Any risk in buying a house with finished basement without permit -Please advise

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I'd say about 99% are done that way. My old house was done that way and nothing was ever questioned.
My only concern would be using the rooms as bedrooms. Code requires a method of egress in case of fire. It the windows are of sufficient size, no problem. Ed
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Some areas may not require a permit to finish off an unfinished basement. Check with the town offices before panicking.
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You're right. And the property assessment department couldn't care less. And the tax assessor couldn't care less, either. I speak from experience. Pat
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Patscga wrote:

Insurance company may care if they know about it when fire broke out. Tony
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Possibly if there were code violations that caused the fire. If the entire house is destroyed, they'd never know anyway. When is the last time your house was inspected by an insurance company? Every 10 years the tax assessor makes a visit. Add a bathroom, pay more taxes because the value went up. No on ever asked about permits though. They just want the revenue. This year the evaluation was done over the phone. Ed
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Hi, My present house was 100% developed when built by my custom builder. B4 I used to finish basement myself. Our city has DIY permit for electrical work and plumbing. Cost is minimal. It includes two inspections. This goes on city record which means you met the code requirement. If everything is done in private, there is no supporting document whether the work was done per code. Insurance coimpany can pick on this as their excuse. If they tell the owner, your wiring was sub standard which caused fire. How can the owner counter that? My local government is not like yours. Tony
Edwin Pawlowski wrote:

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He doesn't hafta. The burden of proof is on the insurance company.
Have a nice week...
Trent
Fighting for peace is like screwing for virginity!
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Trent wrote:

Hi, Are you a lawyer? I think burden of proof is on the owner. Not having a supporting document is already an onus on the owner, IMO. I am not a lawyer. A retired EE. BTW, inspector asked if I was an electrician when he came for an inspection. Tony
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No.
Its just common sense, Tony.
You have a contract with your insurance company. If yer house burns down, they must pay. If they decide NOT to pay, they must prove to the courts whey they are not obligated to pay.
The burden of proof is on them.
And just because someone may have even CONTRIBUTED to the disaster doesn't release the insurance company from paying...unless that type occurrence is SPECIFICALLY outlined in the contract/insurance policy.
Many people burn their own homes down each year...and the insurance companies pay. But they will not pay for arson by the policy holder...as outlined in the policy.
If you breach the contract, you probably will not get paid. But the insurance company must have a reason for not paying...and THEY must provide the reason...and the proof thereof.
Have a nice week...
Trent
Fighting for peace is like screwing for virginity!
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Tony Hwang wrote:

Depends where you are IMHO. Insurance companies can be a different matter; especially when insurance industry profits are down! In this township the regulations about 'finishing' a basement are pretty relaxed. Most people wouldn't even think about a permit (if one is even required!) and the town doesn't seem to check. Finishing out a basement area is generally seen as someone having 'improved' the property and added to its market/resale value. Many homeowners here are excellent do it your selfers, are in the construction industry themselves or have relatives/friends who help them out. But next time (maybe five/ten years later) a tax assessment is done the 'improvement' may be picked up and the assessed value increased; to the surprise and remorse of the owner! The 'new' owner of a purchased property, having made no changes themselves during those years, then demands to know why 'his' assessment has increased! There was a recent house fire (caused by an electrical malfunction on or near the main panel, at night; the three occupants were lucky to get out alive! Fortunately none were sleeping in the basement which had only one exit although some of the basement windows were at or above grade level, which would have possibly been an escape if required. AFIK the homeowner got everything fixed by his insurance company; after all they insured the house for him just the way he bought it from the original/previous owner! But the owners son told me that the insurance company found that the rapid spread of the fire and an amount of the damage was aggravated by the manner in which the basement had been 'finished' by the previous owner. Specifically there was a lack of fire blocking and there were large air spaces behind the wood framed finished basement uprights walls, which had been added. The original structure was comprised of partial concrete walls with a wood framed 'knee wall' on top of the concrete, supporting the main floor. As a result of the basement being 'finished' there was, for example, a large open air space behind the added interior 'basement' wall above the concrete wall that allowed the fire, once started to spread quickly along one whole side of the house. So beware of a) Risky construction and b) What your insurance might NOT cover; quite apart from c) Risk of death injury to your family! Terry.
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"Patscga"wrote in message

You're speaking solely of your area. Where I'm sitting, they do assessments ever 3 years, they base assessment on living area. A basement is not considered living area unless finished. Those that do not let the county auditor in for assessment, find their taxes sky high, and soon welcome the auditor back for a visual assessment after they file a lengthy and time consuming appeal.
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said...

