Understanding the Importance of an Open Permit Search

Why is it important to request an open permit search whenever one buys real property?  The answer to that question involves an understanding of the permit process. When one performs improvements to property, in most cases, a permit for that work is required. The permit, in essence, provides the legal authority to proceed with the work in accordance with the plans or specifications provided to the applicable governmental authority. The permit then goes through different phases, generally as follows:

  1. Open Permit. Once a permit is initially pulled for work, it is considered open until the work is completed.  It remains Open until the work has been completed AND inspected.
  2. Closed Permit.  A permit is Closed once the work has been completed, and most importantly, such work has been inspected by the appropriate governmental authorities to verify that it was done properly and meets all applicable code requirements.
  3. Expired Permit. If work was originally permitted, but never closed properly, the permit may expire. An expired permit means that work may or may not have been done, and that such work, if performed, was not properly inspected to allow the permit to be closed.

(Note that jurisdictions may use different terminology, but generally speaking, these are the three general permit statuses)

It is critically important to request a permit search for two fundamental reasons.  First, the buyer wants to make sure that all prior work on the property, if any, was done properly, and that all permits for that work were properly closed, thus providing confirmation that the work was indeed inspected and blessed by the applicable governmental regulatory body.  Second, if you know that work was done to the property, a permit search will confirm whether the work was indeed properly permitted. In Southwest Florida, there is example after example of illegal work, i.e., work that was done without a permit. This is a large and potentially expensive problem, one that a buyer would want to discover before closing  (rather than when the buyer tries to sell the property down the road).

If open permits are discovered, a buyer should insist that they get closed prior to closing.  This generally involves calling in a government inspection of the improvements, but could involve very costly remedial measures to place the work in compliance with the permit to properly close it out. And if you know that work was performed, but cannot locate a permit for it, chances are, the work was done illegally. In such instances, you should insist that the seller produce proper permits for the work, if they can.  This generally involves applying for what is referred to an after-the-fact permit. This can be VERY expensive and time consuming to obtain, and could require substantial renovations or even total removal of the illegal improvements.  This is not something to be taken lightly.

Insist on an open permit search when you are buying property, and of course always contact your real estate attorney if you have any questions about permits or illegal improvements.

Sincerely,

Berlin Patten Ebling, PLLC

Article Authored by Evan Berlin, Esq. eberlin@berlinpatten.com

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged. 

www.berlinpatten.com 

SARASOTA

1819 Main Street, Suite 1000, Sarasota, FL 34236   P (941) 954-9991  F (941) 954-9992

VENICE

247 South Tamiami Trail, Suite 201, Venice, FL 34285  P (941) 955-9991  F (941) 484-9992

LAKEWOOD RANCH

8130 Main Street, Suite 206, Lakewood Ranch, FL 34202   P (941) 907-9022  F (941) 907-9024

Advertisements

Don’t Forget the Open Permit Search!

For financial reasons most parties do not perform an Open Permit search (which would include expired permits) until after the inspection period has expired.  This is a common mistake that generally leads to the buyers inability to object to an open permit issue at a later date.  The new FARBAR-2 Residential Contract for Purchase and Sale (“FARBAR-2 Contract”)  now requires the party paying for the owners title insurance policy and charges to pay for a municipal lien search.  Generally an Open Permit search is performed in tandem (i.e., part of the same report) with a municipal lien search which is generally handled by an insured third party vendor (i.e., a municipal lien search company).  Note that an Open Permit search is generally an optional service performed by the municipal lien search company and may be an additional fee.

Paragraph 12(d) of the FARBAR-2 Contract provides that the “[b]uyer may have an inspection and examination of records and documents made to determine whether there exists any open or expired building permits or unpermitted improvements to the Property.  Buyer shall, within the Inspection Period, deliver written notice to Seller of the existence of any open or expired building permits or unpermitted improvements  to the Property.”   In other words, a Buyer may lose the opportunity to object to an open permit issue if it is not discovered (and notice provided to Seller) during the Inspection Period.  Obviously the same would hold true for an unpermitted improvement but that is not a service that a municipal lien search company would perform and would typically be disclosed by the Seller or discovered by a licensed building inspector or contractor during inspection.  In order for a Buyer to preserve any objection to an open permit issue he/she/they should: (a) order (and object thereto if necessary) a municipal lien search which includes an Open Permit search prior to the Inspection Period expiring; or (b) extend the timeframe to object so that an open permit search is not tied to the Inspection Period.  

As always, should you have any questions in regards to the foregoing, please consult with your local real estate attorney.

Sincerely,

Berlin-Patten, PLLC

  

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

www.berlinpatten.com 

SARASOTA

1819 Main Street, Suite 1000, Sarasota, FL 34236   P (941) 954-9991  F (941) 954-9992

VENICE

100 W. Venice Avenue, Suite A, Venice, FL 34285  P (941) 955-9991  F (941) 953-9992

LAKEWOOD RANCH

8130 Main Street, Suite 206, Lakewood Ranch, FL 34202   P (941) 907-9022  F (941) 907-9024