You’re about to sell your home — or in the middle of closing on it — when you discover one or more open permits for past work on the property. Perhaps it was for a room addition, plumbing work, or other major renovation. It may be for a project performed recently or in years past. But the bottom line is someone applied for a permit from your city or county’s building office and never closed out the approval process. Will finding an open permit put a halt to your moving plans, or can you sell a house with open permits?
Here’s the short answer: You can sell a house with open permits, but you either must disclose any known open permits or close them out through your local government, a process that varies by location. However, issues can arise if the permit close-out requires tearing up flooring or opening walls.
“Open permits are a big deal because if the buyer closes on the home, it is now the buyer’s responsibility, and usually in those cases a seller did not discover it,” says Jeanette Yates, a top real estate agent in Tampa, Florida. “Because if the seller knew about it, they would need to disclose it on their seller’s disclosure, and the buyer would know about it before they even make an offer.”
Get the answers you need on selling a house with open permits with our comprehensive guide.
We’ll cover the following:
Your options for selling with open permits
- Close out the open permits before you list.
- Offer the buyer a credit in lieu of closing the permit.
- Record the open permits on the seller’s disclosure, and sell ‘as is.’
- What is an open permit?
- Did the project require a permit?
- How are open permits discovered?
- Issues that can arise with open permits
Your options for selling with open permits
If you discover open permits or suspect your home may have them, you have a couple of options to move forward. Keep in mind that you shouldn’t try to conceal open permits and hope buyers don’t discover them — it’s never a good idea, and most states have regulations requiring sellers to disclose any material facts about the property. Here’s what you can do instead.
Option 1: Close out the open permits before you list.
Your best bet is to clear any open permit roadblocks before the sale begins by following these steps:
Run a check for open permits through your local government.
Yates says that sellers can easily check for open permits on their local government websites. As an educator in the real estate industry in addition to her work helping clients buy and sell homes, she always encourages agents to remind sellers of this step.
“I will, in my training [of other agents], reinforce to new agents who are doing their listing presentations that we should go ahead and ask the sellers just to check for open permits,” she says. “Sellers can go into the county records and check.”
If you find an open permit, get in touch with your city or county.
If you find an open permit, start by asking your city or county what to do. Licensed real estate attorney Rajeh Saadeh notes the process for resolving permits varies widely by location. “This whole topic is very localized,” he notes. “New York and New Jersey have ways to deal with it that are different from other states.”
Reach out to the appropriate contractors to close the permits.
If additional steps are required to close a permit, contact your original contractor and ask them to close the permit for you. Most of the time, contractors are responsible for opening and closing permits anyway, and closing it out might be a quick, free-of-charge fix.
“Usually, there are no costs, it probably just didn’t get recorded,” says Yates. “And there are contractors who are usually very cooperative in that situation. This way, if there is a cost to close the permit, the cost doesn’t fall on you.”
In some cases, the open permit is from work done a long time ago by a different owner. Even though this isn’t as easy a fix as getting back to your own contractor to resolve the problem, it’s still possible to reach out to your city or county and close the permit.
Older work and expired open permits might require you to hire a new inspector or contractor to approve the project, but according to Yates, most cities will work with you on steps forward.
“Get the report from the contractor or engineer, file it with the city or the county, and close out the problem,” she says.
Record all information on the seller’s disclosure.
Whether you choose to close permits or leave them open, all repair history should be part of the seller’s disclosure — though laws can vary by state, so make sure you check with your local officials about what to include.
List your home.
After you’ve determined your plan for open permits, it’s time to get excited about listing your home! HomeLight can help connect you with a top real estate agent in your area to guide you through the process and provide further assistance in navigating the open permit if necessary.
Option 2: Offer the buyer a credit in lieu of closing the permit.
Once a buyer discovers an open permit on the property, they will probably expect it to be resolved. But if that’s not a desirable option for whatever reason, you could work with your agent to negotiate something in return for the buyer’s trouble.
Option 3: Record open permits on the seller’s disclosure, and sell ‘as is.’
