Permits to Install??

The salesmen put in the contract "No Permits" and requested that I initial this note on the contract. He indicated that some cities require permits and some cities do not. He cited the fact that Huntington Beach, "a larger city", does not require it but some smaller cities do. He said that no one gets permits in SoCal for windows for single family residence.

Is this true? What is the drawback for not getting permits to install 17 windows?

You should call your city's building department and ask that question.

Site

Most cities will require a permit to change out windows. Some don't. I would tend to lean towards the bigger cities wanting them over the small. Huntington Beach doesn't require them if
"the waterproof membrane is not altered and emergency egress dimensions are equal to or better than the original permitted layout."
This means that all egress windows in each bedroom must have 5.7 sq.ft. of exposed glass space. If they don't have this then a permit will be required. Your local city website usually has all this information available online. Check before you go ahead.