One neighbor had made alteration to her home, without expanding the structure.
She made half a bath from a closet space. No permit neither. Do you think she will have a problem selling her home. I believe the city has a sketch of all the rooms
For that property.

The rules around whether the city "checks" when you sell a house that it's up to code with proper permits and inspections vary from state-to-state and town-to-town. So the answer is: it depends where the house is.

Very good

Where I come from permits have to be applied for for any outside or inside renovations. I am doing renovations done soon and all permits are in place. I am in Ontario.

This could be the issue anywhere otherwise people would be renovating not up to codes. There are codes for wiring and plumbing. Both of which your neighbour would have had to do, that is, plumbing and wiring.

Here is the problem she may run into; if her house ever has to be inspected by someone (from the township)with the original plans, and does not see the renos mentioned, they will ask for the permits, and if none, then they can request the changes be removed. Especially if renos were not done by certified electricians or plumbers.

Yes she could have a problem