New Remedies for the Closure of Open and Expired Permits

Background

It is not uncommon for a real estate licensee to be involved in a transaction where an open or expired building permit is found during the time between contract and closing. In certain instances, these permits are over twenty years old. The concern then becomes how to successfully close these permits so that the property may be conveyed to a new buyer.

Most contracts for sale and purchase include certain remedies between the buyer and seller of the property, but that would not necessarily result in the permit being closed.

Relief Provided by HB 447

After the passage of HB 447 local governments are:

• Authorized to close a building permit six years after the issuance of the permit if the local government determines that no apparent safety hazards exist.
• Prohibited from penalizing an “arm’s length purchaser” of property solely because a previous owner failed to close a building permit.

This bill provides remedies for owners who subsequently discover permits that remain open for work they previously contracted for, and for new purchasers who later discover an open permit for improvements added by a previous owner of the property that was previously undisclosed.

It is important to note that a contractor hired to finish an original contractor’s uncompleted work are only liable for the work they perform. The new contractor is not responsible for any defects in the work performed by the original contractor.  

All these provisions should be very helpful in preventing real estate transactions from failing due to the presence of an open or expired permit.      

This bill was signed into law on June 7, 2019.