Most home owners know the value that home improvements can add to their home. Updates to kitchens and bathrooms can add thousands to your home’s worth, as can the addition of more square footage, landscaping, and various other improvements. Anything that you can do to make the space feel newer, bigger and expensive can help add lots of value to your home.

Planning and window shopping for your next improvement can be a fun and great way to organize your thoughts and ideas prior to starting your home improvement project, but one critical step is often overlooked by many do-it-yourself’ers trying to save money: failing to find out if your home improvement project requires a county or city building permit. Of course, if your DIY improvement project consists of painting a room or installing carpet, you probably won’t need a building permit, but if you’re looking to add square footage to your house by drywalling that unfinished basement, adding a new deck or replacing a deck, you should definitely check with the county or city offices in your area for any necessary building permits.

So what’s the big deal about getting a permit? DIY’ers probably plan to do a better job than any contractor coming into their homes, and most homeowners wouldn’t purposefully do anything to harm their home or the people living in it, but the fact is, there are building codes to adhere to when you live in a community of many homes. These codes can vary from state to state, or even city to city, not to mention the fact that building codes could change due to newer materials or methods.

But wait! There’s more!

Here’s an example. Let’s say you’ve already drywalled your basement and put in that rockin’ new media center– without getting a permit. There are two things that you could do:

1. Check with your city to see if a building permit was needed. If so, the building inspector may require you remove some walls — yes, that’s right… REMOVE some walls, painted or not — so that they can inspect the wiring and insulation.
2. Why bother mentioning it? What’s done is done and you promise to get a building permit the next time you do a major home improvement– if there IS a next time. Besides, you think you did a better job than any contractor would do, so your work probably exceeds any kind of building codes standards anyway.

Your first option may cause some headaches, maybe even a lot of headaches, but at least you’ll know that whether or not your work was done to code. Your second option may sound like an easy out, but you could be setting yourself up for an even worse headache than just ripping out new walls. Let’s say you went with the second option. What could go wrong, right? Well, let’s see some different scenarios:

• Life has been good. It’s been several years after your home improvement and your family has enjoyed watching several hi-def movies in your DIY media room. But now the kids have grown and moved on so it’s time to downsize. You list your home for sale. If you listed with an experienced real estate agent, one of the first things your agent will do is generate a Comparables report to establish baseline pricing for your home. And then it happens. Questions start cropping up regarding the square footage of your home versus what is stated on the the city/county tax listing. This discrepancy could affect the value of your home or raise red flags to some potential home buyers as to whether or not the basement was finished to code. As Ricky Ricardo would say… “You got alotta ‘splaining to do, Lucy!”
• Life has still been good, but in this scenario, you’ve decided to live out the rest of your retirement days at home. After all, you put a lot of sweat equity into it, right? By some unfortunate freak accident, your home catches on fire while you are luckily out of town on vacation, so no one was hurt. No problem, items are replaceable thanks to the home owner’s insurance you’ve been paying into all these years, you’re covered, right? Right? The insurance claim adjuster who has arrived to assess the damage and write up the claim finds out that the electrical fire started in the basement. Doing their due diligence, the adjuster does some research to find out exactly how much square footage was lost, so, they go to the county to confirm your statement of square feet lost. Uh-oh, there seems to be a problem. The county has no record of additional square footage from the finished basement. In such a case, your insurance company may only pay out for the loss based on the pre-existing square footage, so all that moola you spent on that fabulous media room could literally go up in smoke. But wait! You think you can appeal the decision, and in fact, are willing to take your insurance company to court over it. Well, let me tell you about a similar case a colleague of mine encountered, wherein the homeowner tried to sue their home insurance company for not covering the entire damage. They all went to court, each side made their claim, but ultimately, the judge ruled that because the basement was not built to code and because the electrical fire started in the basement, the home owner’s insurance company was not liable to pay out anything at all! OUCH! (Yes, that’s a true story.)
• Let’s say that you successfully sold your house with no questions asked about the finished basement. A few years pass and an electrical fire started in the basement burns down part of the house. The new home owners file their claim with their insurance company, and their claim adjuster finds out the same thing– that the basement was not built to code and their insurance company won’t pay out. That’s a shame, but it’s not your problem anymore, right? Not so fast, Speed Racer. Who do you think the new home owner is going to blame? You may be facing legal issues over that basement, even if you don’t own the house anymore! Yikes!

The bottom line is that although it may cause some headaches in the beginning- going out of your way to obtain a building permit and schedule inspections, it could save you from an ugly legal situation and a lot of out-of-pocket expenses later on. Don’t make the biggest DIY mistake ever– get that permit!

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