Episode 33: After-the-Fact FUN

Summary

As a developer, dealing with after-the-fact permits are not all that fun actually.  In today's episode, we define what an after-the-fact permit is, explore why an after-the-fact permit would be needed, how to avoid needing one, and what happens if you don't get one?  Lots of awkward conversations in this episode for sure!  Development is not usually fun and these kinds of permits are REALLY not fun.

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Full Episode Transcription

Welcome to My Life as a Landlord, where we untangle all things housing and educate the curious. If

you're looking for some entertainment with some honest awkward conversations, you've come to the

right show. I'm your host, Dr. Jennifer Salisbury. This is my life as a landlord. Welcome to it.

Well, hello there. Hello. Hello. Welcome to my life as a landlord. Rd. I am your host and educator, Dr. Jen. I'm

so glad you joined me today. Thank you so much. Episode 33 the topic is real estate development and the

episode name after the fact fun. This is very tongue in cheek because anybody in real estate development

that has done an after the fact permit knows they kind of are not fun at all. Just a reminder, we've got five

rotating predictable topics. Last week we talked about tenancy, next week we'll talk about real estate

investment which is all about money and then we circle back to other Salisbury topics and of course

landlord perspectives as well. So you got five rotating topics. You want a new topic? Well just wait a

week. They come out every Saturday. But today's topic is all about real estate development. This is about

changing property and making it its highest and best use. Usually a developer as a part of real estate

developer is associated with a contractor. Because a contractor, most people envision them having a

hammer in their hand and they are the ones doing the work. But usually when you're talking about a

government agency like a city or a county or regional district, they are talking about a developer who is

directing that contractor. That's who they see as the developer. And so whose name is on the property,

whose name is on the permit? Yeah, the contractor is doing the work but the developer is telling them

and paying them to do the work. So the person considered the developer is usually the owner. Now in our

case it's both. We most of the time do own the property and we're also doing the actual work but. This

week's episode is when a developer has made a property change or improvement without permission.

And it doesn't have to always be you. Maybe it was an owner before you that you now have to get caught

up on. So your three points. So what happens when you have to have an after the fact permit? Like what

does that even mean? Why would you need it? Yeah, what is that all about? How can you avoid it? This

is actually a very interesting question is how do you avoid an after the fact permit? And then what

happens if you don't feel like getting an after the fact permit? What happens if you just big fat don't get

one? So let's talk about it. So why would you need an after the fact permit? So let's walk through this

scenario. Somewhere, somehow work on one of your properties was done without permission. Meaning

the government agency for your area, the city, the county, the regional district, whomever? The state,

even state, maybe it's Department of Health, whatever done some improvements. 1s But you didn't get

permission from some government agency. And it doesn't have to be you. It's just somebody. Okay, at

some point, this government agency, somebody's alerted to this work. They're alerted that there was work

that was done without permission. And that can be through a city inspector or a county inspector, a health

inspector. It can be an appraiser. Maybe you're looking to either refinance or sell the property. Or a

buyer's brought in an appraiser, and the appraiser says, hey, there's some unpermitted work here. Maybe

you had an insurance claim. Maybe you had some kind of a loss. Somebody drove a vehicle into your

house or your deck or you had a fire and there's an insurance claim there. And the insurance adjuster is

noting that there is some unpermitted work that could be possible. Or maybe you've got a complaint.

Maybe a neighbor complained and said, hey, that deck didn't get a permit or that staircase didn't get a

permit, and they report you to your local government agency, whatever that may be. And there are many

others, just so we're clear, there are many other ways that you can get alerted if there is unpermitted

work. And as a result of this reporting, somehow, some way, the government agencies going to be alerted

to this work. 1s You might 1s get a courtesy call, might. But most of the time, there's no call. Most of the

time you get a letter of warning, a notice of warning of some kind. It can be a certified document that you

have to receive. You can have that. And this letter of warning basically says, hey, you've got unpermitted

work. Here's how you have to remedy this. You've either got to tear it down or you've got to get an

architect or an engineer or whatever it is, and here's your time frame. So that's the biggest thing, is that

you know that they've got a notice of warning and there'll be a date on that letter that is critical because

there'll be some time frame. That could be 30 days, could be six months. It could be anything. They will

give you some time to correct whatever the unpermitted work was. Now remember, this could have

been done way before you. This could have been you, but it could have been done way before you.

