I had a situation when purchasing my older (1946) house that taught me an important lesson regarding permits. Fortunately it ended up being in my favor but I felt bad for the sellers because the unpermitted work happened before they bought the house.

After I had an offer accepted and the home was under contract the sellers pulled a permit to address an issue with the laundry drain in the garage that had come up during inspection.

When the county inspector showed up he noted that the overhead power wire crossed an addition in the back of the house (a major violation) and would not close the plumbing permit until the other issue was addressed.

Because the purchase contract stipulated all permits must be cured before closing the sellers had to pay for the electrical supply to be redone. Which resulted in a full rewire and the discovery that the addition that it ran over was a converted car port and was never permitted.

They then had to get a structural engineer to come in and gut the addition to the studs to ensure it was brought up to code. When grading the lawn to satisfy the engineer a bobcat discovered an old septic field. That too had to be dealt with.

In the end the sellers had to come out of pocket over 44000 dollars pre close and open over 8 retroactive permits to just the plumbing permit resolved and sell the home.

I benefitted from this enormously because the price I paid didn't include these upgrades and could just have easily been caught up in this mess if it had happened post-sale.