Buying & Selling
The inspection found unpermitted work. Now what?
You have a closing date and a problem that was built ten years ago. Here is how this normally plays out, and the three decisions that actually matter.
Unpermitted work does not usually kill a sale, but it does force a decision under time pressure. You have three realistic routes: permit it retroactively, credit the buyer and sell as-is, or remove the work. Which one is right depends almost entirely on whether the work is structurally sound and whether it would pass today's code. A licensed contractor can usually tell you which route is even available within a single site visit — and that is the call worth making before you negotiate anything.
What “unpermitted” actually means here
It means work was done without a permit being pulled, inspected and closed out with the city. It does not automatically mean the work is dangerous, and it does not automatically mean it has to come out. Plenty of unpermitted work is perfectly well built. The problem is that nobody can prove it — there is no inspection record, so a buyer, a lender and an insurer all have to assume the worst.
That is the real damage. Unpermitted square footage may not appraise, which can move what a lender will finance. Some insurers take a position on it. And a buyer who cannot verify what is behind the drywall will price that uncertainty into their offer, usually at a number well above what resolving it would have cost.
A converted garage. An enclosed patio counted as living space. A bathroom added in a basement or attic. Electrical sub-panels and added circuits. A deck or a structural wall removal from a previous owner's remodel. In a lot of cases the current seller did not do the work and did not know.
Your three options, honestly compared
| Route | When it makes sense | The catch |
|---|---|---|
| Permit it retroactively | The work is sound and can meet current code | Takes the longest. The city may require opening walls so an inspector can see framing, electrical and plumbing that are currently covered |
| Credit the buyer, sell as-is | Closing date matters more than the dollars, and the buyer is willing | You will almost always credit more than the fix would have cost, because the buyer is pricing unknown risk rather than a scope |
| Remove the work | It cannot meet code, or it is genuinely unsafe | Usually the worst financial outcome, but occasionally the only honest one |
| Do nothing and disclose | Rarely. Some buyers accept it, especially cash buyers | You still have to disclose. Hiding it is a different and much larger problem |
What retroactive permitting actually involves
People imagine paperwork. It is usually more than that. The city has to be satisfied that work it never inspected meets code, and the only way to do that is to make the work visible again.
An as-built set gets drawn
Someone has to document what is actually there. On anything structural that means an architect and often a structural engineer. We coordinate and price that work rather than handing you a homework assignment.
The city reviews it
Plan check treats it like a new application, because from their side it is one.
Concealed work gets exposed
This is the part that surprises people. Expect to open drywall so an inspector can see framing, wiring, plumbing and any structural connections.
Corrections get made
Whatever does not meet current code has to be brought up. Older work often misses requirements that did not exist when it was built.
Inspections close out
The permit is finalled. Now there is a record, and the record is the whole point.
Retroactive permitting is generally held to today's requirements, not the ones in force when the work was done. That is the single biggest driver of cost, and it is why a garage conversion from 2004 can need real work to legalise in 2026.
Who pays, in practice
There is no rule. It is a negotiation, and it usually lands on whoever is under more time pressure. A seller with a backup offer has leverage. A seller who has already bought their next house does not.
What consistently improves the seller's position is a real number from a licensed contractor rather than an estimate from the buyer's imagination. An unpriced problem gets negotiated as a big problem. A priced problem gets negotiated as a line item.
The one thing to do first
Find out whether the work is legalisable before you negotiate anything. That single question — can this be permitted as built, or does it need to change — decides which of the three routes you are actually choosing between. Everything else is downstream of it.
If it turns out the work has to be opened up or partially rebuilt, you want to know that while you still have room to negotiate, not after you have agreed a credit based on a guess.
We can walk the property, tell you what we think will be required, and price the route you choose. We are not attorneys and we do not give legal or disclosure advice — your agent and, where it matters, a real estate attorney own that part.
Common questions
Do I have to disclose unpermitted work when selling in California?
Will unpermitted work stop the buyer getting a loan?
How long does retroactive permitting take?
Can you just make it look finished so it passes?
Where to go next
Written by the team at Elusive Construction, a licensed California general contractor (B #1112902) building in Santa Clara and San Mateo counties. General information about how residential construction works — not legal advice. For your specific contract, talk to an attorney.
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