Property has open permit?

6 Replies

Has any one bought a property with an open permit and what problems have you encountered? I am currently considering a bid on a property in Long Island, NY that has an open permit for a dormer that was put on by the current owner. My lender and agent have advised me against putting an offer in because they said it could be a problem with other potential issues during inspection. If the dormer is up to code however it will be around a 6k fee for the permit which will be deducted from my offer. I don’t want to let this deal slip up if all that is holding me back is this permit as I will be able To cash flow a property on long island that will also appreciate. Thoughts? TIA

Just make closing out the permit - which implies final inspection and payment of any resulting costs/fees - a condition of your offer.

Its owned by a trust and they do not want to go through the leg work to close it.

@Nick Zias

The Vendor must believe the property will sell, at, or close to, their ask, with the open permit in-place.  

Is the overdue permit registered as an encumbrance?  In some jurisdictions where we operate, the municipality will register open {overdue} permits, work orders, and unaddressed by-law/ordinance violations as encumbrances on title.  In these situations, the encumbrance must be satisfied, or waived by the municipality, before title can change hands.

You could till have satisfactory closure of the permit as a condition of your offer.   Then, negotiate a further reduction in price for you to go through the leg work of closing out the permit on their behalf - and, naturally, at their expense {any costs associated with closing the permit or rectifying/completing the required work would come from the proceeds of sale}. 

    

Alternatively, if the deal is not sweet enough, you could simply move along to the next opportunity.

This is something I have considered. My fear is however that the town wont approve the dormer in its current condition which could mean alot of work as well as finding other conditions in the property are not up to code. I suppose I can account for that in my offer.

Originally posted by @Nick Zias :

This is something I have considered. My fear is however that the town wont approve the dormer in its current condition which could mean alot of work as well as finding other conditions in the property are not up to code. I suppose I can account for that in my offer.

Nick:

In your offer, an amount could be withheld in escrow for the purpose of covering any work related to satisfaction of the permit.  Once all work has been completed and the permit successfully closed, any balance of funds in escrow would be released to the Vendor.

We've done this many times to address items as simple as the immediate need for a new roof to satisfaction of municipal encumbrances on title.

Thats a great idea, I will contact my agent and see if the trust would be willing to do this. Thank you Roy.

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