When do you need permits for a rehab project?

You need permits any time the work involves structural changes, electrical, plumbing, HVAC, roofing, or changes to the building footprint. Local building departments set the rules, and requirements vary by city and county. If you are unsure, call your local building department before starting work.

Do lenders require permits before funding a rehab loan?

Most hard money lenders, including Veristone Capital, want to see that permitted work has the proper approvals before releasing rehab draws. We do not typically require permits in hand at closing, but they need to be pulled before the relevant work begins. Funding a project with unpermitted work creates risk for both the borrower and the lender.

What types of renovation work require permits?

Structural modifications, electrical rewiring, plumbing rough-ins, HVAC installation, window or door replacements that change openings, new roofing, and any work that changes the layout or load-bearing walls all require permits in most jurisdictions. Adding square footage or converting a garage always requires permits. When in doubt, check with your local building department.

What happens if you skip permits on a rehab project?

Unpermitted work can block your sale, kill a buyer's financing, or trigger fines from the city. Title companies and appraisers flag unpermitted square footage and modifications. If you plan to sell or refinance, unpermitted work will cost you more to fix after the fact than it would have cost to permit upfront.

How do permits affect your loan timeline?

Permit processing times vary widely. Some cities issue over-the-counter permits in a day, while others take weeks or months for plan review. Factor permit timelines into your project schedule from the start. Veristone Capital recommends submitting permit applications as early as possible so they do not hold up your rehab draws.

Do you need permits for cosmetic-only renovations?

Cosmetic work like painting, flooring, countertops, cabinet refacing, and landscaping generally does not require permits. However, if cosmetic work involves moving a sink, adding an outlet, or changing a fixture location, you may need a permit for the underlying plumbing or electrical work. The finish is cosmetic, but the rough work behind it may not be.

Who is responsible for pulling permits, the property owner or the contractor?

In most jurisdictions, either the property owner or a licensed contractor can pull permits. On investor rehab projects, the general contractor typically handles this. As the property owner, you are ultimately responsible for making sure the work is permitted and passes final inspection. Do not assume your contractor pulled permits without confirming it yourself.

How do permit delays affect your draw schedule?

If permitted work has not been approved or inspected, Veristone Capital may hold the related draw until the issue is resolved. Permit delays can push back your entire rehab timeline, which affects your loan term and carrying costs. Build buffer time into your project schedule and stay on top of inspection scheduling to keep draws moving on time.

Building Permits and Compliance for Rehab Loan Projects

Permits are one of the most overlooked parts of a rehab project, and skipping them can create serious problems at resale or refinance. Here is what real estate investors need to know about permits, compliance, and how they factor into your hard money loan.

When do you need permits for a rehab project?: You need permits any time the work involves structural changes, electrical, plumbing, HVAC, roofing, or changes to the building footprint. Local building departments set the rules, and requirements vary by city and county. If you are unsure, call your local building department before starting work.
Do lenders require permits before funding a rehab loan?: Most hard money lenders, including Veristone Capital, want to see that permitted work has the proper approvals before releasing rehab draws. We do not typically require permits in hand at closing, but they need to be pulled before the relevant work begins. Funding a project with unpermitted work creates risk for both the borrower and the lender.
What types of renovation work require permits?: Structural modifications, electrical rewiring, plumbing rough-ins, HVAC installation, window or door replacements that change openings, new roofing, and any work that changes the layout or load-bearing walls all require permits in most jurisdictions. Adding square footage or converting a garage always requires permits. When in doubt, check with your local building department.
What happens if you skip permits on a rehab project?: Unpermitted work can block your sale, kill a buyer's financing, or trigger fines from the city. Title companies and appraisers flag unpermitted square footage and modifications. If you plan to sell or refinance, unpermitted work will cost you more to fix after the fact than it would have cost to permit upfront.
How do permits affect your loan timeline?: Permit processing times vary widely. Some cities issue over-the-counter permits in a day, while others take weeks or months for plan review. Factor permit timelines into your project schedule from the start. Veristone Capital recommends submitting permit applications as early as possible so they do not hold up your rehab draws.
Do you need permits for cosmetic-only renovations?: Cosmetic work like painting, flooring, countertops, cabinet refacing, and landscaping generally does not require permits. However, if cosmetic work involves moving a sink, adding an outlet, or changing a fixture location, you may need a permit for the underlying plumbing or electrical work. The finish is cosmetic, but the rough work behind it may not be.
Who is responsible for pulling permits, the property owner or the contractor?: In most jurisdictions, either the property owner or a licensed contractor can pull permits. On investor rehab projects, the general contractor typically handles this. As the property owner, you are ultimately responsible for making sure the work is permitted and passes final inspection. Do not assume your contractor pulled permits without confirming it yourself.
How do permit delays affect your draw schedule?: If permitted work has not been approved or inspected, Veristone Capital may hold the related draw until the issue is resolved. Permit delays can push back your entire rehab timeline, which affects your loan term and carrying costs. Build buffer time into your project schedule and stay on top of inspection scheduling to keep draws moving on time.

Tim Mushen

VP of Marketing and Technology

Disclaimer: Veristone Capital does not provide legal or financial advice. The information on this page is for general informational purposes only and should not be construed as legal, financial, or tax advice. Consult a qualified attorney, accountant, or financial advisor to evaluate your specific situation before making any investment or lending decisions.

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