What Happens if I Finish My Basement Without a Permit

When you undertake any renovation project, it is usually required for you to obtain certain permits before you start the job, and basement finishes are no exception. These signify that your renovation will be up to code and complies with safety protocols and can come in handy if codes change in the future, as the permit will cover you for any alterations.

You simply need to submit your building plans and an application fee to the permit department in your city. Failure to attain a permit for any structural, electrical, or plumbing changes might bring some hefty consequences. However, you shouldn’t panic, the more extreme consequences are seldom enforced.

If you finish your basement without a permit, you will at least have to apply for a retrospective permit and submit to inspections. Worse cases including heavy fines, opening walls for inspection, and un-doing all the work. It can also compromise safety, insurance, resale value and prospects, and mortgages.

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Does Your State/Area Require Permits?

The headache of applying for a permit applies to most construction projects, but the results of not having a permit are even worse.

Obviously, if your specific city or state does not require a permit for basement upgrades, or at least for the type of upgrades you are hoping to do, then you won’t need to worry about any penalties. Certain counties in Missouri are some of the few areas that don’t require a permit.

Building permit Written on Blue Key of Metallic Keyboard. Finger pressing key.

However, states like Connecticut, Pennsylvania, Michigan, Wisconsin, and Georgia, as well as Alberta and Ontario in Canada do require a permit for any work done in your home, including the basement, so do not skip that step when planning your renovation. You can expect to pay $200 to $1000 for a permit, which might seem hefty right now, but just wait until you read how much the fines are!

House Won’t Pass Home Inspection

Without a permit, you take on the risk of renovating your basement incorrectly—that is, making any changes that affect the structural, electrical, and plumbing integrity of the house.

When an official comes to inspect your home, for example when you try to sell it or for yearly tax appraisal purposes, you are at risk of failing the inspection if there are any structural, wiring, or plumbing issues identified.

young man engineer wearing protective helmet holding tablet computer showing thumb down negative feedback gesture

This means you might need to renegotiate your selling price for the buyers so that they can make the necessary adjustments to bring the building to code, or you can settle the bill yourself as a condition of the sale. Either way, it is a lose-lose situation for you.

You Will Likely Have to Pay a Fine

It might be best to pull up your socks and fill out the necessary paperwork to get a permit for your basement renovation as the alternative can be quite expensive.

The best thing to do is to act immediately and apply for the permit now, even if you have already finished the basement.

If you are caught renovating without a permit, you will receive hefty penalties and probably have to pay fines until the situation is rectified. The budget you had for your next DIY project will be blown out the window.

Pasta machine is wasting dollars against a white isolated background with copy-space

For instance, in Seattle, it is mandated to pay $500 a day for each day you renovate without a permit. If you managed to complete your entire renovation going unnoticed, and only get caught out afterward, this is going to be a huge chunk of money. New Hampshire is slightly less, but will still work out expensively at $275 a day.

In Toronto, you will need to pay for the permit, as well as an additional fee of 50% of the total permit costs, which can be anywhere from $200 to $30 000.

Michigan laws also state that you will pay fines for renovating without obtaining a permit first. These amounts range depending on whether it was your first, second, or third offense and can be between $750 to $1500.

In Massachusetts, you can expect to pay 3x the permit fee if you failed to obtain a permit before starting construction.

City Can Request After-the-Fact Application

If you get caught without a permit after a renovation, your city may request that you submit an after-the-fact or retrospective application. This is essentially a permit for completed structures, where an inspector will go to your house and inspect the entire renovation project.

These applications tend to be more complicated than pulling a permit before starting a renovation. It is not as simple as filling out a form and getting a stamped permit.

You will need to provide extremely detailed and in-depth plans of the entire basement, including signed letters from your engineers, electricians, plumbers, and contractors, stating they completed the jobs up to code. You might also have to remove any wall coverings to allow the inspector to investigate thoroughly, which just adds more work to your plate.

You might have other issues in obtaining the retrospective permit that you might not realize. As you failed to follow protocols initially, your city’s governing bodies might be biased against your application. This could mean it takes an exaggerated amount of time for the inspector to make an appointment or the officials could request a lot more paperwork than necessary.

Changes to Your Basement May Be Required

Once an inspector comes to your home and sees that you have completed your basement with no permit, there may be some drastic consequences that could leave you frustrated, exhausted, and broke.

If the inspection reveals that there are a lot of flaws in your construction and your renovation is not up to code, you may have to make changes to your basement in order to rectify the issues and comply with regulations. This could be anywhere from fixing wiring or plumbing issues, to moving walls and windows. The inspectors may even require an entire takedown of your renovation.

This entire process will not only extend your renovation time, which means more days of dust and debris floating around your house, but you will also be quite out of pocket.

You will probably go way over your initial budget for your renovation, or might not be able to afford the changes, choosing instead to tear everything down. An average basement finishing starts at $2800, so you can look at going over double that.

You May Have to Remove All Finishes

If your unpermitted construction project comes to light, which it almost always does, an inspector is likely to come to your home to assess the standard of the renovation. The inspector may require you to remove all the finishes in order to investigate the structure in detail. For instance, removing wooden flooring or drywall.