Maybe you weren't even aware that something was unpermitted, but this is what happens. But also in that

letter of warning, they're going to tell you exactly what to do. And that can be confusing. That can be

very confusing. They can say, you know what, take out the kitchen. Well, what the heck does that mean?

What does that mean? Does that mean take it down to the drywall? Or does that mean take out a sink or a

cabinet? What does that mean? Anyway? Some of this can be very confusing. So how do I know this?

Because this has happened to us. And so we've had to recover through after the fact permits. And so

here's the trick. And this is you've got to have an awkward conversation. Whoever sent you the letter, this

certified, lovely certified letter, this notice of warning of this unpermitted work, you have to call them.

Sorry. You have to call them, and you have to say, yes, this is me. You are you. I'm very sorry this

happened. I want to make it work. What do we have to do to fix this? And if they're still not talking,

exactly what needs to be done. Let's go back to the staircase incident. Let's talk about there was a

staircase that was installed. It wasn't installed with permits, and 1s an appraiser came by to look at it, and

they noted that on the approved property taxes, the staircase wasn't there. So there was an illegal staircase

put in, and now the city is enforcing that. You have an architect or an engineer go back and get the

staircase verified, certified. And when you call this inspector, you've got to say, what can we do to fix

this? And if they say, you've got to get an architect or an engineer or somebody to stamp that this

staircase is safe. Okay, so do that. Look for an architect, look for an engineer. Get some prints made up. I

mean, you can even be a sketch. These folks can sketch this out. They might want to come out to the

property and see it. That's probably what they're going to want to do. And see where the staircase is.

Maybe they want a couple more supports, maybe they want a tie down, who knows? Whatever it is,

they're putting their name and their insurance on this. And verify with the inspector that that will

satisfy basically this letter of warning. And when you do that, confirm the time. Confirm, say, look, I

have 30 days to update you, or I have 90 days to fix it, or whatever. If they explain to you that you're in

violation because you didn't get a building permit for the staircase, you've got 90 days to fix it. The

correction looks like a submittal to the city. Hire an architect to do drawings for the staircase. The

architect will do it. A contractor will come out and confirm it or add a support or whatever the architect

says, and then submit that to the city. Basically, that is the after the fact permit you're going to submit and

say, I screwed up here it is. Super awkward. Holy crap. Is it awkward? Very awkward. But when you do

this, you get the stamp, and then the city will actually issue this building permit, but it's already built.

And so that's what's considered an after the fact permit. So you'll get this after the fact permit, and when

you go pick it up, there will be psalm. Fee associated with it. In Hawaii, it's double the amount. If you

were going to submit to build a regular staircase and then you're doing an after the fact staircase, well,

then you have to pay double the fee. But there is a multiple a calculation for every location, every

municipality or county or regional district. There will be a way they calculate after the fact permits. So

then what you do when you're done, when you have your after the fact permit, make sure you're

communicating with this inspector. Super awkward. But you have to have good communication. Let me

also take a sidestep here. If you are not a good communicator, you need to make sure you're working

with someone who is. Michael Salisbury. You know exactly what I'm talking about. 1s There's been

many times where inspectors in general not talking after the fact inspectors in general have angered Mr.

Salisbury, and I have to step in and figure out exactly how to get us out of this pickle. So if you are not a

good communicator, you need to have someone who is a good communicator and who can handle the

details. Do this work. This is very important. Okay, super awkward. Let's say you've got your after the

fact permit, and then I always call back the inspector, and I go, okay, I believe we have fulfilled this. Is

there anything outside, anything else remaining to clear this letter of warning? The inspector may want to

come back out and confirm it. They may say, you know what? The architect signing off on it is done. It's

fine. You've paid for it. That may be it, but that's how the entire thing flows. That's just one example.

