All About Building Permits
When you commence any construction or remodeling project, you are required to obtain a building permit from your local building department. The reason for requiring a permit is to regulate and ensure public safety, health and welfare. When permits are required, they are valuable in the following ways:
Obtaining a building permit allows government officials the opportunity to search your property, which may lead to discovery of unpermitted or even illegal work. In other words, taking out a permit gives the government a "reason" to look for code violations, and you do not want that. Sometimes homeowners do permit work that would otherwise be illegal – for example, alterations to a utility room (see below).
A building permit ensures your project meets building codes and ordinances of your city or county. This is a positive thing when hiring a contractor (and negative when you do not pull permit):
Permits often provide a "receipt" or acknowledgement that the contractor is properly licensed and/or insured (as required by your jurisdiction). Including the permit in your contract with the contractor, right at the beginning of the project, may require your contractor to provide certifiably proof he possesses insurance and is properly licensed. Which means if there is a dispute, it will be easier to "back track" to find it .
In many cases, you will not be charged a permit fee if you are a homeowner and take out the permit yourself, rather than having a contractor pull it. Depending on where you live and how your laws are set up, this may also mean that the city will not require an inspection. Instead, it may be up to you, the homeowner, to have the work inspected once it is done. This is NOT a good idea because you have no experience with looking for things that code requires. Remember, the building inspectors are looking at a project through a microscope and if they see even one single missed detail, you could be in hot water and find yourself having to redo large parts of your project. If you then try to sue the contractor, the contractor may say he actually did take out the permit and it was you who failed to get the inspection. Even worse, the city may think you are trying to fraudulently collect money from the contractor and could try to press charges.
More extreme examples of "not properly permitted work" include things such as adding a new bathroom or kitchen to a basement – items which are not ordinarily permitted (because they are not considered public areas). These types of projects can actually require an entirely new meter, plumbing inlets, and much more. The city may also decide to shut down your electricity or water service until you can prove that the work was done properly and legally.
Responsibility of the Contractor to Pull Permits
Unless you are dramatically increasing the size of your home or doing something that will alter the structure of your residence, your contractor is usually required by contract to obtain and pay for the necessary governmental permits, as long as you have approved the plans and specifications for the work. Authorizations and assignments of privileges are usually provided to you so that the contractor can obtain the permits.
Standard form agreements, such as AIA contracts, usually specifically require the contractor to ". . . obtain and pay for all of the permits, fees and notices required by law for the performance of the Work at no expense to the Owner in accordance with the Project Schedule."
Put simply, your contractor will obtain and pay for any required building, planning, fire, electrical and HVAC permits, as well as any inspection reports and certificates that are required to be obtained in connection with the work that he is to perform.
The contractor will usually also agree that it has not performed any "hazardous materials survey," and that it shall be responsible for determining if any hazardous materials shall be disturbed in performing the work, and for any "hazardous materials" not included in its plans. In larger commercial projects, the contractor will usually specifically agree to "secure the services of a California registered asbestos consultant . . . to identify all known or suspect asbestos containing materials and perform any necessary abatement of such materials." Your contract with your contractor should also indemnify you for any loss incurred because of any failure to comply with State’s Hazardous Materials Regulations.
Legal Basis to Sue your Contractor
Suing a contractor for failing to pull (or obtain) construction permits is a breach of contract action. In any construction project, there is a contract that defines the duties and obligations of both parties. If a breach of the contract occurs, damages may be awarded to the party not in breach.
For example, if you entered into a contract, or agreement, with the contractor to build an addition on your home, the contract should state that the contractor shall pull all necessary permits from local agencies. If the contractor proceeds to build the addition without pulling the permits and you suffer a loss because of the failure to pull (obtain) the permits, then you can sue the contractor for breach of contract.
Another cause of action that may be asserted against a contractor is negligence. A contractor has a duty to properly pull, or obtain, the proper construction permits for a project. If the project does not proceed with the proper permits, or you suffer a loss because the permits were not pulled, then the contractor may be liable under a negligence theory.
The construction permits are required for many reasons, but when they are not obtained or violated, then damages may be awarded. For instance, if the cost of the project is increased and you end up spending more money, or losing out on some amenities because the required permits were not obtained, you may be able to sue successfully for that difference. Or, where permits are not obtained, the construction may not have been done properly and you may be able to recover the cost of repairing the deficient work.
