Geez, sorry you dealt with that. In my town, this would never pass inspection, which certainly costs something in taxes, permits, and labor cost, but I think it would be difficult to end up saddled with bad work.
All the contractors around here push really hard to do the work without permits. It takes at least twice as long to finish with permits since there needs to be an inspection after each step that will get covered up by something else (and since much work is done unpermitted, many contractors forget to do this and have to redo work).
I always pull permits these days because of stupid stuff contractors have done; the horizontal duct run that was way out of spec was found by an inspector and I had to call 4 HVAC contractors before finding one that would do a quote that included permits...
