When someone renovates a home, whether a new bathroom, an electrical upgrade, a deck or a finished basement, the work usually requires a permit from the town's building department. The permit stays "open" from the day it's issued until an inspector signs off on the finished work and the town closes it.
An open permit is one that never got that final sign-off. Sometimes the work was never finished. More often, the work was done fine and nobody scheduled the final inspection. Either way, the town's records still show a job in progress.
Open permits tend to show up late. A title search, municipal search or the buyer's attorney turns one up, often in the final weeks before closing, when everyone assumed the file was done. Refinances aren't immune either: a homeowner who bought years ago can discover a permit a prior owner left open.
We saw both recently. A condo refinance hit a permit a prior owner pulled and never closed out, and it still closed on time. A separate purchase ran into an open electrical permit the sellers never closed out, and that one is being worked through now.
An open permit raises questions nobody wants to answer the week of closing. Was the work done to code? Will the town require changes before it signs off? Who pays if it does? Buyers' attorneys and lenders may not want to close with those questions unresolved, and a buyer who takes on an open permit can inherit the job of closing it out.
In many transactions the seller is expected to resolve open permits before closing, but the answer ultimately depends on the purchase contract and what the parties negotiate. That's why it matters to raise the question early and put the answer in writing.
Most open permits are resolved in one of a few ways:
Which option works depends on the town, the type of work, the lender and what both sides' attorneys will accept.
For sellers and listing agents, the simplest step is to check the property's permit history with the building department before listing. For buyers, ask early whether any permits are open, who will close them out, and what happens if that isn't done by closing day.
Finding an open permit a month before closing is a paperwork problem. Finding it the week of closing is a closing problem.
If you're buying or refinancing in Connecticut and want to know how an open permit could affect your financing, talk to your lender before you're under contract.
Become homeowners. AFC Mortgage Group will help you navigate the loan process, secure financing, and purchase your dream home.
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