Given the hassle or paying permitting fees and dealing with local bureaucracies, many homeowners--and in some cases, their contractors--are tempted to avoid this part of the process. Doing so comes with risks, however.
In many instances, the law requires that permits for construction work be issued by the local municipality where the property is located. In large cities, that is likely a centralized Department of Buildings. (New York’s DOB and Chicago’s DOB are both good examples.)
There are many reasons that governments require permits for home repairs or improvements. First, they want to ensure public safety by not allowing unlicensed individuals to perform complicated, sophisticated, or dangerous work. Second, they want to ensure that the desired construction is permissible in the zoning and location you are proposing; a request for a permit to build a factory in a residential neighborhood would likely be denied. Third, they want to ensure that the timing of your construction work is appropriate and will not interfere with other activities or necessities for the area.
If you try to proceed with unpermitted work, you might face a number of consequences. If caught in the short term, these might include fines as well as stop-work orders. You might also cause damage to your property, which might not be covered by your homeowners' insurance policy, based on your failure to obtain the appropriate permit.
And even if all goes well in the short-term, when it comes time to sell your home, buyers may insist that you obtain permits for the work and then remedy any work that isn't up to code. You could wind up tearing apart your work and starting over.
For all of these reasons, it's worth taking the time to acquire the appropriate permit and ensure that any contractor you hire does the same.