Solving the rehabber’s dilemma

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The problem: In poorer areas, very few owners use permits when they fix / upgrade their apartment buildings, so most of the work done isn’t to code. If you buy one of these buildings with the intention of upgrading it, you’re faced with two choices, both of them bad:

1. Pull permits for your work, in which case you’re opening yourself up to an inspector calling you out for subpar work done by the previous owner, which can end up requiring you to spend way, way more money than you budgeted fixing the old stuff.

2. Upgrade without permits, in which case you’re taking the risk of getting busted during the renovation process and also taking the risk that your contractor will do subpar work himself, leaving you open to getting busted sometime in the future and having to redo all of the work, this time with permits.

When making the above choice, there’s one more thing to consider: The penalty associated with being caught doing unpermitted work is generally a slap on the wrist.

Faced with the above choice, the vast majority of owners choose #2, meaning that more and more work is done without permits, which is dangerous for the occupants (you don’t want some handyman doing a re-wire, trust me)  and contrary to city policy.

 So, what’s the solution?

I believe the city should institute an amnesty prior permitted work, coupled with severe penalties for future unpermitted work. Here’s how this would be structured:

1. If you do the right thing, and pull permits for your work, DBS should be instructed not to give you a hard time about un-permitted work in the structure, unless such work represents a bona fide threat to safety. So, irregularly-sized plumbing gets a pass, but faulty electrical wiring gets called-out.

2.  If you are caught doing unpermitted work going forward, the penalty should be dramatically increased. Right now, the incentive is to risk it, because the penalty when you’re caught is low and the chances of getting caught are low. You want much more severe penalties to change the expected value calculation in favor of pulling permits.

The combination above would cause most rehabbers to use permits, leading to safer construction practices, safer buildings, and more permit fees to the city.

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