Toronto’s housing market is as diverse as its people: ranging in price, size, and location. I pick a Toronto listing or trend to focus on each week and review it with a professional's eye. What makes a house a great pick - and what makes it a pass?
WHAT DOES BUILDING PERMIT STATUS MEAN TO YOU?
This week we’re going to talk in a little more detail about a subject that I’ve touched on briefly in some of my previous posts: building permits. Some people have an idea as to what a building permit is, but most do not understand it’s true purpose or functionality in relation to buying a home.
WHAT IS A BUILDING PERMIT
Let’s start off with the basics – what exactly is a building permit?
Building permits are generally issued by municipalities; according to the Toronto government website, a building permit is:
“[…] your formal permission to begin the construction, demolition, addition or renovation on your property.
As part of the building permit process, Toronto Building staff must review your plans to ensure they comply with the Ontario Building Code, local Zoning Bylaws, and other Applicable Law.
Building permits regulate the type of construction allowed in a community and ensure that minimum building standards are met. The permit process protects the owner’s interests, the community, and helps to ensure that any new construction is appropriate and safe.”
The permit process can be lengthy and complicated as a city inspector will need to complete an assessment of the work done on the home before issuing a “pass”. The permit process has three main stages: open, inspection, and closed - what we are looking for on a potential property is that building permits have been taken out and all are in the final “closed” stage.
WHY IS IT IMPORTANT
It’s important to look for building permits when buying a home that has had work done to it as it is a sort of peace of mind in knowing that the construction has been completed up to government standards. If the home doesn’t have permits you can always have a home inspector check for inconsistencies, but one thing to remember would be that it is a visual inspection only – meaning it’s possible there could be hidden issues. The difference between having an inspector for the city check the construction and a third-party home inspector would be the timing in when they are seeing the home. The government home inspector checks the construction at various stages – so they get a first-hand view at all the work that is being done, not just the finished product. Another problem could be that changes could have been made to the property that are against codes or bylaws and for which you are now responsible. It's important to keep in mind that not all renovations are significant enough to need permits - comestic changes and repairs to existing structures generally do not need permits.
A common example of when we could see building permits becoming an issue is when an older home is made to be open concept. If the construction calls for removing load bearing walls then certain measures need to be taken in order to maintain the structural integrity of the home. It can be difficult to tell once all of the drywall has been put up if the structure has been reinforced or not – this is when it would be prudent to check for building permits to ensure the construction has been completed up to code.
This is not to say that homes built without building permits are inherently bad or have poor construction – it’s just to say that because you cannot see everything that has been done you could be taking a risk in the quality of the construction.
OPEN BUILDING PERMITS
Buying a home with an open building permit, in my opinion, can be just as risky as buying a home with no building permits. Why? Because they need to be inspected and closed to verify the work was done correctly – just because they’re taken out from the city doesn’t necessarily mean the person taking it out has passed the inspections needed to close it. There are certainly varying degrees of risk when it comes to the type of building permit that is open: an open building permit for the demolition of a free-standing garage in the backyard is much different than one for the construction of a second story addition on the home.
One thing prospective home owners may not know is that if you buy a home with an open building permit, you inherit that permit in the sense that it now becomes your responsibility to close and as mentioned before you may find yourself falling afoul of codes and bylaws. If the work wasn’t done properly closing the permit(s) could be a costly process for you.
HOW TO PROTECT YOURSELF
As mentioned previously, just because a home has no building permits or has an open building permit doesn’t mean that the work was done wrong – but it’s good to educate yourself. You can research for building permits on a property by contacting the city or using a website like ours, Realosophy.com (Note that you'll need access to Realosophy PRO, the premium, clients only version of our website and that data is only available for properties in the City of Toronto at present).
If you find open building permits on a home, don’t let that completely sway your decision to buy it - there are still ways to protect yourself. Your agent can put a clause into the Agreement of Purchase and sale stating that the seller represents and warrants all building permits taken out on the home will be closed out prior to closing or you might want to factor in the potential cost of inheriting this risk into your purchase price. Having an experienced agent behind you throughout this process will help you navigate these "grey areas" and protect yourself and your investment with more confidence.
Nicole Harrington is a Sales Representative with Realosophy in Toronto. She specializes in using data and analytics to help her clients make smarter real estate decisions, concentrating on Toronto and the GTA, and hosts her own website: SheSellsToronto.com. Email Nicole