Building Permits

My first home I built entirely without any building permits. In rural Alaska during the early 1970’s, permits were not required and no organized official governmental authority existed to issue one or inspect the work. Contractors and owner-builders like myself were required to follow a state building code and good construction practices.

Home building in Alaska had its own set of unique challenges and scarcity of building materials required many creative innovations. Time was always a crucial factor. The ground would be completely frozen until “spring breakup” usually in late April or early May and by the end of September the home needed to be water tight and heated. Thousands of homes and entire cities were built without a single building permit and have weathered sub-zero winter temperatures, winds gusting to hurricane strength and routine earthquakes of magnitude 3.5 and better.

Fast-forward 35 years. The building permit process and their accompanying inspections have become the accepted standard and law in most communities. Our county’s building department is charged with the responsibility of insuring that all buildings meet a minimum standard of construction to insure the health and safety of its citizens. Homebuyers and sellers should have a basic understanding of the permit process and potential liability in their absence.

If a man made structure exists on a property in El Dorado County, it probably should have a permit. There are a few exceptions: A storage shed less than 120 square feet without water and electric, a radio antenna, a detached deck not higher than 30 inches off the ground, a fence under six feet high, a retaining wall under 4 feet, an above ground pool holding less than 5,000 gallons of water and a concrete driveway or sidewalk.

Most all the homes in the county have a permit on file someplace but I am skeptical about all the other structures including: storage sheds, barns, stalls, pump-houses, detached garages and workshops. Garages are sometimes converted to additional living space without the benefit of a permit, carports are enclosed, spas and hot tubs moved onto a deck or patio and I have seen a few room additions that probably were not permitted.

Most unpermitted structures will safely outlast the original builder and subsequent owners but what if they don’t? If a fire in an unpermitted detached workshop results in an injury, who, if anyone is responsible?

California real estate law requires home sellers to disclose to buyers any material facts that may affect the property including the absence of any building permits. The law does not prevent a property transfer if permits do not exist, only that the disclosure be made. In our seller’s market between 2000 and 2005, most unpermitted room additions or structures were overlooked. Today, homebuyers are more inclined to demand that proper building permits be obtained prior to the close of escrow or move on to another property.





The county has a process for obtaining permits after the fact. An additional “investigation fee” equal to the amount of the Building Permit Fee will be charged. General information on permits, fees and inspections can be found on the county’s web site at www.co.el-dorado.ca.us. If a home was built after 1987, the permits will be found on-line and prior to 1987, stored on microfiche.

I sleep easier knowing that the county’s policy on permit violators is reactive not pro-active. Jim Wassner, the Operations Supervisor for Code Enforcement, doesn’t go snooping around the county looking for unpermitted hot tubs and hay barns with a hanging light bulb. If he becomes aware of a violation, however, his office is charged with investigating the slacker and taking appropriate actions necessary to bring the property into code compliance.

So how does Jim find out about all the unpermitted work in the county? Anyone can report a suspected non-permitted violation but the most frequent complaints come from: contractors who believe they were under bid by another contractor, disgruntled neighbors who have a beef with another neighbor and ex-wives and ex-husbands reporting on each other.

Permits, fees and inspections may be avoidable but the on-going liability isn’t worth the savings. Sellers should obtain valid permits on any unpermitted structures prior to putting their home up for sale and buyers or their agents should check on any suspected violations.

The bureaucratic permit process is an expensive hassle for conscientious and knowledgeable builders but insures against the incompetent and fraudulent. Besides, having all your permits guarantees that you won’t get a call from Jim Wassner making an appointment to inspect the electrical connection on your hot tub.

Allstate may leave California Homeowners

At any given time, lenders and insurance companies are in and out of the market. In other words, they are either looking for new business by offering completive rates and programs or they are cutting back on their existing business and raising their rates and or premiums. There are a number of reasons for this practice. In business expansion isn’t always profitable. It cost money to attract a new client and put a new loan on the books.

Allstate Insurance Company announced last week that it may cease issuing homeowner’s insurance in California as early as April, citing the potential for huge financial loss in the event of an earthquake. Allstate has already stopped writing new policies in the Gulf States and along the Eastern seaboard in response to recent hurricane damage.
Folsom based, Central Pacific Mortgage, closed their doors last week due to their contingent liability on a few non-performing loans. It was not a surprise to us industry insiders that Central Pacific was having some problems. Their interest rates and programs were less attractive than other lenders.
Mortgage and Insurance brokers usually know which companies are looking for new business and which ones are not. That’s another benefit of using a broker.

Second Home Sales Slow in West

Just as high housing prices in California helped create spill-over boom markets throughout the West, the reverse is now coming true as some markets in the West begin to feel the receding wave of Californians. That, in part, is because California's second home buyers are either running out of cash or they are hedging their bets against falling prices or both.

Second home sales in the Golden State in 2006 plunged to their lowest levels since La Jolla, CA-based DataQuick began tracking the sector in 1998. DataQuick blames lower appreciation on primary residences -- as well as continued interest in out-of-state properties -- as reasons for the 37.1 percent drop in second homes sales of homes in California's vacation home markets. Second homes, as a more discretionary buy, is likely to feel market down turns quickly, but prices are pretty hefty too and still on the rise in select markets.

The median price paid for a second home in California was $400,000 last year, up 10.8 percent from $361,000 the year before. Median prices ranged from under $150,000 in some remote desert communities to well above $1 million in Pebble Beach and Carmel.
DataQuick said only 13,798 second homes were purchased in vacation markets in California in 2006, down from 21,925 the year before. The 2006 number is the lowest number of sales in DataQuick's second-home statistics. The second home sales market peaked in 2004 when 24,916 vacation homes sold.

Sales of all homes in California have been on the decline for more than a year and were down 24.9 percent in 2006 --- 742,715 in 2005; 557,782 in 2006. "Many California homeowners were feeling pretty good in 2004 and 2005 when there was double-digit appreciation. It appears a lot of them felt that using built-up equity to buy a mountain cabin or a condo in the desert would be a good investment. As prices leveled off last year, interest in weekend retreats declined," said Marshall Prentice, DataQuick's president.

California's major second home markets all saw massive sales declines -- down 38.4 percent in the Palm Springs area; down 34.7 percent in Sierra Mountains and foothill communities; down 37.3 percent in the Lake Arrowhead/Big Bear area.
Out-of-state buying by Californians dwindled last year too. For, example, in 2006, Californians bought 8,409 Las Vegas area homes, down 32.4 percent from 12,440 in 2005. In 2001 there were 1,824 Las Vegas area purchases by Californians.

Because most second-home communities are also primary-home communities, the second home market dragged down sales overall in these areas, but at a more moderate pace, said DataQuick. However, the trend is impacting prices in cities Californians favor as second home enclaves.