How to Close Building Permits: Part I

What is a permit? Why do we need permits and why are open permits a concern?

I have been heavily involved in closing off permits in the past. Here is my attempt at answering these questions. If you are well versed in this topic, feel free to jump over to Part II and Part III.

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First of all, a building permit is legal permission to begin construction or demolition. Building permits are issued by the Building Division, Planning and Building Department. Local municipalities (ex. City of Toronto) generally grants the permission. Building permits are required under the Building Code Act for the construction and/or demolition of a new building, an addition, or alteration of any building or structures. (Building permit application process is a standalone topic, reserved for another day.) Ideally as a project is near completion, contractors will call in for a final inspection. Once the building inspector deems the site to be complete and free of deficiencies, he/she will close off the permit.

There are many reasons why permits remain open after construction is long finished. Sometimes, an owner/contractor may obtain a permit but do not complete the full scope of work. Sometimes, the work might be complete but the owner/contractor never arranged for a final inspection. Sometimes, permits are left open due to unresolved deficiencies that the owner/contractor decide to neglect. Part I highlights the importance to close a permit.

The most significant reason is that open permits can cause owner problems when selling or financing their property down the road. Open permit becomes a lien on the building/property when a title is transferred during the purchase and sale of a property. These outstanding liens become a liability to the seller. It also does not help that open permits are often discovered much later in the real estate transaction process since permit related problems related can not be discovered from title searches. Open permits must be searched independently through the local municipality. Open permits can potentially delay closing or even cause a potential buyer to terminate the contract. Therefore it is best practice to keep on top of this potential landmine by ensuring that open permits are closed as soon as the construction is substantially complete (97% completion).

Nowadays, we frequently see owner withholding a certain percentage of hold-back (usually 10%) which will not be released back to the contractor until the building permit is closed (along with other close-out documents). Contractors are encouraged to close off their projects to get the deposit back.

The good news is that permits take less effort to close if it is tackled right away. Older construction projects are often not in compliance with current building codes as building code change over time. If we wait months or years, the owner maybe forced to redo the work to comply with the current building codes before the permit is closed. Furthermore, it becomes increasing difficult to track down important information about the project as files are often missing. This situation can be further complicated if the contractor who did the initial work is out of business. I had this occurred to me a few times in the past so let me assure you that it is no fun.


Topic Directory

Part I – Introduction

We explained various reasons why permits remain open long after the completion of a project. From my experience, the best advice is to close your permits as soon as construction is completed. The longer you wait, the harder it becomes to close it off.

Part II – Permit Types & Status

We will take a look at the most common types of permits and associated documents required for their closures. Since most of my projects are in the City of Toronto, the information I am about to provide will be the most relevant in Toronto. Minor procedures might differ across different Municipalities but the bulk of the information remains relevant.

Part III – Closure Process & Additional Tips

What specific documents are required to close off a specific permit? What are the procedures? We will answer these questions with additional tips I picked up along the way.

8 thoughts on “How to Close Building Permits: Part I

  1. Wow, fantastic weblog layout! How lengthy have you ever been blogging for? you make blogging glance easy. The whole glance of your site is fantastic, as well as the content material!

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    1. Thanks Alex for your comment. I have been blogging for over half a year. I am glad you are finding the contents and layout enjoyable. I am still getting the hang of it! Love to hear if you have any suggestions on how I can improve!

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  2. Thank you for every other excellent post. The place else may just anyone get that type of info in such an ideal way of writing? I’ve a presentation next week, and I’m on the search for such info.

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    1. Thank you for your comment Casandra. Appreciate the encouragements. I wrote this post when I realized there are not many resources online specific to closing a building permit. If you are looking for general permit information on permits, ex. How to apply for a permit, I would suggest to check out your local municipal building department website.

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  3. F*ckin’ tremendous things here. I am very glad to see your article. Thanks a lot and i am taking a look forward to contact you. Will you please drop me a mail?

    Like

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