BIC TIP #1297: If It Is Unpermitted, Can You Count It?
It is one of the most common questions brokers ask: can I count unpermitted space in my square footage? Stephen Long, your Notorious BIC, says the North Carolina Real Estate Commission has been really clear on this one. You can include it, as long as it meets the measuring guidelines, and as long as you disclose exactly what is or may be unpermitted.
Yes, You Can Count It
Unpermitted space, or space where nobody knows whether it was permitted, can be included in gross living area so long as it is heated, finished, and directly accessible and otherwise meets the guidelines for measuring residential square footage.
The permit question does not change how you measure. Square footage is about the physical characteristics of the space. The permit status is a separate issue, and that is where disclosure comes in.
But You Must Disclose It
If you include that space in your marketed square footage, you must disclose how much of it is not permitted or may not be permitted. Buyers deserve to know that part of the living area they are paying for may not have gone through the permitting process.
Stephen gives a simple example: a bonus room included in the total square footage, with a disclosure stating that the bonus room space may not have been permitted, or was not permitted, along with how much space that represents. Clear, specific, and in writing.
Why the Disclosure Matters
Unpermitted work can affect a buyer’s insurance, financing, future renovations, and resale. That makes it a fact a buyer would reasonably want to know before making a decision. Being upfront protects your client and protects you.
If you are not sure whether something was permitted, say so. “Unknown” is an honest answer. Guessing that it is fine is not.
The Practical Takeaway
Measure the home according to the Real Estate Commission’s guidelines. If unpermitted or possibly unpermitted space is heated, finished, and directly accessible, you can market it as part of the total square footage, but clearly disclose how much of that space is or may be unpermitted. When in doubt, check with your broker-in-charge.
