Why are expired building permits a problem for both the seller and buyer of a home?
Friday, July 20, 2018
When a homeowner or contractor receives a building permit for a home improvement, the time allowed for completion of the work by the local building department is typically six months. The permit expires if the necessary intermediate inspections, and then a final inspection that certifies that the work was done to the satisfaction of the building department, are not completed during that period. An expired permit is often referred to as an “open permit,” because it hasn’t been closed out by a final inspection.
Expired building permits are a headache for both the seller and buyer in a real estate transaction. The standard FARBAR contract that is used on our area, along with similar real estate contracts around the country, includes a clause that requires the seller to close out any open permits as part of the sale. We provide a listing of all building permits in the jurisdictions in our area that provide permit records that are searchable online, and regularly report on open permits as part of our inspection report. They are often just an oversight by the contractor, who can apply for a “completion permit” even years after the original work was done, and get it signed off on by the building inspector within a few days.
But sometimes it’s not that simple. If the contractor is no longer in business or, even worse, if the work done by the defunct contractor was not compliant with the applicable building codes, then the homeowner has to hire a new contractor to apply for a completion permit and correct the inadequate work in order to sell the home. One local real estate attorney, Robert Lash, estimates that expired permits pose a problem in about 25% of the sales he handles.
If the sale of a home is somehow completed with an open permit on the books, the problem is transferred to the new homeowner. Old permits have to be closed out before a new permit can be issued, so an expired permit for something as minor as a water heater replacement, can hold up the work on a new pool or home addition.
One homeowner that had a difficult time getting a permit for a screen porch enclosure for her recently purchased home due to a 10-year-old open permit was annoyed enough by the problem to take action. She is seeking to have Alachua County to take an inventory of all their open permits, notify homeowners of them, get contractors to close them out, and give amnesty to homeowners with older permits. It will be an uphill battle.
Also, see our blog post Does a home inspector check for permits?
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