Know the risks before you buy
Red Flag Renovation Resales
Purchasing a home with renovations that lack proper permits can lead to a host of legal, financial, and safety issues. Here’s what every Ontario buyer should know:
Why Would A Homeowner not get permits?
That is a great question- here are some reasons why a homeowner may choose to not get proper permits-
Ignorance
Not knowing that they are required and moving forward on that DIY or dream list.
Save time and money
Permits cost money and time. Every township and municipality have different timelines and often it can take weeks to getting your permit approved. Also depending on the specific property and location, there could be multiple permits required such as septic and conservation.
Taxes
When renovations are done without permits it can sometimes go under the radar with the municipality and then the taxes aren’t adjusted for the “extras” in and around the home.
Quick Flip
Sellers sometimes use this to make a profit a flip a property at a much higher amount than previously purchased putting more in their pocket.
What are unPermitted Renovations?
What Are Unpermitted Renovations?
In Ontario, most significant home renovations require permits from the local municipality to ensure they meet building codes and safety regulations. These permits are usually required for:
- Structural changes (e.g., removing or adding walls)
- Electrical and plumbing work
- HVAC modifications
- Basement finishing involving electrical or plumbing
- Adding bathrooms, kitchens and bedrooms to a home on a septic requires a septic inspection prior to building
- Adding new rooms, decks, or extensions
- Any work that affects the foundation or load-bearing structures
- Conversion of single-family homes into multi-unit residences
When homeowners skip this step, the renovations are considered unpermitted work. This can create legal, financial, and safety concerns for future buyers.
risks associated with purchasing a home with unpermitted renovations
Legal Liability & Enforcement
Under Ontario’s Building Code Act, municipalities can issue orders requiring you to remove, retroactively permit, or fix unapproved work. Fines range from up to $50,000 for individuals (first offence) and even higher for subsequent ones Plus, they can refuse occupancy permits or inspections until compliance is met.
Safety Risks
Permits and inspections exist to validate structural, plumbing, and electrical safety. Unpermitted changes may be structurally unsound, improperly wired, or poorly plumbed — and could have caused invisible damage leading to potential for great risk to those who live and reside in the home.
Insurance Troubles
Homeowners insurance often excludes coverage for damages stemming from unpermitted work. That means if faulty wiring or plumbing leads to a fire or flood, your insurer may deny the claim.
How can you identify a home that has unpermitted Work
There are a few ways you can help to determine if the home you are looking at to purchase has had work done without the required permits
- Ask the Seller for Documentation– Ask them for copies of the permits and inspection reports for any major renovations. If the Seller cannot or will not provide them it could be an indicator that they have unpermitted work.
- Reach out to the local municipality or township to see if there are any outstanding permits or if permits were used for the home in the renovation.
- Hire a Home Inspector- While a home inspector cannot verify or confirm of work done in a home was permitted they can access if the work done properly and identify any potential hazards or code violations.
What if you still want to Buy the Home?
Alright, you love them home- it checks off the boxes and you can’t stop thinking about it. What can you do to protect yourself?
Negotiate with the Seller
Ask the Seller to get retroactive permits before closing and negotiate a lower price to account for the potential costs. Ask your agent to include a clause in the Agreement of Purchase and Sale allowing you to back out if permits cannot be verified.
Consult a Real Estate Lawyer
It is in your best interest to obtaining the advise from a Real Estate Lawyer before even considering having an offer drawn up. Using a lawyer familiar with Ontario Real Estate laws can advise on the risks and potential legal remedies. They are also able to check if the municipality has any existing orders or issues with the property.
Request a Municipal Inspection
Municipalities often allow retroactive permitting—but may still require costly corrections. Budget for both permit fees and potential renovation work.
Check insurance coverage
Talk to your insurer about covering remediated work and request clear documentation showing compliance.
Budget for corrections and repairs
Whether for structural issues, rewiring, plumbing replacements or septic extensions/upgrades, or heritage compliance—set aside funds for unexpected municipal orders or demolition.
Final Take
Buying a home with unpermitted renovations in Ontario isn’t inherently a deal-breaker — but it carries serious risks. To move forward safely:
Do thorough due diligence: permit checks, inspections, legal review.
Make remediation or permit resolution a condition of the sale.
Budget time and money for bringing the property fully into compliance.
- Hire a strong Realtor® who understands the municipality and the building permit process. If you’re considering a rural property with septic systems and wells, finding an Agent that has expertise in those areas is a must.
When in doubt, lean toward caution. The cost of ignoring permits can far exceed the savings you think you’re getting.
