We've been searching for a house that fits our requirements for the better part of 2025. Found one within a month of searching, late spring, but a few life boxes didn't check off in time… seller understood and we called it off.
We finally found another one we liked only a couple of miles from our current house. Today is the 4th day into escrow, finished General Inspection, chimney inspection, sewer inspection. Found out last night that the "down to the studs" advertised remodel was never permitted. I pulled LADBS records and the last building permit and CoO were issued two decades ago. Seller disclosures expected by EOD but doesn't change the story. Seller's agent confirmed an hour ago that permits were never filed.
We did get a list of the full scope of remodel, below are the key ones:
– Has the electrical been updated? Yes completely
– Has the plumbing been updated? Yes completely. All water lines copper.
– Have there been any remodels done to the house, and when were they done? Complete remodel down to studs 2025
Just those three factors tell us that a permit should've been required, not a CoO because footprint did not change. We think this is grounds for pulling out of escrow because the risks are too high, with physical risk and financial risk with potential insurance fallouts.
So, few questions:
1) Our personal licensed contractor friend who walked the house with us initially suggests we pull out.
2) Does LA do retroactive/after-the-fact permits? Given the complete electrical rework, can they even do a retroactive inspection? There wouldn't be any way for the inspector to look at cable routing or clearances to plumbing, for example.
3) research since last night says this is pretty common in LA and other cities. Are we being sticklers or is it acceptable to build and sell and purchase unpermitted complete home remodels?
4) Ethically, I want to report this to MLS. We are super bummed, we weren't emotionally attached to the house but it would've unlocked quite a few next steps for us. But I also don't want an unwitting buyer to go through this either.
TLDR: in escrow to purchase a house that has a full remodel without permits. Are we right in pulling out? Is there any clawback with post-remodel permits in Los Angeles?
Deciding to pull out of escrow to purchase unpermitted remodeled home (Los Angeles city)
byu/boilerdam inRealEstate
Posted by boilerdam
5 Comments
I’m not clear from what you posted – were the electrical and plumbing updated during the 2025 remodel or at an earlier point? If it was earlier, were no permits pulled for them then either?
A “to the studs” remodel that was just drywall and finish work might conceivably not require permits if there was no electrical or plumbing work done (which would be odd, but it’s not clear to me from the way you posted them separately).
Otherwise in terms of the actual quality of the work, I would get someone who knows what they are doing – either a good old inspector (not recommended by any realtor on your side or the sellers’ who could make a commission off this sale), or better yet a good old contractor friend/family member or very experienced DIYer (i.e. has personally built/thoroughly remodeled multiple houses) to look for any indications of subpar work that you can find without tearing into the walls. If he/she finds any such indications I would demand a steep discount vs. market for a similar house in the area or I would walk. If not, I would demand a small discount. If he/she notes that the work seems to be much better than normal (which you sometimes see in unpermitted work), I would be fine with it.
In terms of the legal/insurance repercussions it depends a lot your local standards. Some places unpermitted remodels are the norm. Some they’re totally unacceptable. Some places its a mix.
It may be ok if you are comfortable with removing all the drywall so you can get a retro active inspection. It seems like a flip so they should have a built in margin for a price reduction. Reduce the price for removing the drywall plus repair and retroactive permits. Add a buffer for the risk you are incurring to fix shoddy work and to account for the time you can’t use your home. However, most sellers would say no and try to find a different buyer/sucker. The house also has to be at least from the 1960s to warrant a full gut because of age. Otherwise there may have been a fire or flooding. Replacing and not changing anything should technically be ok, but everything has already been covered up.
A ton of remodeled homes will not have permits. If your inspectors couldn’t find any issues, you could get independent ones for water, electrical, gas, structural. I would probably say the cast majority of remodels homes won’t have permits because there is little to no margin with it. Getting permits will make the job take 2-3x as long and interest payments are steep in LA. If you’re that concerned, your options will be to buy a new or newer home.
As this commenter already stated, going to studs may mean new drywall. New drywall doesn’t usually require permits.
We had a similar issue recently. We fell in love with a house that had been meticulously updated to maintain the home’s 1930’s Tudor character but they had zero permits pulled for any of these updates. It was so disappointing because it was such a beautiful job but they had changed the footprint of the kitchen and moved walls and updated electric and plumbing and just the fear and potential cost of possibly having an inspector someday request to open walls to check stuff was enough of a deterrent for us. That was about three months ago and the house is still on the market.
We made the sellers get retroactive permits for a bunch of work. The city made the contractor dig up the area of the sewer line replacement to prove that it had been done correctly.