Penalties for Failure to Pull Permits
Homeowners may face hefty fines or face work being shut down if an unpermitted project or renovation is discovered in the course of a municipal inspection. Code enforcement officials may stop ongoing work, which may lead to costly delays. A municipal inspection may occur at any time, especially on a large renovation. Significantly, the fines for unpermitted work are not to be confused with the cost of the permits that eventually may be obtained. The fines are over and above the costs associated with obtaining a permit after the fact.
Homeowners might also find it difficult to sell their home if a contractor fails to pull permits, since failing to obtain required inspections may also mean that the municipal or county health department has not properly inspected the work done. This is particularly true for septic system work. If the septic system has not been buried under dirt, there may be ways to inspect it during an escrow period. If the septic system has been buried, the only way to conduct a proper inspection of the septic system may be to excavate the waste water component of the system. However, even if the excavating of waste water components is required, real property sales are closed every day all over the country. Likewise, there are ways to separate old work that wasn’t completed with permits.
What To Do if Permits Were Not Pulled
If you discover after the fact that the contractor did not pull a permit, the first step ought to be to formally talk to the contractor about the matter. It may turn out that the contractor has not pulled the permits yet because the work is not completed and has not been inspected. You should also check your contract with the contractor on whether the contractor was supposed to pull a permit or not . In essence, looking for a solution with the contractor first is the best approach particularly if you and the contractor are on good terms. Regardless of whether or not you were supposed to pull a permit, you should still make an effort to inform the local government that the work was done without a building permit. When you do so, you should indicate that you have asked the contractor to rectify the situation by pulling a permit and that you remain hopeful that the situation will resolve itself amicably.
When To Get Legal Advice
With the complications involved in pursuing a case, it is in the homeowner’s best interest to seek legal counsel. They can walk you through which steps to take, ask the right questions of the contractor, and help represent you in court. This especially applies if you already have a history of communication with the contractor about the issue and have resolved to take it to court.
But how do you know what lawyer to pick? It is important to pick an attorney or law firm that has worked specifically with homeowner versus contractor cases and lawsuits. You will need to have a wealth of evidence to show why you are seeking compensation.
Preparing for court will take time as you will need to gather all communication that you have with the contractor, including the initial agreement, and any emails or text messages that demonstrate the contractor’s negligence or refusal to refund you. Moreover, you will need to obtain any written material from your local regulatory authority (state, county, city) to which you can point in order to support your case. It is always in your best interest to have an experienced attorney fighting on your behalf throughout this process.
Homeowner Preventive Steps
Permissive measures are always better than curative measures. So reviewing the likely permitting requirements for any construction project, and making sure that permits are pulled and closed out is just prudent construction planning, if not an outright requirement of every construction contract.
On smaller construction projects, it is the homeowner who must act to compel the pulling of permits (and the closing out) prior to the construction project being undertaken. This requires due diligence to determine whether permits are required. This also requires due diligence to determine the 1) likelihood that your contractor will pull permits (and/or) close them out himself; or will he (or she) try to avoid the permitting process as long as possible; and, 2) whether your contractor has pulled the proper permits (and has not closed them out) and/or, is ultimately going to try to cut corners and avoid pulling the proper permits.
Homeowners can protect themselves by making sure certain things happen, before, during and after construction. Prior to entering into a construction contract, homeowners should confirm whether permits are required for the type of work to be performed, and whether/or not the contractor pulling and closing out the required building permits is going to be a term of the contract. If permits are required, and closing them out is a condition precedent to payment; AND the contractor refuses to do so, or is avoiding the requirement (s) to pull such permits, then the homeowner must understand that there is nothing legally they can do to compel all the permits required to be pulled for the project .
Often times, homeowners will make sure permits are pulled as part of their well-crafted, written contractual documents with the contractor, but fail to follow up afterwards to make sure that it is one of the terms of the contract that all permits will be pulled. Homeowners can avoid having to sue for breach of contract to pull permits, and for a declaration requiring permit closure, by diligent review of the contract, and most importantly, diligently requesting, reconciling and following up on the permit status from the contractor as the construction project progresses.
Homeowners also can protect themselves by investigating whether there have been prior complaints filed with the County, state and/or builder by other homeowners in connection with the Property that had similar types of work done on their homes. This information can be obtained at the local building department and/or with the local real estate commission in the state where the property is located. If the complaints reveal that a particular contractor has received a complaint about permits not being pulled, prior to hiring that contractor, the homeowner should investigate the nature of the complaints. Were there complaints about permits not being pulled, or were those complaints made about non-permits related issues unrelated to the pulling of permits?