California has strong disclosure laws with regard to the sale of real estate. Anything that you know will, or might, affect a potential buyer's decision to go through with a purchase must be disclosed.

@Lindsey_CA Fine, so if you disclose a repair by an unlicensed contractor and say the sale is for the property in "as-is" condition, will that be a binding as-is sale?

I cannot answer that question as I am not an attorney (I'm married to one, but he doesn't do real estate law). My husband and I have purchased, owned, and sold several homes in California, and each time we've sold one, we've had to disclose anything we knew, or reasonably should have known, might affect a potential buyer's decision to purchase.

I know that I would not purchase a home if I knew that repairs had been done by an unlicensed contractor. First, anything over $500 needs to be done by a licensed contractor. And many repairs/replacements, etc., require inspections. If the contractor isn't licensed, you can be sure that no permit was pulled and no inspections were done. And, if it's found out down the line that this happened, depending on what the construction involved, the seller can be made to rip it out and have it done over by a licensed contractor.

You need to speak to a real estate attorney, and disclose to the attorney exactly what is involved so that you can get the right answer as it applies to your situation.

@Lindsey_CA We are not talking about putting up new buildings or major property renovations. We are talking about sub-$500 jobs like changing out a light fixture, stopping a leak in a roof created by a licensed contractor, etc.

The penalties for work over $500 are for the contractor not the homeowner.

Based on the number of people on Nextdoor who constantly ask for a handyman - few of whom are usually licensed contractors - I would say the list of homes you are willing to buy is very very very short.

So you've had a bunch of work done by unlicensed contractors, and now you want to sell, but you don't want to be responsible for any problems or issues with those repairs, so you want to sell "as is" without disclosing the unlicensed status of the repair people. I will reiterate what I said before -- You need to speak to a real estate attorney, and disclose to the attorney exactly what is involved so that you can get the right answer as it applies to your situation.

And, for the record, the very first home I ever bought was a previously owned home. Every home I've bought since then was brand new, so there was never any issue of repairs be done by unlicensed contractors. And Hubs and I are in our forever home, so the "list of homes [I am} willing to buy is very, very, very short." As in none.

@Lindsey_CA I never said anything about not disclosing information. Quite the opposite: I would disclose everything. The problem is no one who owns a home for 40 years even knows who was unlicensed, and now there is no easy way to find out. I am trying to understand the law as written. Realtors all brush off the issue and say "disclose everything and sell as-is". I simply want to understand the issues behind their opinion. At this point I have no home available for sale. I am trying to get a general level of understanding of what issues are important so that I can ask good pointed questions. I agree a lawyer should draft any as-is language and review all disclosuires.

Based on your statements, I totally understand why you mainly bought new homes, and that is a totally reasonable thing to do.

You should first ask these questions to your realtor, and then your attorney if necessary, but I have never seen a disclosure duty for the license status of a contractor. Nor would that likely be considered a defect of the home. So long as all required permits were obtained then there is no defect to report. In reality, unlicensed contractors don’t ususlly pull permits and so the latter largely covers the former.

California actually has pretty relaxed disclosure requirements. I know many people are surprised by this, but it is the case.

The California required disclosure states: “Are you (seller) aware of any of the following?” and then goes on to list things such as ”room additions, structural modifications, or other alterations or repairs made without necessary permits?”

So in California the standard for fraudulent representation is that you have to prove the seller knew, or reasonably should have known, the work required a permit and knew the work wasn’t permitted. There is no question on the disclosure about licensure of contractors.

In my home state, and many others, the question asks “have there been any additions, structural modifications, or alterations made? If so were all necessary permits and approvals obtained?”

So my home state’s disclosure form creates a duty to investigate.

@bry911 Thank you for that extremely good reply that really moved my understanding forward. What is the best resource to get a list of all California projects that should have required a permit? And the important question is: if you had any changes done previously that did not have permits pulled, does California allow you to simply disclose all such projects individually and still sell as-is? Or does California exempt such modifications not done with permit and attach some permanent liability to the seller that cannot be undone by any buy/sell contract? Obviously I am not relying on you for legal advice. I am trying to understand the terrain so that I can have pointed conversations with professionals.

