In the towns where I have lived, permits serve two purposes: First,
they, if done right, insure that safety and building code provisions are
met; Second, they alert the city to possible improvements in the
property, which can result in an increase in property tax.

So if the tax rolls show the property I'm looking at has three bedrooms
and no air conditioning, but my visit shows five bedrooms and central
air, that is an indication of unpermitted work, which will, at least,
increase the property tax when discovered. But more dire is that if I
do such work, or buy property on which it has been done, and there is a
problem with the wiring, for example, that leads to a fire, my insurance
company is going to check to see if the work was permitted, and deny
coverage if it was not.

Around here, if a homeowner has been cited for doing unpermitted work,
the government can demand that he remove it, or at least dismantle it
enough that they can do an inspection. I imagine that if the owner
stands by running his mouth, the inspection can be very thorough. If he
refuses, they pull the occupancy permit, and you have a house no one,
including yourself, can legally occupy. From there, you will probably
get to deal with a called mortgage, and possible jail time. And trying
to sell property with an unoccupiable house on it should be interesting;
he'll probably have to pay the buyer to take it off his hands.

DanG wrote:
A friend who shall remain nameless called. He lives in the county
in a different state. He launched into a small addition with no
permit. He has it framed and dried in. He received a letter from
the county ordering him to cease and desist. He called wondering
what they can do to him if he just keeps going.

I didn't really have an answer. I did tell him that if there was
a need for the electric company to do any work on the service,
they would not perform without permit approval. Other than that,
what can they do? This guy is a bit of a renegade. I explained
about the yes, sir/no,sir - gee, I'm sorry approach. He's headed
a bit more along the my castle, my kingdom, damn the torpedoes
approach.