Back taxes for Unpermitted work?

[Teed]

I let my wife talk me into finishing our basement without permits back in 2007. We put in electrical, walls, sheet rock, HVAC ducts. Now we are looking at getting some other stuff done and possibly sell within 3 years. Can they hit us with past taxes? My thought is to have our building inspector look at some other deck work we want to do and then feel him out. We have done lots of exterior permitted work before, so not sure if I should just say the contractor never got them (Unable to find him or his company's name for the past 10 years so not even sure if he's still around). My wife wants to rip a lot of stuff out and then have him come in; but it's all to code so I see no reason for that. If he feels he needs to see it, he'll tell me. Any thoughts?

 

[chasnr]

This is as good of a complex question there is with regards to your situation. I had a similar circumstance where the homeowner decided to come clean and obtain a building permit after the fact of finishing his basement and all associated trade work. This happens quite often per the jurisdiction. It was years later, so, he did not have any trade information where they could provide a 3rd party inspection and testify that all the electric work was done properly. Hence, the county made them apply for the building permit and then had to cut out certain sections of drywall to show them that the wiring was done to code.
If you are now looking to get permits for other scopes of work, I wouldn't bring up anything done w/out permits. It will open up a big mess. I would just get the proper permits for the new proposed work. If it is for a deck, there should be no reason for them to come inside.
Your question about owing back taxes if you do wind up getting a permit now for unpermitted work is something you would need to speak to a local official or realtor about. This certainly would not be the first time someone finished there basement and sold there house without obtaining a permit for the finished basement. Thinking more about this though, the real estate professional would probably be your best starting point as they most likely deal with this quite often.

 

[Teed]

This is as good of a complex question there is with regards to your situation. I had a similar circumstance where the homeowner decided to come clean and obtain a building permit after the fact of finishing his basement and all associated trade work. This happens quite often per the jurisdiction. It was years later, so, he did not have any trade information where they could provide a 3rd party inspection and testify that all the electric work was done properly. Hence, the county made them apply for the building permit and then had to cut out certain sections of drywall to show them that the wiring was done to code.
If you are now looking to get permits for other scopes of work, I wouldn't bring up anything done w/out permits. It will open up a big mess. I would just get the proper permits for the new proposed work. If it is for a deck, there should be no reason for them to come inside.
Your question about owing back taxes if you do wind up getting a permit now for unpermitted work is something you would need to speak to a local official or realtor about. This certainly would not be the first time someone finished there basement and sold there house without obtaining a permit for the finished basement. Thinking more about this though, the real estate professional would probably be your best starting point as they most likely deal with this quite often.

Thank you for the reply. That’s what we’ve been doing thus far. Why bring it up if they don’t. But we are also looking at selling and I don’t want to leave someone with that chore.

 

[W3 Planning and Research]

I let my wife talk me into finishing our basement without permits back in 2007. We put in electrical, walls, sheet rock, HVAC ducts. Now we are looking at getting some other stuff done and possibly sell within 3 years. Can they hit us with past taxes? My thought is to have our building inspector look at some other deck work we want to do and then feel him out. We have done lots of exterior permitted work before, so not sure if I should just say the contractor never got them (Unable to find him or his company's name for the past 10 years so not even sure if he's still around). My wife wants to rip a lot of stuff out and then have him come in; but it's all to code so I see no reason for that. If he feels he needs to see it, he'll tell me. Any thoughts?

Your best bet honestly is to call the building department and have a frank discussion with them. I always gave lienency when people came forward to correct their mistakes, including to the head of the Hells Angels once for the same thing (different story for a different day). What the inspector may have you do is expose some areas for inspection to verify that things were done per code. They may also require you hire an engineer to certify that the work was done correctly and is structurally sound.

Bear in mind, you will have to disclose this when you sell the house on a sellers property disclosure statement (or whatever new jersey calls theirs) as they ask specific questions related to unpermitted work. Lying on that can create major problems since it is an easy fact to determine compliance on. I am betting with only 5 mintues of looking, I can find pictures of an unfinished basement of your house online from when you bought it or at least text in permits or online about it being unfinished. In other words, the evidence is already out there and easy to find.

Your best bet, is just walk to the inspector or the department about how you fix the mistake and make sure it is correct when you sell. They should work with you without any real problems. You may pay a fee, but if you have a good director like I was, they will likely waive that for you as a good faith gesture on their part as well.

As far as talking to the real estate professional, don't bother. Any advice they give is non-binding, and their contracts specifically protect them from almsot anything that they say. Talk to the actual department and officials who govern this work. That is where you will get the correct answers. Outside of that, seek outside legal counsel with a competent attorney.

As far as the taxes, you will just have to wait and see on that front. That is an area I can't help you in.

