Financing

How to get transactional funding with an open permit

Securing transactional funding for a property with an open permit requires addressing lender concerns about potential liabilities. You'll need a clear strategy and solid information to move forward with the deal.

November 7, 2026 · 3 min read

Understanding why an open permit matters to lenders

An open permit signals potential unfinished work or code violations on a property. From a transactional lender's perspective, this represents a risk. He or she wants to ensure the property can be quickly resold to your end buyer without any title complications or unforeseen costs arising from the permit.

The lender's primary concern is usually the clear marketability of the property. If the open permit suggests significant repairs are needed or that a future owner could face fines, it impacts the property's value and the speed of your second closing.

Identifying the type and age of the open permit

Start by researching the specific permit. Is it for a minor electrical fix that was never inspected, or a major structural renovation? The type and scope of the work will heavily influence the lender's comfort level. Pull the permit history from the local building department.

Also, note the age of the permit. An old, unclosed permit can sometimes be more challenging to resolve due to changes in building codes or difficulty locating the original contractor. A recently opened permit for ongoing work might be viewed differently if the work is near completion.

Getting estimates to close out the permit

To mitigate lender concerns, obtain detailed estimates from licensed contractors to complete and close out the open permit. This shows you have a clear understanding of the issue and a plan to resolve it, even if you, as the wholesaler, won't be doing the work.

The estimates should include all costs: labor, materials, and any inspection fees. Presenting these numbers demonstrates professionalism and helps the lender quantify the risk involved. It also provides your end buyer with information he or she will need.

Presenting your plan to the transactional lender

When approaching a transactional lender, be upfront about the open permit. Explain the nature of the permit, your findings from your research, and the estimated costs to close it. Emphasize that your end buyer is aware of the issue and plans to address it.

Highlight the strength of your end buyer, his or her track record, and the speed at which he or she intends to close. The lender wants confidence that the property will transfer quickly and that the open permit won't derail the second leg of your double closing. This is not financial advice.

When a transactional lender might still say no

Even with a solid plan, a transactional lender might decline funding if the open permit is for extremely complex or hazardous work, or if it indicates a history of severe code violations. Some lenders have strict internal policies against properties with specific types of unresolved issues.

If the estimated costs to close the permit are very high relative to the property's value, or if the permit history suggests a lengthy and unpredictable resolution process, a lender might view the risk as too great, preferring to stick to cleaner deals.

Questions people ask

Will the lender require me to close the permit before funding?

Generally, no, as the transactional funder is only holding the property for a few hours. However, he or she will need assurance that your end buyer is aware and accepting of the open permit, often with an addendum or clear disclosure.

Does this type of issue affect how much I can borrow?

It can. If the open permit represents a significant liability or cost, a transactional lender might reduce the loan amount or require a larger down payment from you to offset the perceived risk. This is not financial advice.

Can I use the transactional funding to pay for the permit close-out?

Transactional funding is typically only for the acquisition. Any costs associated with closing out the permit would fall to the end buyer or need to be handled outside of the transactional loan, usually by the end buyer after closing.

Is an open permit always a deal killer?

Not necessarily. Many deals with open permits close, especially if the issue is minor, well-documented, and the end buyer is fully aware and prepared to resolve it. Transparency is key with all parties involved.