Ok so I just got into flipping houses, so I am very new at this. I made several mistakes that cost me a couple of thousand dollars and left even when I finally got the house completed. I learned from those mistakes and was ready to move on to the next house after selling my for flip, or so I thought.
right now I am having a nightmare trying to put this house up for sale. You see, I finished the basement without any permits, and for some reason I though it was a good idea to hire a contractor to pull a permit just for the gas line so it could get inspected. During the inspection, which the sanitary company does, the inspector asked several question and came to the conclusion that at least the bathroom had to be new and requested a permit to be pulled and gave me a stop work order. I was fine with that and contracted a licensed plumber to pull the carpet, drill to get a permit and get it inspected. however, the next day there was another stop work notice from the county which listed all types of permits to be pulled before the could inspect and lift the stop work.
The main floor did not need any permits since no walls were added, and everything was cosmetic, but the basement has new walls, electrical, and the bathroom was existing but moved to another location. Anyway, at this point I think I have all the permits pulled and work inspected for the plumbing and gas, which left me close to 10k in the whole. I was trying to play off that the everything in the basement was existing, and that I only moved an existing bathroom. But I just realized that the inspector will ask to open the other walls and discover that the partitions are new, and ask everything to be re-done.
unfortunately, this happened at the end when everything in the house is complete, painted and cleaned. The water, electricity, gas is on and working properly. I am not sure the best way to resolve this. I am scared of putting this up for sale since I don't know if the stop work order is something that can be pulled on the house. There is no more work to be done, so the work order does not affect me in completing the house, but if I want to get it lifted I would have to re-do the basement and be at the mercy of the county. So far they have not inspected anything and just issued a stop work order since the sanitary company notified them that I may not have permits for new work.
I am also on a hard money loan, so one option is to borrow money and pay off most of the hard money loan and tell them I plan to live here, and hold it for some time and sell it later on, but not sure if that will solve anything. I am really just looking for suggestion and advice. I know the easiest, most expensive, option is to do what is being required, but perhaps there was a way around this.
@Jason Carter - you've got yourself in quite a bind here. You've learned the hard way that permits need to be pulled up front for major work. Now that the appropriate inspectors have put stop work orders up, you don't really have much of an option outside of compliance. Your best bet is to go in and talk to the respective inspectors and figure out what is the most cost effective way to come into compliance.
Selling the home to a prospective buyer without disclosing the known issues is a big no-no. You're asking for a lawsuit IF somehow the seller or closing attorney doesn't find out about the stop work orders before closing.
It's a bad spot to be in, but there is no sense in digging yourself deeper in the hole by trying to cover up your mistakes and screw somebody else over
Sorry to say, you need to bring them in, take your lumps, comply and move on. Learn from this. Avoiding permits (whether the intent is to cut corners or not) is one of the things that make flippers look bad to outside parties.
In the future, speak to the town before you ever start. Ask them what permits are needed with a description of the scope.
I actually found out when doing a renovation and pulling all permits (think roof permit, structural foundation, windows, siding, plumbing for new bath, electrical, kitchen renovation, and 3 bath renovations) that the town expected a separate permit for a door to the garage being moved. It was shown on my plans for the kitchen renovation (as it was part of that work), but when the new owner asked about permits, the town said everything was all set, but I had "never taken a permit out for the garage door"... I spoke to the town about it (to rectify if need be as I had photos of the work and if need be would have gone and helped make it right) but they informed me there wasn't an issue on their end, just that the homeowner had asked about it.
At the end of the day it is good business to keep everything done right and not avoid permits.
You probably have just 2 options at this point. One is to open up the walls so the inspectors can see what has been done. Then, after all inspections are passed, close it back up and finish it off.
Also, you might ask the building official if you can submit a professional engineer's letter that says he saw the construction, and that it was all done according to the applicable codes. Of course, the engineer would be sticking his neck out, so he definitely is going to grill you on the specifics of what was done and how it was done. And, he will charge you a good amount for that letter, if he is willing to do it at all. His license is valuable and if he thinks that you cannot answer his questions well, he will not jeopardize his license for you.