Title and closing

What to do when a title search shows an open permit

When a title search reveals an open permit, it means work was started but not officially closed out with the local building department. You need to investigate the permit's nature and determine if it affects the property's marketability or legality.

October 17, 2026 · 3 min read

Understand the type and age of the open permit

The first step is to get the specifics of the open permit. Is it for a new roof, an addition, plumbing work, or something else? Knowing the type of work helps you understand the potential scope and cost to resolve it. Also, check how old the permit is; very old permits might have different resolution paths.

Sometimes, a permit might be open because the work was inspected and passed but the final paperwork was never filed. Other times, it means the work was never completed or failed inspection. This distinction is critical for how you proceed.

Contact the local building department

Call or visit your local building department to get the full permit history. Ask for details on why the permit is open, what steps are needed to close it, and any associated fees or fines. They are the authority on this matter and can provide the most accurate information.

Be prepared to provide the property address and the permit number. The department can tell you if a final inspection is needed, if there are outstanding issues, or if the permit has simply expired and needs to be re-applied for or closed administratively.

Assess the financial and time implications

Once you know what's required to close the permit, estimate the costs and time involved. This might include paying for new inspections, completing unfinished work, or even undoing unapproved modifications. These are expenses you'll need to factor into your offer or project budget.

Consider how long it will take to get inspectors out and for any required work to be done. This can delay your closing significantly. You need to decide if the potential profit of the deal outweighs the time and financial investment to clear the permit.

Negotiate with the seller

An open permit is a cloud on the title and a liability for the seller. Use this information to negotiate. You can ask for a price reduction to cover the costs and time to resolve the issue, or you can ask the seller to resolve it before closing. Often, a seller will prefer a price reduction to avoid the hassle himself or herself.

Clearly outline what you expect the seller to do or what reduction you need. Document these agreements in your purchase contract addendum. The seller might not even be aware of the open permit, so approach him or her with the facts and a proposed solution.

Consider transactional funding implications

If you are using transactional funding for a double close, an open permit can be a major hurdle. Most transactional lenders require clear title before funding. An open permit often means the title is not considered clear. You may not be able to get funding until the permit is resolved.

Speak with your transactional funding provider early in the process about the open permit. Understand his or her specific requirements and whether he or she will fund with an open permit, or what steps need to be taken to make it fundable. Not all lenders have the same tolerance for this issue.

When to walk away

Sometimes, the juice isn't worth the squeeze. If the open permit involves significant structural issues, unapproved major additions, or requires extensive, costly repairs with uncertain outcomes, it might be best to walk away. Some permits can be a bottomless pit of problems.

If the seller is unwilling to negotiate or assist in resolving the permit, and the costs are too high for your profit margins, do not be afraid to exit the deal. Protecting your capital and time is more important than forcing a problematic transaction.

Questions people ask

Can an open permit stop my closing?

Yes, absolutely. An open permit can make a title company hesitant to insure the property, which is often a requirement for closing. Lenders will almost always require permits to be closed out before funding.

Who is responsible for closing out old permits?

Legally, the property owner is ultimately responsible. In a transaction, this becomes a point of negotiation between you and the seller. Often, the buyer (you) will take on the responsibility in exchange for a lower purchase price.

What if the work was done without a permit originally?

This is a more serious issue. Unpermitted work can lead to fines, require demolition and reconstruction, or make the property difficult to insure. It's often more complex and costly to resolve than an open, but permitted, job. It also means the work was never inspected for safety or code compliance.