CA has or used to have a disclosure form. Column 1 description of work, Column 2 Was a permit drawn. I do not remember if the form had a box for licensed.

1. I receive circulars from local realators, if you have any realtor solicitating you, ask one or more of them or search the internet for the CA real estate sellers disclosure form.

@westes Zone 9b California SF Bay My advice... talk to a realtor and possibly an attorney before you begin an investigation. Generally, the people that you hire have a duty to do the job correctly, and so it is their job to tell you when work requires a permit. So, most attorneys will advise that you only disclose permitting problems when you know (without investigation) that the work required a permit or when you did the work yourself. You typically don't actually have to investigate and probably shouldn't because once you discover a problem you have to disclose it.

As for the as-is thing... all home sales in all states are as-is. As-is just means that the home is conveyed without warranty. There is rarely a duty to make a repair on a home you are selling (some jurisdictions have a requirement that septic problems must be resolved immediately, but that is the only one I have ever heard of). The entire reason that inspections and things exist is for the buyer to investigate and satisfy themselves as to the condition of the house. This doesn't mean you don't have to disclose things you know about, because you can't make a fraudulent representation, but if you have several hundred unpermitted projects the seller's can't demand you fix it. They can ask and then back out of the purchase if you decline.

What most people think of as an as-is sale has no real meaning...it is just bad marketing by the realtor. To an experienced buyer it just says you are broke and desperate. When most people see as-is, they think the property is a fixer upper.

One of the reasons that you should talk to a realtor is to understand the impact of permitting on the selling price of the house. In my area, no one cares. I could list two dozen projects that were not permitted and it wouldn't change the price by $1,000.

Having recently sold a house in another state and bought in Ca i actually feel the disclosure laws in Ca are not as strong as people say. The buyer is not as protected as they would like buyers to believe.

It doesn’t matter what’s required. If something goes wrong after purchase, suing and then collecting is an ordeal that is more often than not futile. I don’t know of any buyer who hunted down permits and licenses before purchasing a 50 year old home that’s had renovation. Yes, to disclose known defects, but those are the least of it.

I would say if you have a house that is even just 10 years old it is likely the permit requirements have changed during that time period, so it would be hard to figure out if work that was done 30 years ago required a permit or not. I think Bry has good advice. Every locality is different too on what is required to have a permit for.

Your best bet with a house purchase is to have an excellent inspector and if they find any major issues, then hire any other necessary trades/companies to make further inspections and give quotes for any repairs needed.

When we sold out house in the northeast, the buyer's inspector found a "crack" on the back foundation wall of the garage. We were on a slight slope with a walk-out basement. We never noticed or had any issues with this "crack". The buyer then hired an engineer to assess the crack and provide a solution and rough cost. The buyer asked for $10K off, we agreed to those terms and the sale went through. Don't know if it was really an issue and if was repaired.

I agree that you should speak with a realtor familiar with the city or unincorporated area the house resides. Some cities have additional disclosure requirements. As an example, I know the City of Gardena has a separate document that needs to be completed when selling a home there (https://cityofgardena.org/truth-in-sales/).

Be more concerned with the quality of work that an unlicensed individual performs in your home than the affect of their licensing status on your eventual sale. CA is the most stringent state for requirements for contractor licensing. They aggressively pursue contractors performing work without a license. Yes, it adds to a business's overhead to be licensed. That's nothing to what it takes from their pocketbook to get caught working unlicensed. Only a fool would risk that. Who wants a fool who may not even know what they are doing, working on their house?

CA is the most stringent state for requirements for contractor licensing. [...] Yes, it adds to a business's overhead to be licensed. That's nothing to what it takes from their pocketbook to get caught working unlicensed. Only a fool would risk that.

When I lived in California there were unlicensed contractors doing work everywhere. Everyone I knew "had a guy," and when I go back those friends are still using those same unlicensed guys.