There are several. There's lots that are there. So that's what happens if you need an after the fact permit

and how it would go. They're not all exactly like that, but that's how you would go. Okay, but let's

rewind. Let's back up and say, how would you avoid getting an after the fact permit in the first place? 1s

Ha. How about do only permitted work, make sure you have building permits. Make sure you have health

permits if you are digging a new well and you need to have the health inspector sign off and you need to

have everything completely permitted or you're building a pool, guess what? I'm betting that you're going

to need some kind of sign off from somebody to use water or whatever. There's all kinds of different

things that you need to make sure. Now how would you know this? You need to educate yourself on your

local, county, regional district or city bylaw for building. There will be some kind of requirement for

building and if you don't know what they are, you can either Google it or better yet, call or walk into your

city hall or your county seat or wherever. You will not be the first person who is asking and saying I

want to build a house or I want to build a shed. How do I even start this process? Guarantee it. But the

biggest thing is to avoid an after the fact permit. Get the proper permits in place in advance. But here's

one of the problems is in our place up in Canada where we work, we've got the city that has now like

globally there's a housing crisis and they have approved, they have okayed, carriage houses. But what

does that mean? What are the requirements for that second dwelling on the property? And what

happens if you can't abide by that? Let's say the property setbacks are too skinny or your property is too

skinny that you can't actually get a second dwelling in there that would meet these requirements. Then

what? So it can result in a bit of an ethical dilemma or they may just say, no, you can't have a carriage

house or that you can't have a shed or whatever you're trying to do. So when the city or the county or the

regional district says whatever the requirements are to do the work properly with permits and it's too

long, it's too delayed, too expensive, too invasive or not possible, and then somebody does the work

anyway. You have just opened the door for work that is not permitted that you might need an after the

fact permit. And oh by the way, what happens if you don't get an after the fact permit? What happens if

you don't get one? Well, it'll usually say in your letter of warning what the next legal step is. They can

give you an official notice of violation, right? They can say you are in violation of this bylaw. They can

start finding you. There is all sorts of legal action imposed on you and your property that will very likely

require you to remove the unpermitted work. Remove it like take it down completely, which, oh, by the

way, let's jump back into our staircase scenario. That was an option when you're talking to your inspector

and the inspector is saying here's some of the options that you can do stuff. 1s One of the things he will

probably say is he or she or she will probably say by the way, you can just take the staircase down and I'll

confirm it's gone and then this is over. Right? Just remove the unpermitted work. Or here's one of the

other fun things. If you don't either get an after the fact permit or you remove the unpermitted work, 1s

you may become uninsured. Like the insurance company may be made aware of this notice of violation

in some way and then if you're uninsured, that would make you in default of your mortgage. Like this can

become a cascading problem very quickly. Michael and I have personally seen other people do this

where they couldn't afford to fix it. Let's just face it, they couldn't afford to fix the unpermitted

conditions. And then when they were in violation and they started getting a daily fine, which was crazy.

1s Well, the daily fines mounted and what ended up happening was the house got abandoned, went into

foreclosure and it was abandoned for four years until Michael and I bought it. This has happened to us.

This is crazy. So there you go. So, summary of the three points. What happens that you would need an

after the fact permit? How do you avoid it? And then what happens if you don't get one? Not fun things

at all. So here is the call to action. I encourage you to have awkward conversations. You should have

awkward conversations because it actually makes you feel better, believe it or not. Call your city, your

county or regional district, whichever one applies to you in the US or Canada and ask them what is their

policy about after the fact permits. Just ask them they're not to guilt and just ask them and read up on

what their policy is. Because what you're looking for is what's the time limit you have to correct. For

some places it might be 30 days, for Hawaii it's 60 days or no. So for Hawaii it's six months. Actually

you have six months to correct. Mainly because it takes forever to get a permit there. But then what is

the fee? What's the fine? Well, again, in Hawaii, it's double the permit cost. You get to pay double.

There's other places that are way higher than that. Or maybe it's a fixed amount, I don't know. So learn

where your local area how your local area looks at after the fact permits. You know by now that I enjoy

your comments and questions. Please, please throw something out. Give me your worst after the fact

story. Those are really hairy. How awkward can we get it? I want your best awkward after the fact story.

Throw that out on Facebook for my life as a landlord. Or you can throw it in the comments section for

YouTube for all you YouTubers out there that are watching me on My Life as a Landlord. And as you

know, I create my podcast content out of questions and comments. So please help me get your question,

your comment in the queue. As one of the recorded podcasts. Next week, I am recording a real estate

investment podcast, which is episode number 34, all about out of state or out of province investing,

remote investing. That sounds fun. I'll see you there. Thanks.

Thank you for joining us this week. To view the complete show notes and all the links mentioned in today's

episode, visit our website at www.mylifeasalandlord.com.

If you're looking for educational resources for getting into real estate investing,

becoming a landlord, or even a better tenant, then I have a page on my website to get you started looking

for a solution to the pickle that you're in. I have suggestions for that too. You can throw your situation on

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