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Coastal Engineering Company of Orleans Cape Cod

Sellers’ Due Diligence: The Importance of Permit Closeout

Published May 03, 2018 by John A. Bologna,
Home Sellers Workshop

Today’s buyers are well informed about the real estate transfer process. They are aware of the time and costs required to make a property turn-key, so the sellers need to be prepared to negotiate accordingly. While most sellers undertake some quick projects to spruce up the house, they typically don’t review the previously obtained permit applications until late in the sale process. However, because outstanding permits issued to the property can delay closing and even result in deals falling through, sellers are wise to make the review a priority.

Below is an overview of typical permits and certifications that require formal closeout:

1. Building Permit/Certificate of Occupancy

Upon completion of a project requiring a building permit (any new construction, additions, or significant improvements such as finishing a basement, adding a deck/patio, etc.), a Certificate of Occupancy indicating that the work has been completed in accordance with the State Building Code is required by the local officials. This can include sign offs from the Building, Plumbing, and Electrical Inspectors, the Fire Department, and others.

2. Conservation Commission/Certificate of Compliance

Any work within wetlands jurisdiction requires filing a Notice of Intent for review by the local Conservation Commission. Approved projects receive Orders of Conditions that get recorded at the Registry of Deeds. This puts an encumbrance on the deed; in order to lift it, a Certificate of Compliance certifying the fact that the work was performed in accordance with the Order of Conditions is required.

3. Board of Health/Certificate of Compliance

Any subsurface sewage disposal system (septic) installation or repair requires a sewage works permit from the local Board of Health. Upon completion of the work, a Certificate of Compliance is required. This involves an inspection by a design professional and the Board of Health agent, along with preparation of an as-built plan.

4. Zoning and Planning/Special Permit

In cases where a Special Permit is required for relief from local zoning or planning regulations, the conditions of such Permit are issued and recorded against the deed. Conditions of the Special Permit will carry over in the title transfer, so any work that has been performed should be verified for compliance.

5. Flood Insurance/Elevation Certificate

If the property is located in a designated flood zone, an Elevation Certificate is required for any new construction and to obtain flood insurance for the property.

6. Department of Environmental Protection (DEP)/Chapter 91 License

Shorefront improvements such as bulkheads, revetments, docks, piers, boat ramps, etc. require a DEP Chapter 91 License if any part of construction is located in the intertidal zone (the zone between the Historic High Water and the Mean Low Water lines). Upon completion, a Certificate of Compliance must be issued.

Scenarios describing various permitting situations that may cause the sale of the property to be delayed - and suggestions to resolve these situations:

1. Permit never obtained for the work: Situation may either be remedied by an “after the fact” permit or, in worse case, may require removal of the unpermitted work.

2. Permits obtained, but never closed out: If the work is in compliance to the existing codes, the building official may choose to issue a Certificate of Compliance; however, if the codes have changed, the work may need to be brought in compliance with the latest codes.

3. Permits obtained, but additional work was done outside the originally approved limit: The work is technically in violation and either has to be removed or else a new permit application is required. Environmental permits are typically a lengthy process and can take several months to resolve. Also, if the building codes have changed, new design plans and compliance certifications may be required.

In Massachusetts, permits obtained to perform building and site improvements require formal closeout. Once the initial permit is received and the work is done, it’s easy for property owners to forget about this final step. Inevitably, skipping the closeout will require the property owner to go back to the permitting agency, which may or may not give their sign off depending on the type of permit and the modifications actually made. Therefore, it is in the owner’s best interest to review and close out any permit applications and ensure that any special conditions are met.

This article was originally published in Cape and Plymouth Business Magazine.

Looking to resolve a permitting issue?

In business for over 40 years, we understand the intricacies of the federal, state, and local regulations that affect our clients’ projects, and have developed cooperative working relationships with the various regulatory agencies. Contact us if to see how we can be of service to you!