Prior top making any kind of committment, we recommend that you get in touch with the city/town/county code enforcement office to get their feedback. Since each situation is unique and regulations and enforcement or regulations varies from one area to another, it is important to provide the facts to someone that can apply this to the regulations.
Under no circumstances should you take anyones advice without consulting with the local governmental agency and then be sure you get it in writing.
Things to be aware with non-permitted work on a home. The first is that it in fact could be a safety issue. Fire hazard with improper wiring. There could be issues with structural safety with incorrect foundation or supports. Second to the pure safety is the fact that if there is damage to the home because of non-permitted work, your home insurance may not cover the repair. (i.e. fire damage due to improper/non-permitted wiring...etc)
Finally the value of the home is in the permitted sections. The re-sale value is limited to the original or permitted areas which typically are defined by the tax accessor's data.
The best way to understand what it will take to fix the problem is to sit down at the city planning office and review what inspections/permits were completed (if at all). If not, find out what it will take to correct the issues. Sometimes permits were filed for but not completed. Sometimes, the work was so incorrectly completed that you must start at the beginning to correct the structure.
Typically, there is not enough staff in planning to track down the non-permitted work completed on homes. They find out through another inspection, insurance claim, or a neighbor reporting an issue. From a peace of mind and safety angle, it may be well worth correcting the issue by obtaining proper final inspections and complete permits.
Before you remove the inspection contingency, make sure you contact the city planning department/code enforcement office to determine the type of permit you might need and whether the addition is up to code. If not, you might have to bring it up to code in addition to paying a fine. Sometimes they will ask you to tear the structure down.
I am not in the San Diego Area, but for our area, once you do a major remodel, you might have to bring everything in the house up to code. This could add up to a lot of expenses that you do not expect to encounter.
This could be a major issue; I'd do it first thing on Monday and again, before removing contingency.
You should purchase the property based on the value of the improvements without the unpermitted additions. Unpermitted additions are not included in appraisals or for financing.
Because you are asking a website this question, I assume you are not working with an agent. If you are, you should work with a better one or work with someone you trust.
Nick Rhea, MBA, Broker
Bombora Investments, Inc