Failure to pull permits- anyone been burned before?

[Richie Thomas]

There's a chance that I'll be closing on my first investment property within the next month!  However I walked the property this morning, and I discovered that the conversion of the open-air carport area into an enclosed "spare room" by the property's owner (who is a contractor) did not include pulling of permits.  I called the local zoning department and they said the only permits pulled for this address in the last 12 years were for a conversion of 100 amp electrical to 200amp due to storm damage.  No idea what that means but it sounds completely unrelated to what I'm referring to, since the remodel took place 15 years ago.

Initially I was worried that this could sink the deal.  My understanding is that, if I purchase the property, I assume any liability related to the original lack of permits.  I'm almost positive that I'm correct on that point.  However my realtor / property manager assures me that almost no one pulls permits in this fashion in my market (Huntsville, AL), and that the length of time since the remodel transpired means we're probably OK.  Additionally I spoke with a lender I'm considering for financing the property, who is local to the area and who I found on my own and who has no connection to the realtor / PM.  This lender said almost the same thing verbatim.

The workmanship looks OK to me, but I'm certainly not a contractor or inspector by any means.  My planned offer includes an inspection contingency, to prevent any habitability issues from turning my deal into a money pit.  My question is, has anyone else run into a similar situation in your local market, or heard of folks getting burned by something this after committing to a deal?

[Henry Lazerow]

This will completely depend on area, I would recommend posting on your BP local forum. In Chicago the majority of home owners do NOT pull permits (even though they should) for mild/medium work. Many buildings even have illegal units that have been there 20+ years. Other towns have annual inspections and the norm is to pull a permit for everything even basic stuff.