Thank Your Legislature: Reduced Delays Related to Open Permits in Real Estate Closings

Posted on November 5, 2019, by Jennifer Codding

Thanks to a recent change in legislation, sellers of property in Florida may benefit from fewer closing delays caused by the pre-closing discovery of open and expired building permits.

Under new legislative amendments, the turnaround time for clearing old, expired permits is significantly shortened due to more owner-friendly permitting laws. For example, rather than hiring a contractor, an owner may now act as an “owner-builder” to finish out incomplete work. Additional provisions provide that an owner may hire a new contractor to finish the work without that contractor being liable for the prior contractor’s work and that permits expired at least six years may be closed without delay.

Generally, permitting issues arise when the majority of work done in accordance with a building permit is completed, but no final inspection is called for, leaving the permit in an “open” status. Because most jurisdictions historically did not notify an owner that a permit remained open, owners were unaware of the problem until they sought to sell their property, and the closing agent discovered an open permit during a permit search.

Key Legislative Changes Impacting Open Permits in Real Estate Closings

Under the law as previously written, upon a closing agent’s discovery of an open permit, the process of clearing the permit could become onerous in cases where, for example, the original contractor was no longer in business or the building code had changed.

The following summarizes the key legislative changes that make the permit-clearing process less burdensome for Florida property owners and closing agents:

• Sec. 125.56(4)(d) F.S. provides that, prior to permit expiration, a local government may send written notice to the property owner and contractor of the upcoming expiration.
• Sec. 125.46(4)(e) F.S. provides a limitation on local government to charging for only one search fee for identifying building permits for a particular property.
• Sec. 553.79(16)(a) F.S. provides that local enforcement  agencies may not deny issuance of a building permit to, issue a notice of violation to, or fine, penalize, sanction or assess fees against an arm’s-length purchaser who acquires a property with an open or expired permit. 
• Sec. 553.79(15)(a) F.S. provides that an owner may retain the original contractor or a new contractor, but that any new contractor will not be liable for defective work of the original contractor. Alternatively, the provision provides that an owner may assume the role of owner-builder, in accordance with Sec. 489.103(7) F.S. and 489.503(6) F.S., and be exempted from hiring a contractor.
• Sec. 553.79(15)(b) provides that if a permit is expired and its requirements are substantially completed, the permit may be closed without the need for a new permit and any work necessary to close the permit may be done according to the building code in effect at the time of permitting.
• Sec. 553.79(15)(c) provides that as long as there are no apparent safety hazards, a local enforcement agency may close a permit six years after its issuance.

The application of these provisions should dramatically reduce the time, labor, and costs associated with addressing stale open permits, getting your closing to the table without delay.

The above is intended to inform firm clients and friends about recent developments in the law, including analysis of statutes and new case decisions. This update should not be construed as legal advice or a legal opinion, and readers should not act upon the information contained herein without seeking the advice of legal counsel.