I've had some of these people as well. When the situation comes up, they're trying to screw you. Naturally, you should be looking for how to screw them as well. Most of the time, these are the same people that you spend a week finishing a basement with electrical, plumbing, etc being completed....... and you realize, there wasn't a permit on the front door (because these are the same people who don't get them).
Let them know that a simple call to the city inspector will have thier basement torn back up to check the work, along with the associated fees they didn't pay in the first place. BAAAM, check in your hand. lol
If they call your bluff, then call the inspector, and then go through the processes mentioned above. The no permit thing has never let me down.