When the home was purchased from the previous owner, the current owner usually obtains title insurance which would cover the past defects.
ALTA and CLTA title insurance, which is standard in almost every real estate transaction, does
not cover any physical defects with respect to the property, all it does is insure against
title defects. If a home or building with title insurance, but no fire insurance, burns down due to previous un-permitted or un-inspected work, the title insurance company doesn't pay a single penny; they might feel bad, but they're not cutting a check.
Some title insurance companies now offer coverage for un-permitted or un-licensed work - at extra cost of course - but only to the extent that it affects title. For example, if a illegal work prevents a home or building from getting a valid CO and the illegal work has to be torn out as a condition for obtaining the CO, that would be covered since this affects title of the property with respect to occupancy and use. But again, this is extra and is not typical in most real estate transactions.
Ironically, if the home or building burns down subsequently as a result of illegal work (and it wasn't caught), that wouldn't be covered because it never affected the transfer of valid title.
How the inspection was preformed is not the owners concern, filing a permit where, and when required is.
Then what's the point of a permit then, if not for safety? Is it just to bust the chops of the EC and/or home or building owner? I hope we're not getting caught so caught up in the process that we're forgetting what the end result is (or should be) and that is safety. More and more though, it seems the primary focus of permits is to more efficiently increase property tax assessments - at least that's what we're seeing around here. As soon as a job is signed off on, owners get an increased notice of value. Disgusting. Maybe this is why Ian's parents don't want to get a permit for the electrical or the deck for that matter - they don't want to get the increased tax bill that may invariably follow.
Still gotta give Ian lots of credit though, how many folks his age are even aware of permit requirements and work like this? The only permits most folks his age seem to know about are drivers permits, and that's about it.
Joe
