That's a good question.

The previous owner applied a permit to convert the garage into 2nd unit (2 bedrooms), but the official record shows incomplete. He somehow managed to convert them into the 2nd unit with 1 bed, and turned another bed into a 3rd unit (unfinished). The permit was dated year 2006. I'm wondering if it's OK to leave it as is, i.e., not report it to the county. Someone told me that I might have some issue when sell it next time, unless use cash deal. I don't worry about the re-sale issue for now, but more concerned about the refinance. I plan to do cash out refinance next year. Not sure if the inspector will find it out and turn down my refinance due to the permit issue. Do you have any suggestion on this?