Sellers: Closing open permits on your home is one of the most important things you should do prior to putting it on the market.
Buyers: It is imperative that you make sure there are no open permits on the property you want to buy.
Your Realtor should help you with this.
What many homeowners don’t realize is that once the contractor, plumber or other vendor completes the permitted work, you must apply for a certificate of occupancy or certificate of compliance. The building department will come out for a final inspection to make sure the work was done according to code and then issue the certificate.
If permits are not closed, it will hold up the closing. In Westchester County, NY, the title company will not issue clear title and the buyer’s bank may renege on financing.
I recently found an open permit from 1937 for a non-existent garage on a property. The garage was noted on the assessor’s card, so this property owner paid taxes on a non-existent garage for years. In most cases, open permits don’t make it on the assessor’s card, so a property isn’t taxed for the upgrades.
The longer you keep an open permit, the greater the possibility that code has changed.
Beware of property cards because what is on the card is for tax purposes but does not guarantee code compliance on work done. Sadly, I found this out the hard way and it delayed a closing and cost the seller to legalize an illegal basement. On another note, there are illegal finished spaces (no permits) on properties that are sold as is.
Their realtor should advise the buyer.
If the buyer goes ahead with the transaction, they assume the risk of discovery by the building department. If this happens, they may either force you to tear it down or legalize it. Both can be costly. If you legalize, you may have to pay for architectural drawings and bringing it up to code. A fine also may accompany this.