Q: My seller-client is unsure if proper permits were obtained for finishing his basement. What should I advise my seller, and what are my disclosure requirements?
A. The State Building Code requires a building permit for “construction, reconstruction, alteration, repair, demolition, removal or change in use or occupancy of buildings and structures.” Local bylaws or ordinances may also include more specific requirements for when a permit is required. If proper permits were not pulled, those improvements might be deemed illegal.
If your seller is unsure if proper permits were obtained, he should work with the town to resolve any outstanding issues before you list the property. If your seller determines that the improvements did not have a valid permit, and you become aware of this fact, you have a duty to disclose under Chapter 93A, the Massachusetts Consumer Protection Act. It is also important to remember that as an agent, you must exercise caution when making verbal or written representations about a property, and use reasonable care when providing information in order to avoid liability if the information is found to be inaccurate.
If your seller chooses to ignore the fact that there is possibly unpermitted work, he should be aware that the unpermitted work may be discovered prior to the sale. First, Massachusetts law requires that the Fire Department inspect each home to be sure it is equipped with an approved smoke detector. That law also requires the Fire Department to report to the local building authority “any condition which he believes to be a violation of any provision of the state building code.” This will not only put the local building authority on notice, but it also could hold up the sale, as the Fire Department may not sign off on the inspection until the permitting issues are resolved. It is also possible that a prudent buyer will perform his or her own investigations regarding permitting. If the buyer discovers that the improvements were illegal, the buyer will likely seek price concessions or even back out of the deal. Again, this may also put the local building authority on notice of the unpermitted work. Finally, many banks require that the appraiser verify permitting during the appraisal process. For the foregoing reasons, it is wise that the seller resolve permitting issues prior to listing the property.