Does contractor need to get city permit for replacement of the drywall 525sqr foot due to water damage

You should contact the Los Angeles Department of Building and Safety for the answer to your question.

Check with the City. Generally, minor repairs, especially those that do not require any structural work, do not require a permit.

Home buyers, inspectors, real estate agents, lenders and lawyers are all concerned about any alterations / repairs made to a house without a permit. At one time, the City of LA required a permit for any structural work worth more than $200.00. Check to see what current limits are and if drywall is considered structural (not likely, but I can’t say given the facts of your question). I think the appropriate place to check is the Dept. of Building and Safety. See also “Do I need a building permit for my project?” at http://www.cslb.ca.gov/consumers/hireacontractor/buildingpermitrequirements.asp