Even if you find open permits, you can choose to leave them open and list them on your seller’s disclosure; just be prepared for a smaller pool of buyers. “If the seller doesn’t close it out, then they’ll have a limited buyer pool,” says Saadeh. “While homes that have open permits can still have a clear title, a lot of buyers will not want a home with open permits.”
In this case, you’ll most likely need to work with a real estate investor who is willing to make an offer on the house “as is.” You may receive a lower price, but direct buyers pay cash and can usually offer a faster closing.
To pursue this route, we’d recommend going through HomeLight’s Simple Sale platform. Just input your address, tell us a bit about the property, and we’ll provide you with a full cash offer for your property. With Simple Sale, open permits are often of no issue.
FAQs about open permits
To clear up any further confusion about open permits, we’ve put together answers to some common FAQs on the matter.
What is an open permit?
First, to explain permits: Permits are essentially documentation that show your home renovation followed municipal guidelines for land use, zoning, and construction. Permits are known to be a pain, but they actually act as a safeguard. A permit signals that any work completed will be safe and up to code for you and any future occupants of the home.
Typically, the process for opening and closing a permit includes these steps:
- Get in touch with the building office of your municipality and ask if a permit is needed for the project.
- Show plans for the project if necessary, and submit a complete application with fees.
- Receive approval and permit to complete the project.
- Start the project (usually within six months of the permit so it doesn’t expire) and post the permit somewhere visible during construction.
- Obtain a final inspection once the project is complete and take down/close the permit.
While some homeowners skip permits entirely, open permits are a different matter – someone intended to stick to the process, but didn’t complete it.
Did the project require a permit?
Examples of renovations that often require permits include major structural changes and additions, or projects that involve electric and plumbing work. Building a shed, deck, garage, or fence might also require a permit. Permits for smaller jobs usually cost between $50 and $300, according to HomeGuide, but can escalate to $2,000 or $3,000 for larger construction projects. Most permit fees are based on the value or the square footage of the project. In any case, if a permit has been opened for past work on your home, buyers are going to want it closed out.
How are open permits discovered?
Unlike mechanics liens, judgments, or easements — defects that will be surfaced through a title search — an open permit will not show up on a home’s title report. Finding an open permit requires a separate look-up through the appropriate local government agency.
Issues that can arise with open permits
Here are the main issues that can crop up when selling a house with open permits:
Traditional buyers get spooked
Why are open permits a problem in the first place?
“Buyers don’t know what’s involved with closing the permit,” Saadeh explains. “They just know the problems will become their own problems. They want to make it their home right away, and have it be move-in ready. Most retail buyers (not investor buyers) want a concrete expectation of what they’re getting into.”
For this reason, it’s better to do an open-permit search ahead of time and have everything already recorded on your seller’s disclosure before your home is listed on the market. Even leaving open permits on the disclosure is preferable to an open permit surprise during closing.
The close-out doesn’t go smoothly
In Yates’ experience, most permit closures are minor inconveniences. But you should also be prepared in the event that closing out the open permit leads to either the discovery of poor construction or requires tearing into walls or flooring to evaluate the work. If the quality of the work can only be seen within walls or below the floor, an inspector may not be able to offer approval without causing serious disruption.
“We had one individual who had a big nice house and turned the stables in the accessory building into homes. He ran electricity and plumbing under the ground and then put a concrete floor on top — but the government said, ‘We have to see if the work was done right and that means tearing the concrete floors out.’ The expense of that was not miniscule. And that impacted the buyers; they didn’t buy because they knew they wouldn’t get the benefit of those units without major work,” he shares.
Open permits: A pain but not always a deal breaker
No one loves to discover that a contractor forgot to close their permit or that a kitchen remodel performed eons ago was never officially approved. Thankfully, in many cases you’ll be able to work with your city to resolve open permits in short order, resulting in only a quick hiccup on the path to selling your home.
If complications arise, a top real estate agent may be able to help you negotiate or coordinate your next steps. In addition, requesting a cash offer through a platform like Simple Sale is always an option to explore. Just be transparent and proactive in addressing the problem so that the sale can go on.
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