City Resale Inspections - Hot Topic in Marin Real Estate

In 2014 in the Marin real estate market city resale inspections are a very hot topic. San Rafael’s inspection in particular has come under scrutiny with the Marin Association of Realtors. It wasn’t too long ago when the city’s resale inspection consisted of what seemed like mainly a check for smoke detectors a water heater strapping.  Times have changed and the City is now looking closely for and has taken a harder line on work done without permits. There have been scenarios where non permitted work was done before properties were previously sold and it wasn’t called out on previous resale inspections. Today when those buyers turned sellers are getting resale inspections the non-permitted work they inherited is now being called out and they are being held accountable.

Resale inspections are common in cities throughout Marin County. Properties on county land are not subject to a resale inspection, however any work done without permits still needs to be disclosed to buyers. I’ve had buyers ask for permits to be taken out with the County during transaction, while other buyers have simply accepted work done without permits.

The issues with homeowners doing work without permits are significant. One of the obvious issues is not having local government oversight on projects. Contractors may not be doing work up to code which can lead to potentially hazardous construction. Taking out and finalizing permits ensures the work is done properly for homeowners and future buyers. Non permitted work disclosed to buyers can potentially turn them off a transaction. Homeowners may save a little money upfront not requiring their contractors to get permits, but ultimately fines can be much more costly.

San Rafael has followed Novato’s lead and now fines homeowners three times the permit fee when penalizing non-permitted work. That’s in addition to the actual permit fee, multiplying the cost by four times! Permits costs are calculated based on the cost of construction and the penalties can run not just into the hundreds but thousands of dollars. It’s a stiff price to pay for not having contractors work with the local building department when doing the work. Understandably some contractors don’t want to pull out permits for work because they don’t want to go through the hassle. Plans need to be drawn up, submitted and approved. Inspections need to take place and job cards signed off. All of which takes time, and contractors like to get in and out of jobs, not wait around for building departments to process permits.

Whether intentional or not the resale inspections have become an opportunity for local governments to generate additional revenue. Building departments are revenue centers. And there is no way to get around non permitted work anymore when it’s called out. In Tiburon if work doesn’t begin within 30 days of being called out, or if there’s not a good reason to get an extension the town begins to fine additionally. In San Rafael it’s sixty days. I recently had a homeowner in San Rafael decide not to sell because they didn’t want to deal with the City and the permitting process.

The moral of this story? Homeowners should make sure their contractors take out and finalize permits. Or if they don’t get permits they should understand the risks and future implications when it comes to selling the property.