Trouble with Building Permits

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Trouble with Building Permits

For decades, no one involved in real estate transactions double-checked local building department files, unless a notice of violation had been issued. Everyone used to assume that when government officials allowed an owner to occupy a residence, everything was fine. All that has changed.

A series of powerful storms in the 2004-2005 hurricane seasons, plus a wild land boom that followed, set the stage for a bureaucratic catastrophe. Countless roof replacements and new construction overloaded building departments all around the state. Government didn’t have sufficient staff to follow up when contractors and subcontractors neglected to schedule final inspections. In South Florida alone, literally tens of thousands of permits were left open and expired, including hundreds on the Treasure Coast.

It is taking years to discover how many of the government’s files are not in order. The legislature hasn’t come up with a general solution to correct the situation, so, incomplete building permit files must be corrected one at a time. Often it is relatively inexpensive to reopen a permit and obtain the requisite final inspection, but sometimes the process can cost thousands.

Standard form contracts have been revised to address the issue, but they only require sellers to disclose permitting problems they know about. Of course, most sellers have no idea whether government files are incomplete. Buyers usually have an opportunity to check on the issue themselves, but many of them don’t. Perhaps they assume that title insurance covers expired and open permits. It does not.

The current standard “As Is” contract recognized by Florida Realtors and the Florida Bar places the burden of correction on the buyer—at no expense to the seller. The alternative standard form contract places the burden on the seller, but only up to a limited amount, which can be as low as zero.

The issue of open and expired building permits is not going away anytime soon. If you need advice concerning this or other real estate matters, Crary Buchanan has a number of lawyers with experience in real estate law. We’d be happy to assist you.