So let's discuss some economics here. The California CSLB licensing exam has a 59% first time pass rate, so that means that means that the average person is going to need to take courses in order to pass the exam and those courses require time and money. Contracting in California has a low barrier to entry but a high compliance cost and there is never going to a shortage of people who are willing to contract without a license.

As the penalties for non-compliance increase so does the profit for non-compliance. So you are never going to be able to fix the problem by penalizing unlicensed contractors. Nor are those people fools for taking that risk, as we all take risks for profit.

There is plenty of good work done by unlicensed contractors all over the country, however, when you hire an unlicensed contractor you take additional risks and you should be aware of them. Specifically, those related to injuries and damages to third party properties. Too many consumers don't actually mitigate those risks properly and if they did so they would likely find licensed contractors much more competitive.

Maybe OP westes is long gone but sorry, I happen upon this late.

Too many misinformed comments here by someone known for that and blowing smoke.

I'm also a Bay Area resident and purchased a house in another part of the state just a few years ago. There's a standard seller disclosure form in use provided by the Cal Association of Realtors that goes through a laundry list of questions that are to be answered based upon information known by the seller to the best of his/her/their knowledge and with an attestation to that effect. One of the questions is whether the seller is aware of structural alterations, additions, or other modifications of enumerated kinds has been done for which permits were required but not obtained.

Whether or not a licensed contractor is involved isn't an issue, it isn't asked for in the disclosure and is irrelevant.

Just as an example, homeowners are free to do whatever work they choose to do themselves. But if it involves items for which a permit (and by extension, a work inspection) is required, that needs to be done too. Whether such regulated work is done by Chuck with a Truck, a contactor, or the homeowner themself the rules, requirements, and disclosures at time of sale are the same and focus only on compliance with permitting rules.

Starts by saying ”Too many misinformed comments here..." then literally says the exact same thing as those comments. Even attempts to copy the same quote... Classic Elmer.

Here you go from the California Association of Realtors:

Notice that is exactly what I quoted above and several others have advised.

ETA: Time for an ad hominem? Or maybe you know someone who personally wrote the disclosures and has let you in on super secret insights that you can vaguely refer to.

-You mentioned attorneys, a profession nearly completely absent from the residential real estate market in California. Unseen, uninvolved, unconsulted in all but the very rarest of circumstances.

-You mentioned possible issues about facts a seller "should have known", which is not a consideration. As I said, there's no standard or expectation of intellectual competence or memory for a seller, simply a requirement that they disclose what they know and no requirement that a reviews or inspections/investigations be done for the purposes of the disclosure.

-You mentioned risks for "contractors" for being unlicensed. Most people know that the only restriction for a worker without a license is that jobs can't exceed a certain dollar amount, which I think is $500. Nothing wrong with doing 10 consecutive $500 projects. Also, less than reasonably competent contractors of various trades can and do pass the licensing exams. Someone who knows their trade will pass with no problems, it's not an insurmountable test to comply with, and licensure doesn't insure either competence or honesty (the absence of either which can be reason for a license to be revoked and penalties assesed. The licensing board gets thousands upon thousands of complaints).

-You said " if you have several hundred unpermitted projects the seller's can't demand you fix it ". It would be the buyers who may make such a demand but the objective is simply disclosure of facts, not admission of problems or guilt. The remedy for unpermitted work is a delinquent permit submission if it comes to that but the disclosure is made and the prospective buyer decides what to do not do about it and how it affects the possible deal.

I am not going back and forth on this. However, I urge readers to not be too influenced by someone with a personal axe to grind. Ignorance has a limit, which is why people often say, "knew, or should have known."

E.g. Suppose you sign a remodeling contract that notoriously states "required permits were omitted." You are going to struggle if your defense is "prove I read that contract."

I think that is all that needs to be said...

" I am not going back and forth on this. "

Good idea. Time to stop when you get outed for pretending to know what you don't.

" I am not going back and forth on this. "

Good choice. It's the right thing to do when having been outed for pretending to be familiar with what you clearly know little about.

