What are the risks of home remodeling without a permit?

Building permits are required by law, so there are some legal consequences if you are caught working without one. The building inspector will normally order that work be stopped until it is determined exactly what is being done, how much work has been completed, and if any building codes have been violated. You will then be required to get the necessary permits and correct any unsafe work, usually at a higher rate than if the proper permits had been obtained in the first place. Inspectors may require that you remove already competed work to make it accessible to them for inspection, such as tearing out new drywall to access concealed electrical wiring.

Costs may be incurred in the future if you buy a home that was renovated without permits. For example, you plan to remodel the kitchen and attempt to obtain the required building permits. If a city building inspector finds code violations from past work when he's inspecting the kitchen remodel, you may have to correct these violations before the inspector will sign off on the kitchen project. You may also be liable for penalty fees.

Appraisers often want to know that major renovations were done with building permits. If you add a room or do any significant projects without a permit, the additional square footage and value for remodeling improvements may not receive full value. Without permits, the appraiser may not be willing to give full value for the improvements, so the property will appraise for significantly less than the purchase price. The effort to save money by going around the permit process can end up costing much more in the long run.