plumbing, or HVAC services in your basement, will also require a permit. If you are simply changing the look of your basement, you may not need a permit. Some municipalities allow a dollar limit – around $6000 in some cases – for how much you can spend on the remodel before a permit is required.

Conclusion

The penalties for failing to obtain a permit for finishing your basement are both long and short-term. If you finish your basement improperly, you risk long-term damage to your home that will reduce its value and possibly injure your ability to obtain another mortgage, sell the house, or have the new space insured.

Shorter-term penalties such as fines, work removal, and misdemeanor charges are easily avoided by simply calling your local building services department and finding out the process for getting a permit.

There are no good reasons to avoid getting a permit to finish your basement. You’ll find the process is likely easier than you thought and the inspector will likely have some good tips for you, as well. The consequences of not getting a permit are simply too steep.

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