@Elmer J Fudd The problem here is that no one on the other side of the issues that @bry911 raises ever makes a specific factual claim or offers actionable advice that is not generic. There is always an innuendo that doing work without a permit or with an unlicensed contractor "might be" illegal, might be unethical, might be "cheating", might require you to redo work, or that it would poison any buy-sell transaction with possible future liability. None of those innuendos is ever proven with facts.

The advice given by people who make those vague claims is usually "talk to a realtor" or "talk to a lawyer", which is great advice when it comes time to actually sell a home. It's not helpful advice when having a casual conversation about the topic.

It would be more constructive if you stuck to arguing facts than trying to put down the only person who actually had useful insights.

There are two parallel discussions going on here (1) should you have unpermitted/unlicensed work, and (2) what should you do when you sell a home in regards work you have had done? Both of these questions are more complicated and nuanced than some people White Knighting on the internet pretend they are.

In my area, permits are inexpensive, quick, and easy. So I usually get permits. Here are a couple of examples of permitting in my area.

(1) I installed a new water heater. I downloaded the necessary permit online and dropped it off at the building department (you can also turn in the permit at the retailer who sells the water heater but I didn't trust their process). I installed the water heater and left a voicemail for the plumbing inspector. He returned my call and asked me a few questions about the water heater and had me measure the distance to the expansion tank, and asked that I send him pictures. I received the tag in the mail about a week later.

(2) I had to have an electrical inspection on a property and called the inspector. He said he was in the area and could meet me there in 30 minutes, while he was looking things over I filled out the paperwork (which he had with him), paid him the money and dropped the paperwork off immediately after that.

This is a lot different than when I lived in L.A.

We were having a couple of outlets added to our kitchen and hired a licensed electrician. This was a job that took a few hours and cost a few hundred bucks. He recommended not permitting the work because it wouldn't change the way he did anything, it would just add several layers of bureaucracy, significant cost, and an unreasonable amount of time to a simple project.

I don't want to pretend to be an expert on the norms in California as I have not lived there for a while and sold my rental property there a bit after I moved away. I do still talk renovations with friends from there (because renovations is about the only thing we have in common these days) but I am not going to pretend that I ask them about permitting and licensing (even though I familiar with some of the people they used). Having said that, I strongly suspect that most of the people on here, even those in the Bay Area, don't really get permits on many of their small jobs that actually require permits. It is so contrary to my experiences there and in other places and I am struggling to accept that my numerous experiences are all outliers.

This is not to say that you shouldn't get a permit, just to say that if you elected not to get a permit, you are likely in good company.

----

As for the question of what to do as you get ready to sell. A good rule of thumb is: disclose everything you know, don't investigate and don't correct. If you have conflicting information about permit requirements (e.g. your contractor said no permit was required and your sub said a permit is required) then disclose the work and that you received conflicting information about permit requirements. Correction is almost always more expensive than disclosure. In other words, you will likely spend more correcting an issue than the buyers will deduct for that issue.

The reason that people on an internet board should tell you to check with a local realtor, is because precedent changes. There have been several very public reversals of precedent in the last few years unrelated to real estate. A change in the precedent surrounding disclosures would not be so public and although it is unlikely to have happened it is always best to consult someone who keeps current on those issues, especially when that consultation has little cost.

" the only person who actually had useful insights "

This guy seems to like to blow smoke, it's pretty consistent in the occasional encounters I've had with him. I mostly ignore him now, the conversations are repetitive and boring.

A lack of familiarity with the subject matter of a discussion doesn't stop him from pontificating. He's also made up "facts" in prior exchanges and then backed off when I called him on it.

You can call your own balls and strikes. He often doesn't know what he's talking about and thinks people are impressed when he brings in random and irrelevant points.

Ah, yes, the little boys in a pi**ing contest on the school playground.... you guys are just too predictable.

@westes Zone 9b California SF Bay - I urge you to examine the additive value of comments to this discussion for yourself.

Elmer and I have history because I challenged him on his turf, which was a financial section of this board, and I didn't go away when he puffed up his chest like others did. For far too long I believed that I had to respond to his allegations and ad hominem attacks so people could see that my points were indeed correct and/or useful. I now realize that people never needed my response to see that, and thus I am not going to respond to the allegations above.

