Sellers and buyers beware. When in doubt, obtain a permit.

Most municipalities require that the owner of real estate obtains a permit before finishing your basement. This could involve electrical, plumbing, drywall, etc..The municipality will charge you based upon the value of the contract.  They will also want the contractor to become registered and provide adequate insurance coverage.  Many owners of real estate don't want to follow these requirements to save the permit money.  They are concerned that it could cause real estate taxes to increase.

I recently was representing a seller that disclosed that he did not obtain a permit for several repairs.  He disclosed the lack of permitting on the sellers property disclosure statement.  I had several prospective buyers decline on the home once they learned that the seller did not obtain the required permits.  Then I found a buyer that accepted the sellers disclosure which indicated that the seller did not obtain permits for the basement and lots of other work.   Everything was going great until the mortgage appraiser came into the home to appraise the property.  The appraiser noticed that some of the work did not look correct.  This caused the appraiser to contact the local township to confirm permits.  Once the appraiser found out that permits were not obtained, he required the seller to go back to the township and obtain the permits.  The appraiser indicated that he would reduce the value of the appraisal below the sale price if we didn't obtain the appropriate permits which would have caused the closing to fall apart.  Fortunately, I was able to have some of my vendors from www.HomeSellerConcierge.com help and get all the necessary permits which caused the home to appraise and close on time.  I contacted my insurance vendor and presented the above fact pattern.  He indicated that the home owner could also find that they don't get insurance coverage for items that
the seller fails to permit.

The moral of the story is to get permits for work especially when you are finishing a basement or converting a garage.  In addition,  there are many other items that require permitting.  When in doubt, you should check with the township for their building requirements.