Yesterday, I spent some time helping a friend who was in a pickle. Four years ago he renovated his garage into living space. Fast forward to today, he’s trying to sell his house, and the buyer’s lender wanted to make sure that the renovation was done correctly. Thankfully, the days of swearing on your mother’s grave that all work is safe and completed to code are almost exterminated, but my friend didn’t get a permit for the renovation at the time. Thus, I found myself with my friend’s Realtor at the building department trying to figure out how to get a permit, ex post facto.
This brought up an interesting discussion with the inspector. I understand that most people see permits as another form of taxation or government intrusion. However, in this case, it actually is holding my the sale of my friend’s home because the lender wants to make certain that the asset their lending for 1) won’t fall in or burn down, and 2), can be sold with the renovation if the buyer defaults.
Another hidden benefit of permitting is home insurance rates. In the not too distant past, the city of Indianapolis was struggling to get inspectors to key phases in residential construction. You know, things like making sure footings were correct; structure was properly specified and fastened properly; and there were no electrical or plumbing problems. If the contractor called for an inspection at any of these phases, the understanding was that they only had to wait 24 hours, and if an inspector did not appear, they could continue with their work. So, you guessed it, not all projects were built to code, and some of them failed, because, at the end of the project, the contractors only needed to mail a little postcard to the city basically swearing that they built the project to code.
These poor inspection practices – and the results thereof – caught the attention of the insurance rating board and Indianapolis received a poor rating. This drove homeowners’ insurance higher.
Enter a new sheriff in town, who cleaned things up, categorized permitting much better, and, yes, raised some permit fees. Of course, raised fees didn’t set well with some folk, but the fees went to hire a couple dozen more inspectors and installed an inspection review/dispatch system that keeps those inspectors efficient and completing almost 100% of the required inspections.
Once again, the inspection practices caught the attention of the insurance rating board and Indianapolis received a high rating. Homeowner’s insurance premiums went down.
Wouldn’t you rather have a higher one-time permit fee, and the benefit of lower annual premiums for the rest of your life?
Oh! My friend? In order to get an inspection and thus a Certificate of Occupancy, he’ll have to apply for a permit, remove a good amount of drywall, fix some issues with the gas-fired water heater which is now in a living space, request an inspection, patch it all up (assuming he’s done all the work to code), paint it, and then, his buyer can get a loan.