Mesa, AZ – Elynor bought this home near Phoenix, as a "fixer upper".

She hired a remodeling contractor, but when the contractor applied for permits, the application was denied. The city inspector pointed out that a previous room addition was done without a building permit. Worse, the addition wasn't built to code - so it would have to be demolished.

Like many Phoenix area homes, this one was originally built with a carport. A prior owner simply enclosed the carport to create the room addition. But the foundation, framing and electrical wiring were inadequate.

Fortunately, Elynor had purchased an " Owners Policy". As the most comprehensive form available, the Owners Policy insures against risk that a residential structure, or any portion thereof, has been constructred without a valid building permit.

In this case, the coverage was subject to a deductible of $519 and a maximum liability of $25,000.

After receiving her contractor's estimate, her Owners Policy paid $20, 271 to help her correct the violation.

MORAL: According to a recent study published by Harvard University, Americans are undertaking residential remodeling projects in unprecedented numbers. As building costs continue to soar, this trends seems destined to increase. How much work is done without required permits is anybody's guess.

This trend exposes buyers of resale homes to new risks. The title industry has responded by adding new coverages to its policies. Once again, the best advice we can give is that prospective owners and lenders should inquire, and make sure they are getting the most comprehensive coverage available.