Good luck!

 

[W3 Planning and Research]

This is as good of a complex question there is with regards to your situation. I had a similar circumstance where the homeowner decided to come clean and obtain a building permit after the fact of finishing his basement and all associated trade work. This happens quite often per the jurisdiction. It was years later, so, he did not have any trade information where they could provide a 3rd party inspection and testify that all the electric work was done properly. Hence, the county made them apply for the building permit and then had to cut out certain sections of drywall to show them that the wiring was done to code.
If you are now looking to get permits for other scopes of work, I wouldn't bring up anything done w/out permits. It will open up a big mess. I would just get the proper permits for the new proposed work. If it is for a deck, there should be no reason for them to come inside.
Your question about owing back taxes if you do wind up getting a permit now for unpermitted work is something you would need to speak to a local official or realtor about. This certainly would not be the first time someone finished there basement and sold there house without obtaining a permit for the finished basement. Thinking more about this though, the real estate professional would probably be your best starting point as they most likely deal with this quite often.

I strongly disagree with just leaving it as is. As someone who was responsible for enforcement for a large county, as well as being in real estate, I see this coming back at you both on the civil side for misrepresnetation in the sale of the home, as well as with the jurisdiction for conducting work without a permit, which could be a criminal offense depending on the jurisdiction. On the civil side, it won't take anything for the buyers to discover that work was done without permits. Online resources, neighbors, etc. Also new buyers have a tendency to want to upgrade homes, so what happens when they walk in to the building department and say they want to remodel the basement only to find that the basement was never permitted to begin with? How much will it cost you to defend a real estate lawsuit for misrepresentation for the attorneys? For the corrections (damages) that are out of your control (ie, you don't get to chose who does the work, just write the check). Courts are not forgiving on issues related to permitting problems, and often times the courts will order total removal and rebuilding correctly as the remedy. From the jurisdiction side, if they want to prosecute, you are looking at criminal or civil charges with fines that accrue DAILY. Can you afford $750 per day while the proeprty is in violation? Just my opinion and not legal advice, but I have been on the other side and successfully prosecuted many people for exactly this same thing as well as testifying in court on civil cases related to the absence of permits. It never ends well.

While I agree, I wouldn't bring it up until the deck is approved (Let them final the deck, THEN go in and talk to them), the right thing to do is address the problem.

Every Director I know is forgiving for this as they just want everything to be safe and code compliant (including obtaining permits). They will work with you if you say you made the mistake. What they won't do is work with you if they are brought into it as part of an investigation as their hands are now tied and have to follow legal processes.

 

[Eric]

I had a laundry room remodel completed last summer and the contractor actively discouraged me from getting permits. I went ahead and handled the permitting myself and found my local jurisdiction to be extremely accommodating. I even let my 10-year-old son handle the site/floor plan drawings (see this post).

Bottom line: permitting authorities are run by human beings who generally want to help you and aren't out to get you. But I don't know your specific jurisdiction and maybe you have other reasons for feeling like the costs of compliance outweigh the benefits. Overall, though, I'd have to agree with @W3 Planning and Research on this one.

Hence, the county made them apply for the building permit and then had to cut out certain sections of drywall to show them that the wiring was done to code.

It may just be me, but having to remove/replace a few sections of drywall doesn't sound all that bad. What would that cost, a couple hundred bucks?

@chasnr, I know you work in nearby Maryland. Do you know anything about how building departments operate in NJ that would give you pause engaging them on something like this?

 

[W3 Planning and Research]

I had a laundry room remodel completed last summer and the contractor actively discouraged me from getting permits. I went ahead and handled the permitting myself and found my local jurisdiction to be extremely accommodating. I even let my 10-year-old son handle the site/floor plan drawings (see this post).

Bottom line: permitting authorities are run by human beings who generally want to help you and aren't out to get you. But I don't know your specific jurisdiction and maybe you have other reasons for feeling like the costs of compliance outweigh the benefits. Overall, though, I'd have to agree with @W3 Planning and Research on this one.



It may just be me, but having to remove/replace a few sections of drywall doesn't sound all that bad. What would that cost, a couple hundred bucks?

@chasnr, I know you work in nearby Maryland. Do you know anything about how building departments operate in NJ that would give you pause engaging them on something like this?

Typically, yes, minimal cost. You can use cameras pretty easily then to do inspections.

 

[Fenix]

Why would back taxes come into play here? Does that mean that the property assessor would've assessed your property at a higher value had they known about your improvements? If so, assessing is done every few years, so there's a chance that it hasn't been missed. In my experience with pulling permits retroactively, the inspector wanted to cut into the wall to view the electrical work, so don't be surprised if that happens to you.