Building

Unpermitted Homes Reported to Hawaiʻi County Building Department

When we list a property where all or a portion of a structure was built without permits, we as real estate professionals note that fact in the listing, as it has consequences for property valuation and for the ability of a lender to finance the property. Similarly, the legally mandated Sellers Real Property Disclosure Form requires the seller to note any violations or variances.

Anyone who suspects a violation of County code can file a report online or in person. And one recent Saturday, someone (or perhaps three “someones” as reports were filed under three different aliases) took the time to comb through active and pending listings that mention unpermitted residential structures and file complaints on them. Approximately 150 complaints, as many as the Building Department might typically receive in a year, according to the inspector serving as complaints officer.

Older homes may have non-conforming structures

Properties that pre-date modern building codes might have multiple non-conforming structures. Newer properties should have building permits.

Hawaii County Code Enforcement – Building Permit Violations Procedures for Filing and Response

It is easy for anyone to go on the Hawaii County website and file a Building Code complaint. Once the complaint is entered, the Building Department is required to follow up as follows:

Hawaii County Building Violation Complaint Process

Source: County of Hawaiʻi Department of Public Works website

So what is going to happen as a result of this avalanche of complaints?

For one thing, we already know that the Hawaiʻi County Department of Public Works is running behind in processing building permits. Due to the high volume of new construction, as well as holders of old open permits rushing to meet deadlines before their open permits are canceled, building inspectors are scrambling to keep up with inspections. Now added to the workload will be initial and follow up inspections for the new complaints.

In some cases, owners will need to file for “as built” permits, which then will add to the permit application backlog.  The new EPIC permit system makes it easier for anyone to see the status of permits on a property, but has also created delays in processing of new permit requests.

The bottom line is that our County resources will be stretched even more thin. This will create additional delays in getting permits and closing them out, unintended negative consequences for anyone building or remodeling with permits – people who abided by the rules. The process for the owners who built or bought without permits and are now cited in the complaints could take years to resolve.

What Does This Mean for Buyers and Sellers of Big Island Real Estate?

Unpermitted, off the grid cabin

Many of Hawaii Island unpermitted structures are in remote locations, not easy for a building inspector to do a drive-by to follow up on complaints

The complaints were specifically filed against easy targets: listings that stated residential structures were built without permits. Some of these listings were already in escrow, meaning those transactions are likely to be delayed in closing unless the buyer is willing to assume all the risk and effort associated with the Building Divisionʻs enforcement process.

For active listings with unpermitted structures, whether or not they were included in the complaints already filed, sellers and prospective buyers both will need to evaluate their next steps. Given the low inventory market conditions with many cash buyers coming to Hawaiʻi, buyers have been more willing than usual to overlook permit issues. That may no longer be the case. If owners decide to apply for “as built” permits, they are looking at a years-long process, and another whole slice of real estate inventory disappears from the market.

Whoever filed these complaints, however legitimate, is going to be awfully unpopular with a whole lot of people if their name comes to light. At a moment when we have a housing crisis on the island, they have just exacerbated the problem. On the other hand, perhaps some of these owners will sell at bargain prices reflecting the risk and cost the new owners will bear.

Stay tuned for updates!

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Denni Keyes

June 16, 2022

WOW!! All I can say is WOW!?!

John

June 16, 2022

You overlook the fact that unpermitted houses are OFTEN a safety hazard for occupants. I have personally seen house fires from people using a dryer plug on an oven/range by switching the receptacle to match (They look similar but are very different). Wrong amperage overheats, melts the receptacle and bad news. It is expensive to install a septic system so a backhoe digs a big hole and like magic a cess pool is built. Too few electrical circuits, wrong size wire, splice wires to make more outlets, wires not enclosed in boxes……. I do not like the permitting process and much is nonsense but many people with no knowledge can build a ‘structure’ in the shape of a house that is very unsafe. Bldg depts in HI are very bad. They say too much work for too few employees but I can assure you that very few if any are overworked.
Just my thoughts.

Beth Robinson

June 16, 2022

> Hi John, thank you for reading and taking the time to comment.

My point was not to be an advocate for or against unpermitted construction. As a licensee, I always advise my clients to build with permits as that is essential to my looking out for their fiduciary interests. I only intend to report on this development and its consequences for the real estate market overall, and for sellers and buyers who might currently be affected.

Denise Nakanishi

June 16, 2022

Awesome post Beth!

Beth Robinson

June 16, 2022

> Thanks, Denise! Just one more crazy twist in a crazy market. Luckily we have survived a few rodeos already, right?

petAr

June 29, 2022

I am an architect born and raised in Hawaii. This is a lame situation for literally everyone except the one selfish human with a grudge. This is going to cost a lot in an already stressed housing market. This will likely affect local families more so than people that moved here recently. The only good thing is that they used real estate listings as their way of selecting targets; this is not good but it is better than including kama’aina families.
~my two cents

Beth Thoma Robinson, R(B)

June 29, 2022

> Mahalo for reading and commenting, Peter, I think you are 100% right.

Noelani E. Spencer

July 19, 2022

Great article, I just heard this from another agent and had to look it up and of course, you are on it!! I am flabbergasted. Unpopular to say the least, I hope their name does comes to light. Unfortunately, families have had to do what they have had to do to accommodate a growing family or help subsidize in an increasingly expensive paradise that we all call home. That’s not always the case but more likely than not. And to further punish them is very very unfortunate.

Looking forward to the updates. Mahalo Beth!

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