It's a good thing they don't work on commission.
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On Wed, 12 Nov 2003 14:58:23 -0500, someone wrote:

As a practical matter, I agree to the extent that it would be OK with 'the bank' as long as the illegally finished area is not being relied upon to acheive the required value of the property. OTOH if the bank thinks it is mortgaging a 4-bedroom 3 bath home, but one bedroom and one bath are illegal in the basement, then they sure as hell WOULD care, IF their appraiser was on the ball enough to catch it, which he should, but often will not.
-v.
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On Sat, 15 Nov 2003 03:24:50 GMT, snipped-for-privacy@verizon.net (v) wrote:

All the banks pretty much care about is if the building really exists...and if you have insurance on it for the amount of your loan. They don't care what the inside looks like. Many homes, of course, are sold for cash.
And very few rooms inside the house have any designated purpose. Special-purpose fixtures...like a toilet, sink, lack of window, etc...can sometimes designate the purpose. But other rooms can simply be designated as whatever the present owner wants to do with it.
My house is over 100 years old...and has gone from 2 bedroom to 4 bedroom to 2 bedroom about a half-dozen times...depending on how the current owner uses the various rooms. I now have a 2 bedroom...with a computer room and a large storage room.
My house will be advertised as a 4 bedroom when and if I sell it. It was listed as a 4 bedroom when I bought it...and it had 2 beds in the house when I took the tour.
Have a nice week...
Trent
Fighting for peace is like screwing for virginity!
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"Trent" wrote:

This is a bit inaccurate. The banks want to be sure that the house can be sold for at least the amount of the mortgate in case you default. This is part of why they insist on an appraisal, which includes an assessment of the inside and outside of the house.

Maybe in your mind, but not necessarily in the minds of the appraiser or the tax authority. Generally, if a room has a closet it is considered a bedroom. Many people get around a bedroom limitation on their septic permit by adding rooms which do not contain a closet.

You are talking about how you are using the rooms, not how it would be classified on an appraisal or tax evaluation.

Counting beds to evaluate the actual number of bedrooms is meaningless. I have a 4 bedroom beach house, which contains 5 beds. Should I have it reclassified as a 5 bedrrom because of the bed count? Of course not.
Chuck
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wrote:

What I said was 'for the amount of the loan'. We're way beyond the point already that you bring up here. The loan has already been approved...yer credit has been checked, etc. Now they go out and see if there's a building there...and if that building is worth 120% (roughly) of what you want to borrow...assuming their gonna give you an 80-20 loan.
And, in my area, the appraisers NEVER come inside the house...nor do the insurance companies. Its a waste of time for them. All the insurance companies hafta do is ask questions about the house over the phone. Most will come out later and take a picture of the place...again, to verify that the building exists.
And, unless you have a newly built home, they have a database to do any necessary comparison checking.

I've seen a lot of hallways with closets...and a lot of other rooms that were not bedrooms with closets, also. And there are a LOT of bedrooms WITHOUT closets. My house has 2 of them. Many of the older houses were built without closets in the bedroom.
The room I'm sitting in now has a closet. I use it as a computer room for some of my computers. Its not on the tax assessment as a bedroom...simply because I don't USE it as a bedroom. But it was listed as a bedroom before.

They are classified as how you use them. Why would you think otherwise?

Of course not. If you have a bed in your bathroom...that doesn't make that room a bedroom. And you can also have 2 beds in the same room. I don't know where that 5th bed is located.
But if you have a full-size bed in a room, its pretty much an indication that you expect someone to sleep in it...ergo, its a bedroom.
The BEGINNING test for a bedroom is...is the primary purpose of that room to have someone sleep in it. Then more logical testing is done. For instance, if you have a very large bathroom...with a bed set up in it...that room would still be classified as a bathroom...especially if it was the only room in the entire house with a toilet.
Have a nice week...
Trent
Fighting for peace is like screwing for virginity!
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"Trent" wrote:

What you said is the banks only care that you have insurance for the amount of the loan. Now you are changing what you said to confirm my clarification.

In this area, and many other areas in the country, the appraisers come inside the house. The finish and condition of the interior is a significant factor in coming up with an accurate estimate.

They still do an appraisal which includes a walk through.

The tax assesor does not care how you use the room. They care if it could function as a bedroom. Are you sure it is not listed as a bedroom?

You are simply wrong on this. No matter how many times you say it you will still be wrong. I cannot reduce the number of bedrooms in my house by merely not using a room as a bedroom. You can continue to delude yourself, but you will not delude the tax assesor. Perhaps an older house which has bedrooms without closets could have this happen, but not a typical house built in the last 30 or 40 years.

And a lack of a bed does not magically make it not a bedroom.

Talk to a tax assessor or appraiser some time. I think you will find that your test is misguided.
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wrote:

If they don't care how you use the room, why would they care if it can function as a bedroom?

If I am 'simply wrong', how can there be any 'perhaps'? lol
There are millions of homes that are over 40 years old. On my block along, there are 30 homes that are over 100 years old.

I think you've got your mindset inside that 30 year old house. Take a tour sometime of a 100 year old house. Those get appraised, too.

Again...I think you're thinking of only the newer homes...half or full bath built next to a room large enough to accommodate a bed. Pretty much defines the room, doesn't it.
But rooms in older homes aren't as definitive.
Last post by me on this.
Have a nice week...
Trent
Fighting for peace is like screwing for virginity!
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"Trent" wrote:

Because that is part of the way they price houses.

And millions more that are newer than 40 years old.

And the appraisers still can figure out which room is a bedroom, regardless of whether it has a bed or not.

Whatever. Continue to delude yourself if you want. The tax person is more than capable of figuring it out.
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When the house was originally built, it got a certificate of occupancy. That is quite enough.

Pat
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