Bought a House With an Unpermitted Renovation in British Columbia?

Learning after closing that a basement suite, deck or addition was built without a building permit is stressful. You may worry about the municipality, your insurer, your resale value and whether the seller owes you anything.

The answers depend heavily on the work, your municipality and what the seller said or knew. This article sets out the general picture and the points worth raising with a lawyer.

This article covers the law of British Columbia.

Municipal consequences

Which rules apply to your home, and what process the municipality follows, depends on where the home sits, so the local building department is the place to ask. Municipal bylaws, not a provincial fence statute, set the height, setback and permit rules for a particular fence or tree. The kind of work involved, such as a fence or a basement suite, can make a difference to which rules apply. That depends on the work and the local rules, so ask the building department before you assume anything.

How this applies depends on your situation, so it is worth confirming with a lawyer before you contact the municipality. Keep any records of what the municipality tells you.

Insurance and resale

How your insurer treats unpermitted work depends on your policy and the insurer, so read your policy and ask. Some may ask questions or limit coverage, and others may not. Tell your insurer or broker what you know and ask how it affects your policy rather than guessing.

When you eventually sell, what you need to say about the work is worth confirming with a lawyer. Sellers must disclose known latent defects, and a licensee must disclose material latent defects in writing before an agreement is reached. If you know of the unpermitted work when you sell, treat that as something to deal with openly.

Can the seller be held responsible?

In BC there is no prescribed disclosure form. A Property Disclosure Statement completed by the seller is a common but voluntary way to disclose. The buyer-beware principle (caveat emptor) still applies to visible, or patent, defects, and buyers have a general duty to inspect.

Sellers, however, must disclose known latent defects, which are defects a reasonable inspection would not reveal. Whether unpermitted work counts, and whether it affects safety or value in a way that matters, depends on the facts.

• Did the seller know the work was unpermitted?
• Was it visible or discoverable on a reasonable inspection?
• What did the Property Disclosure Statement, listing and emails say?
• Did the seller or agent answer your questions about renovations?

Licensees must disclose material latent defects in writing before an agreement is reached, and they cannot contract out of that obligation by a clause in the contract. If you received a Property No Disclosure Statement, that is a signal for the buyer to do further due diligence. What remedies might be available, and how a court would view your documents, is a question for a lawyer.

Time limits

A court proceeding generally must not be started more than 2 years after the day the claim is discovered. A claim is discovered on the first day you knew or reasonably ought to have known that loss occurred, that an act or omission caused it, that it was the defendant's, and that a court proceeding would be an appropriate way to seek a remedy.

There is also a 15-year limit from the act or omission, which for a hidden defect runs from the act or omission, not from when you found the defect. If the defendant wilfully concealed the loss or its cause, the act or omission is treated as occurring on the discovery day, which can extend that outer limit. If a person acknowledges liability before a limitation period expires, the claim is treated as not discovered before the day of the acknowledgment, and the acknowledgment generally must be in writing, signed and made to you or your agent. Check whether another law sets its own period.

If the amount at stake is $5,000 or less, the Civil Resolution Tribunal may be an option. Larger claims go to Provincial Court (Small Claims) or the Supreme Court.

What to do next

• Keep your contract, listing, Property Disclosure Statement, inspection report and all messages with the seller and agents.
• Note the date you first learned the work had no permit.
• Do not start repairs or demolition before photographing and documenting what you found.
• Ask your insurer how the work affects your policy.
• Ask a lawyer about your position against the seller and the agents before contacting them in writing.
• Get a quote from a qualified contractor so you know the likely cost to fix or legalize the work.

Frequently asked questions