Building Permits

06/20/09

For your convenience this document is published on the Internet at:
http://www.mkgappraisal.com/letter2009_02b.htm

Homes Haunted by Past

I direct your attention to this article from the Denver Post dated 6/20/09. I have published the text below because these articles have a short shelf life, and I think this message is worth preserving.

Sisters Nancy Boston and Patricia Porter were a week away from selling their four-bedroom Arvada home when city officials slapped them with an unpleasant surprise: Their finished basement violates the building code.

Boston, 65, and Porter, 63, bought the house, which already had a finished basement, from the federal government in 2003. No one had noted a problem with the two bedrooms and family room remodeled into the basement years before — until now.

Theirs is one of 15 Arvada homes currently on the market that the city has flagged for noncompliant remodeling projects that were done years ago without proper city permits or safety inspections. And there could be more coming, officials said.

The problem isn't isolated to Arvada, construction and real estate experts say. Every municipality in Colorado can likely find hundreds of illegal home-remodeling projects with minimal effort.

"Nothing ever came up before, and we paid handsomely for the inspection when we bought the house from (the U.S. Department of Housing and Urban Development)," said Boston, a retired food-service worker for the Jefferson County School District. "This about knocked me on my backside."

The Arvada homeowners now face a dilemma: fix the violations at great expense, get the new owners to agree to buy the house "as is" and take on the code compliance work, or risk a citation and court appearance. At worst they'd not be able to sell the house.

"There's a part of the code stating it shall be unlawful for a person with a compliance violation to sell that property," said G. Noel Vargo, Arvada's chief building official.

In the sisters' case, fixing the violations — a lack of ingress and egress via basement windows — would cost about $6,000, Boston said. Electrical and plumbing work would have to be approved as well, which could mean the removal of drywall ceilings and walls if inspectors can't tell the work meets code.

"It's just not right to hit us below the knees with this," Boston said. "Coming at us for something from 25 years ago that we never knew about, it's plain wrong."

Market gets tougher

The citations come during an anemic housing market, where any sale could stall over the slightest blemish. Though real estate agents who focus on Arvada properties say the city's enforcement action is unprecedented — "I've sold hundreds of houses and nobody worried about it," said one — they acknowledge the lack of proper permits for long-ago home upgrades could present a problem for future sales.

The issue is that the remodeling projects don't comply with the current building code, even if the work was done years before the code was enacted. That means the four-bedroom house Boston and Porter own is technically only a two-bedroom ranch, and Jefferson County assessor records show it's been taxed properly, as a two-bedroom.

Had the original work been permitted, it would be grand fathered into any code changes each time they occurred, Arvada officials said. The latest came in 2006.

Construction permits can mean big money for a city. There were 5,852 permits pulled in Arvada last year, officials said, generating $1.4 million in fees and another $1.95 million in use taxes.

Still, many remodeling jobs fly under the radar.

"We see things that aren't in the records," Re/Max Alliance Realtor Tammy Bray said. "In property disclosures it asks if any work was done without a permit. Buyers just turn a shoulder since they'd be taxed on what's known. They're willing to take the risk."

It's all about the money

There's the rub, remodeling experts say — taxes.

"Not obtaining permits is very prevalent — and that's unfortunate — usually to avoid the higher tax assessment on the improvements," said Renee Rewiski, board chairman of the National Association of the Remodeling Industry, a trade group. "In this economy people shop price a lot, and the easiest trim is the permit fees. Then homeowners are told to strip it out when they're caught later. That's expensive."

Though Arvada officials refused to say what piqued their interest — they won't provide copies of the violations, claiming the citations are criminal justice records protected from public disclosure — several people familiar with the issue said a disgruntled real estate agent who was forced to obtain permits for his own projects in Arvada chose to show the city how others also don't comply.

The individual used real estate listings that advertised finished basements and compared them with city building permits — a process that can be done online at no charge. Where city files were devoid of the necessary permits, he sent the discrepancies to the city building department anonymously.

David Migoya: 303-954-1506 or dmigoya@denverpost.com

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