Saturday, October 22, 2011

Unpermitted square footage and your lender

If you've been searching for real estate in Los Angeles and San Fernando Valley, you already know that many homes have been added on to since they were originally built.  Some of the additions are really nice and make a lot of sense; others are really funky.  Some are permitted; some are not (back in the day, a lot of do-it-yourselfers didn't bother to pull permits.  It would have increased their property taxes to do so.)  And this usually becomes a freak-out issue for most buyers.  Here are some things to know.

Here's what your lender is concerned about vis-a-vis unpermitted square footage.  Caveat: this has nothing to do with what the city or your insurance company thinks about unpermitted square footage.  That's another thing entirely. Your lender, through the property appraisal, will be concerned with:
  • The addition must be done in a workman-like manner with decent construction standards. Nothing with cinderblock bricks instead of a foundation, for example.
  • It can't have a kitchen.  This is a big no-no for most municipalities, too.
  • The addition's square footage will not be counted towards the square footage of the house.  You can't say your house is 400 sf bigger because somebody drywalled the garage.
  • There must be comparable or similar additions, permitted or not, in the neighborhood.  For example, if the homes on your street were built with carports instead of garages, but subsequently everyone enclosed their carport, it's probably okay with your lender.
How do you tell if the square footage is permitted? Two ways.  You can either visit the city building and safety department and pull the permits on the house.  Or contact  Or you can look at the County Assessor's tax records (easy to find online).  Sometimes, though, for whatever reason, all square footage hasn't been recorded by the tax assessor; if there's a dispute, definitely go to the municipality.  In another post, I'll go into what unpermitted additions are probably NOT okay.

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