This means you will have to spend time taking all the finishes off and then having to pay once more for them to be reinstalled. You might not have the money to re-hire your contractors, so you might opt to put the finishes back yourself—and it just will not look the same. The standard of your basement will have dropped, putting you in a terrible position when it comes to resale.

Basement May Not Be up to Code

Permits are an official declaration that your renovation plans have been approved by authorities and that any work done is up to code. Without a permit, you create the risk of your plans not being compliant with certain laws and regulations, which means that your renovation could have some serious health and safety risks.

In order for basements to comply with regulations, they have to be constructed according to certain specifications. For example, there is a minimum ceiling height of 7 ft, there need to be egress points, and the basement has to have sufficient ventilation.

When you apply for a permit, you submit detailed plans of your intended renovation, so the official would be able to identify any code violations before you begin construction. Skipping this process would put you at risk of having a basement not up to code which brings about a lot of issues.

You might find yourself the victim of electrical flaws, flooding, and other plumbing issues, or structural cracks, which are no easy fix and just create an incredible inconvenience to you.

Contractors Shouldn’t Work Without Permits

If your city requires a permit for your basement renovation, which most do, and your contractor either does not inform you of this, or directly advises you against it because “you don’t really need one”, then it might be a sign to choose a different contractor.

An individual who will knowingly violate rules is not the person that will renovate your basement successfully, ensuring it is up to code. It is best to spend more time researching professionals who have your safety and best interests in mind and is not just looking to make a quick buck with minimal effort.

Engineer pleading ignorance or a crack in a wall behind him raising his hands to show he doesn't know what happened

Luckily, most professional contractors are aware of the rules and regulations. You can expect to receive invoices from contractors that include the cost of the necessary permit fees, so you can be confident that they will have it under control.

Making sure your contractors are reliable and professional in this regard is so important as you will be the one who suffers should any issues arise. You will be held liable for any penalties or fines that may ensue, even if your contractor was the one who advised you not to obtain a permit.

Compromised Insurance Cover

Sometimes things happen that are beyond our control, so we take out homeowners’ insurance to cover us when we need it most. However, the fine print and T’s and C’s are very important.

If you failed to obtain a permit while renovating your basement—or any other part of your house for that matter—and an electrical fire, flood, or another unforeseen disaster happens in that room, your homeowners’ insurance will likely not cover it and you will be left with a substantial bill.

Permits are there to ensure the building is being done to the highest standard, with all safety concerns in mind. Lack of a permit proves to your insurance that you didn’t follow the necessary protocols, which are there to identify any possible safety issues and correct them before they could become a potential issue.

Your homeowners’ insurance might even choose to release you of your cover altogether. They may view you as a huge financial risk because you made choices that could cost them a lot. Don’t fret though, because you can apply to remediate the insurance, where an official will carry out inspections and reinstate your insurance once your home is deemed safe and to-code once again.

Man holds a green house and red prohibition symbol NO. Prohibition. Denial of insurance payment. Housing problems

Selling Your House Will Be Difficult

You might think that finishing your basement was an investment, but when you put your house on the market, you might get a shock.

When you sell your house, you will need a certificate of occupancy, which essentially states that your house is all up to code and is safe for human living. When you fail to get a permit, getting a certificate of occupancy will be very difficult.

Not only that, but unpermitted basements, or any unpermitted work for that matter, is very off-putting to potential buyers as that means they may have possibly structural damage in the future or may have to re-do the unpermitted area—significant potential costs that they want to avoid.

If the home inspection somehow misses the fact that the basement was unpermitted, and your new buyers find out at a later stage, you could be sued for misrepresenting your property, which will be a lengthy and costly process. Therefore, it is in your own best interest to disclose the information during the marketing of your house to avoid this.

If you disclose your unpermitted basement, as you should, and a buyer is interested, you may be negotiated into giving them a discount in order for them to be able to afford to rectify the situation.

Your investment has now lost you money.

Compromised Mortgage

When you buy a home that has additions or renovations that were unpermitted, you could face some complications when it comes to your mortgage. When you apply for a mortgage, the bank might not grant you the full mortgage amount if the home you are buying has an unpermitted basement, which means you may have to look elsewhere for your dream home.

It is rare, but not impossible, but the bank has the authority to demand immediate repayment of an entire loan if they discover you knowingly bought a home with unpermitted work done. This is because of the unknown safety and financial risks that could arise from purchasing such a house.

If you need to get a loan and have your house appraised as collateral, the value of your house will be a lot lower with the unpermitted basement than if it were unfinished. This means you could get a much lower loan, or not be considered for the loan at all.

I Had a Permit But it Expired

If you had a permit but it expired before you completed construction, then you will have to assess the remaining work. If it is work that does not require a permit, you may be able to continue without one. However, you should always check with your local building and planning department if the work qualifies as unpermitted, just to be safe.

Should the remaining work still require a permit, you cannot apply for an extension on an already expired permit, you will have to reapply and the likelihood is that the new and increased fees will be applicable. It’s best not to let your permit expire if you can help it.