Would You Undo a Finished Room Just Because It Was Never Permitted?

Question

Say you buy a flip and the previous owner already turned the garage into a bedroom. It looks good. It has AC, electrical, a closet, everything you’d expect. Then you find out none of it was permitted. Now you’ve got this finished room that might not count toward the square footage when you sell. Would you try to get it legalized, turn it back into a garage, or just leave it alone and run your numbers without counting the extra space? Has anyone had something like this actually cause a problem when it was time to sell?

Greg Scott · Answer

I bought a rental in DFW that had an unpermitted garage conversion. We had my contractor go to the city. They charged us a permit fee, had us create "drawings" of the conversion (which my contractor hand-sketched), did an inspection (with fees) and then the city approved the conversion.

When we went to sell, it was a fully permitted conversion, so no issues.

Bruce Woodruff · Answer

Yeah, I've done this and I agree with the above comments. No point at all in tearing it out, just 1) see what it will take to make it legal, or 2) sell it as is, disclose the lack of permits, and take the financial hit...

Stacy Raskin · Answer

Worth it to try to get it permitted if you are going to sell it as the appraiser won't use the square footage if unpermitted so that will affect the value of the property. Some cities or counties are more flexible on permitting after the fact. It's worth contacting who would issue the permits before making a decision on the direction to take. That way it can be an informed decision once finding out the difficulty and cost of getting it permitted and whether it's worth it for your particular real estate goals.

If it's a rental, it's worth permitting because I have seen renters call the city or county inspectors on owners if they knew part of the property was unpermitted. This is usually after there's an argument about something else. Not sure how the renters found out it was unpermitted. I had a client in San Diego who had to rebuild a unit that was an unpermitted one bedroom garage conversion after the renters called the inspectors on him. That was about seven years ago.

Chris Seveney · Answer

I wouldn't tear it apart I would talk to the inspectors to see what's needed to get it permitted. Some may have you open up a few locations but in most instances it's worth it

Would You Undo a Finished Room Just Because It Was Never Permitted?

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