Open Building Permits: A Must-Know Guide for Smart Home Buyers

Real Estate Agent with EXIT Realty Beatrice Associates 9506757

Suppose you're on the exciting journey of buying your dream home. In that case, it's essential to understand the significance of open building permits. They can affect a home's value and even prevent a closing from occurring.


In this guide, we'll walk you through what you need to know about open permits, their impact on your home purchase, and how to navigate the process. Let's dive in and become savvy homebuyers together!


What are Open Building Permits for Home Buyers?

Before you even start taking mental possession of your home, discovering if the home you are about to purchase has open permits is essential.


When a property undergoes construction or renovations, the local authorities issue a building permit to ensure the work complies with safety codes and zoning regulations. 


The permit remains open if any construction or renovation work needs to be completed or received a final inspection and approval. 


Open Permits Become Your Problem- They Are A Risk

As a homebuyer, you need to be aware of any open permits.


The issue for home buyers is when you take possession of your new home; you are inheriting the open permits on your new home. Building permits follow the property and not the owner.

What Is The Issue With Open Permits For A Home Buyer?

As I stated earlier, you inherit the open building permit with the home.  

In years past, it was something people should have paid more attention to. But recently, your local municipalities are no longer turning a blind eye to open permits.  


Open permits can cause the town to levy fines or revoke your occupancy permit. While we are not really seeing that there is the potential.  


What is affecting homeowners is the building departments require all open permits to be closed out before issuing a new one. It could be as simple as having a final inspection and getting the building permit closed.  


But the more significant issue is that when you close the permit, you must bring the work up to current building codes. This could be a considerable cost and hassle to you.


Selling Your Home Down The Line

As you should be doing your due diligence on a home, so will the buyer you will sell it to.


Open permits could scare away potential buyers. Even more critical title insurance companies are now refusing coverage on properties where they are aware of open permits.


Having building permits left open can prevent the sale of your home or, at the very least, be a hassle getting to the closing table.


Due Diligence

Buying a home also means doing your due diligence and finding out everything you can about the home you are about to purchase. Of course, you are going to do a home inspection. That is pretty much a given.  


But you also need to go to the town hall and find out what permits have been pulled on the property and if any permits remain open.


Zoning Regulations

Every city has its unique zoning laws and regulations that dictate how properties can be used and what can be built on them. 


As a homebuyer, understanding these are important. In most cases, a building permit will be required if you are doing any work on your home.


You might dream of building an extension or adding a pool in the backyard. Or you may have a repair that needs immediate attention. Most likely, the town will require a building permit.  


But with open permits, you must address the open permits to move forward.


Building Permits Ensure A Certain Level Of Safety

Your future home should be a place of comfort and safety. The purpose of a building permit is to ensure minimum building codes are met, ultimately providing a safe home for you and your family.


The final sign-off on any renovations also tells you that the work has been done in a craftsmen-like manner.


What To Do If You Find Open Permits

What do you do if you find there are open permits on a home you have under contract?


There are several remedies:

  1. Insist on the seller closing out the building permits before closing. This is the best remedy for the home buyer. Realize this could delay the closing.
  2. After talking with the building department and getting the full scope of what needs to be done and at what cost, ask for closing credit to cover any additional expenses and inconvenience. This will allow you to close on time, but there could be a risk that closing out the permits is more costly and involved than you thought.
  3. Accept the house with the open permits and head towards closing. Realize you own the problem after you close on the house.
  4. If the seller won't compromise and you feel the open permits are too much of a cost or hassle, walk away.

Before making any decision regarding open permits, discuss with your real estate attorney and buyer's agent the full ramifications of your decision.


FAQs for Smart Home Buyers

1. Can I still buy a home with open building permits?

Absolutely! Buying a home with open permits is common. The key is to address these permits during the buying process to ensure the property is compliant and safe.

2. Are open permits a deal-breaker for homebuyers?

Not necessarily. It depends on the situation.  Proper communication between the buyer, seller, and relevant authorities can resolve open building permits.

3. How do I check for open permits on a property?

Your real estate agent or a professional home inspector can assist you in checking for open permits. They have access to records and can guide you through the process.

4. Can open permits affect my homeowner's insurance?

Some insurance providers may have reservations about homes with open permits. Be sure to discuss this with your insurance agent to find the right coverage for your new home.

5. What if the home I want to buy has unpermitted renovations?

Unpermitted renovations can lead to complications. Consider negotiating with the seller to address the issue or consult with local authorities on the best course of action.

6. Can I proceed with my own renovations if there are open permits?

In most cases, you can proceed with your own renovations, but you must close any open permits related to previous work before starting new projects.


Conclusion: Homeownership with Confidence

Knowing about open building permits and their implications, you're well on your way to being a savvy and confident homebuyer and prevent you from making a costly mistake.

Comments (1)

Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Kevin. A savvy buyer should require that any open permits be finalized before closing. Taking a property subject to the open permit, even with a credit, is inheriting a problem. Enjoy your day.

Aug 02, 2023 06:55 AM
Kevin Vitali

I agree 


Aug 02, 2023 06:49 PM