@westes Zone 9b California SF Bay - In order to avoid any further conflict here I am going to switch off notifications about new comments, so I may not see any follow up comments or questions you have. Also, Elmer is from the Bay Area and might be able to actually provide you with some useful help or insights if I am not here to attack. If you need input from me, please feel free to message me.

This sounds like you may be expecting a problem or trying to avoid one. It is important for you to know what's what from the horse's mouth (which is not us).

Your state building code probably allows individual municipalities to enact stricter codes, so put your mind at ease and check with your building department.

Let us know the outcome.

@bry911 I talked to several realtors prior to posting this thread, and they always say "disclose everything and you will be fine". I simply want to understand the law in a little more detail than their bottom-line advice.

" I talked to several realtors prior to posting this thread, and they always say "disclose everything and you will be fine" "

Real estate agents will say that because should they say anything other than that and a problem develops, they could have some degree of legal liability. There are other things they do in the same vein - if you ask "should I put in an offer", or "at $X", the response always will be "The decision is yours, I will present any offer you decide you want to give the sellers"

Ask for disclosures, I can tell you with the confidence of experience that the process is not an interrogation under a hot spotlight while in handcuffs at the police station. There's a prescribed Realtor Board form for a reason. If you're a seller, read the form, answer the questions asked as honestly and completely as you can based on information you have knowledge of, and leave it at that.

" Elmer is from the Bay Area and might be able to actually provide you with some useful help "

Well, for a start, you can count on me westes to not make up responses and pretend I know what I'm talking about.

Edit to add - dear friend sushipup who commented above sold a house a bit to the south of the Bay Area (still in NorCal) not too many years ago. You might twist her unbiased arm to describe her experience, she doesn't make up answers either.

Hello! We sold a house in Monterey County in 2016. I recall mountains of disclosures, but not that question directly. We had done an extensive remodel in 2002, and would up doing a lot of work ourselves, and we are not contractors. As I recall, a homeowner can do whatever work they want without having to be a contractor. A homeowner can pull permits, too, and act as their own GC, and subcontract work.

How do people even remember 30 years of repairs??? And a “repair” can be something as simple as a pilot light going out, snaking a drain, changing a light fixture or faucet, etc that is easily performed correctly by a pony. Yes, a pony. I attempted to type half witted homeowner and it got autocorrected to pony and I think it’s appropriate, especially for California.

The issue that is specific to California is that technically "anything" that is over $500 requires a permit.

Perhaps when the statute was enacted $500 was a significant amount of money but not anymore

The practical application - at least among all of the homeowners I know in California - is that they do not get permits for home maintenance or repairs that are relatively minor and don't impact the structural integrity of the home.

Techically you *need* a permit to change your kitchen counter material because the cost is almost certainly more than $500. Or you need a permit to change the flooring - again people would not generally have a permit to install new flooring.

When I remodeled it was all done with permits and heavily inspected. When I had some modifications made to my electricity - chandelier hung, Lutron smart system installed I used the same licensed electrician and no permits although technically the work was for more than $500.

CA construction contracts at $500 & above require a license.

This is not a threshold for permits. Permits are related to type of work & local ordinances.

" Nothing wrong with doing 10 consecutive $500 projects."

There certainly is. Do you think the lawmakers and enforcers are stupid? Do you think they haven't thought of end-runners? Well they have. You're not stacking jobs to skirt the law, trust me.

From a lawyer:

"Of specific importance is that California law states that an unlicensed handyman cannot charge more than $500 for a job. This pay includes both labor and cost of materials, and is not increased if more than one task is undertaken at the same time.Further, a handyman cannot break a larger job up into smaller parts to avoid the $500 limitation."

Hello all Any help

@ Hansraaj Hati - Joseph didn't say that. Elmer Fudd said it and Joseph quoted him while pointing out his error.

@Mike K - this post was started over three years ago - the last comment was from over two years ago. You need to look at the dates before you revive an old post by adding a new comment.