Don't Let Open Permits Derail Your Deal

For New York City home sellers, there is one behind-the-scenes issue that is showing up more and more often in real estate deals: open permits. Unresolved permits have become one of the most common (and frustrating) surprises during the transaction process. The good news is that they are usually manageable when caught early.

Many renovations in New York City - especially work involving plumbing, electrical, or structural changes - require permits from the Department of Buildings. Once the work is finished, those permits are supposed to be formally closed out. But over the years, many simply were not, often because a contractor or subcontractor never completed the paperwork. In many cases, homeowners have no idea the permits are still attached to the property.

This became a much bigger issue once NYC digitized DOB records, making permit histories easy for buyer attorneys and title companies to search online. Today, open permits regularly appear during due diligence, sometimes tied to renovations completed several owners ago.

Fortunately, most situations can be resolved. Sometimes the original contractor can close the permit. Other times, a licensed professional may need to inspect the work and certify completion. And in some transactions, buyers and sellers negotiate a practical solution, such as an escrow after closing.

The biggest takeaway for sellers: it pays to get ahead of the issue early. A simple permit search before going to market can prevent delays, reduce stress, and keep a deal moving smoothly once buyers come into the picture.

BONUS TIP: If you're renovating your home, make the contractor's last payment contingent on their providing a Certificate of Completion, confirming that they have closed out all open permits. Then save it both the hard copy and a digital version. Someday you'll thank me.