What motivates a builder to understate the estimated cost of construction when applying for a building permit? (Assume the owner pays the fee.)
Discussion Forum
Discussion Forum
Up Next
Video Shorts
Featured Story
When deck posts exceed what the prescriptive code tables allow, it's time to consult a structural engineer for post sizing and possible bracing.
Featured Video
Highlights
"I have learned so much thanks to the searchable articles on the FHB website. I can confidently say that I expect to be a life-long subscriber." - M.K.
Fine Homebuilding Magazine
Fine Home Building
Follow
-
Fine Homebuilding
Dig into cutting-edge approaches and decades of proven solutions with total access to our experts and tradespeople.
Start Free Trial Now -
GBA Prime
Get instant access to the latest developments in green building, research, and reports from the field.
Start Free Trial Now
Replies
Rebellion against the system. Don't give the tax man any moe $ than absolutely necessary. Also, not letting the community know the actual cost of construction ... it's none of their business.
I'm sorry, I thought you wanted it done the right way.
Here, you can avoid having to bring the whole building up to current code by doing that. If it's a very old building it can be a very big deal. The inspectors know and look the other way.
PAHS Designer/Builder- Bury it!
around here permit fees are base on value of bldg not actuat cost of construction.
Has nothing to do with the size of the fee. Has everything to do with what has to be done to code. Friday I was looking at such a project. Hundred yr old house to be offices.
How far do you go to meet current code? If more than 50% value of building, all must be brought up to code. In this case, demolition would be the only viable action. When low-balling the repair cost, only the new construction must be code. I don't know if this particular house was in a protected historic district, but that would greatly compound the problem. It took 6 mos anyway to get the permits. We've got good drawings and nothing can be changed. Working in the city isn't something I ever look forward to, but the GC is a good friend.
I was called in particularly to deal with the reinforced concrete walls with large footings and the grass paving, Grasspave2, which I guess nobody here has experience with. The rest of my duties are consulting only.PAHS Designer/Builder- Bury it!
to which I'd add a lack of ESP. It is a regular occurrance that job X which started with a $30K scope of work at contract signing (and permit procurement) became a job with a $45K scope of work by virtue of change order. Just one part of the equation, to be sure.
"If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man." - Mark Twain
Keep in mind that in many parts of the country the value of the building permit for an addition, say, is automatically added to the value of the house. Understating the value on the permit will keep the HO's taxes lower for a few years (until the next appraisal).
Many years ago in Kentucky (not sure if it's still the case) you had to buy tax stamps (in an amount based on the value of the property) for a deed, and affix them to the deed. The law said you had to buy the stamps before the deed was registered, but it wasn't too specific as to when you had to affix the stamps. Savy lawyers would buy the stamps, affix 3/4 of them to the deed, send it to be registered, then affix the rest. When stamps were affixed at registration, the assessor, of course, would base the assessed value of the property on the value of the stamps.
I view the permit fees, (at least in part) as a form of legalized extortion. I have to admit that in a couple of the jurisdictions that we work in, the inspectors have been earning their fees by doing timely and thorough inspections and by educating the contractors in code changes. In other towns, the inspector simply collects the fee and hands out the COs at the local pub.
That would be my motivation for cheating on the permit fees as opposed to my general policy of honesty and support of the legal processes which form the framework of our society. No jurisdiction around here uses the estimate as a basis for the fee cost anymore, so that I do not have to balance these pros and cons.
I can't imagine doing more than fudging 10 to 20% to avoid a threshold that would kick the project into a whole different category. The motivation? To save the customer I am working for a few bucks.
Reading this over certainly makes me question my own position. Is cheating ever defensible? Or dishonesty? On the other hand, we are human and should be forgiven for succumbing to temptation. At least I am willing to forgive any contractor who fudges the estimate numbers.
You have to remember that all cheating - all of it - is done via the most dangerous word in our language - "rationalization". Cheaters "rationalize" what they do in order to live with themself afterwards so they can still feel good abot themselves. So they look for reasons to justify their deception.As you mentioned, where does it stop? Or what does one cheat on and what does one not cheat on? Cheat on your spouse, an employee on his hours, a vendor, etc. Cheating is the same - worse, - than lying, and the practice of deception. Again, where does one stop?Cheaters think they are sharp and the rest are fools. I think it's the opposite.I prefer not to cheat on anything. It's really about one's character, and has nothing to do with money, permitting costs, or anything else.
I didn't think it would ever happen, but I agree with you.
Sonny,
We are definitely not in the tavern, because I totally agree with you!
Well fellas, politics is one thing, but character is what makes the world go around. I once wrote an article for RSI magazine - think it was back in 1985. In it I said that what the world need more iare contractors and tradesmen who stop being characters and develop character. Some things never change. Thanks guys.
If the permit cost related to cost of construction, I would definitely fudge down the number.
Problem is, in my jurisdiction, the cost of the permit is computed from square footage, and it is hard to fudge that when you are submitting drawings.
computed from square footage, and it is hard to fudge that Just print the drawings at a smaller scale and omit the legend.I'm sorry, I thought you wanted it done the right way.
" Just print the drawings at a smaller scale and omit the legend."And if they ask, tell them that it is child's play house, not a mega mansion.
Thanks to all those who replied. You answered my question. I feared that there was some "gotcha" for the homeowner when the builder understates the project cost when applying for a building permit. Your replies indicate that this is not a problem.
See ... sometimes the builder actually is trying to help the HO.
I'm sorry, I thought you wanted it done the right way.
Here, the permit fees are fairly low and are not tied to the cost of the work. The cost of the work is determined by the plans examiner, who forwards the info to the assessor so they can ding you on your next tax bill.
At least we have decent schools.
Building permit fees are going up all the time, sometimes dramatically. One reason (at least here in the Minneapolis-St. Paul area) is the municipality is trying to recover some of the costs they are facing to improve their infrastructure - some of the suburbs around here have more than doubled in size in the last five years, and they've been struggling to pay for all the new streets, water and sewer lines, wells and wastewater plants, etc. that are required.