Old permits bring new headaches for NYC agents, sellers
In November, New York City agent Mike Fabbri was fed up with an expensive, deal-stalling problem.
Over the past 18 months, six of his pending transactions had been held up thanks to open permits for past renovation work filed with the Department of Buildings.
Home renovations typically require permits — and once the work is done, those permits must be formally closed out. But when that step gets missed, the open permit can resurface late in the sales process, often in a title report, and bring a deal to a standstill as neither side wants to absorb the liability. Closing the permit could mean hiring architects, electricians and inspectors and filing fresh paperwork with the DOB, which can cost thousands of dollars.
Fabbri had run into this issue this many times that he’d decided to add an agent who specializes in closing these permits to his team.
“One deal I did this summer, we had to agree to put a certain amount in escrow for them to close,” Fabbri said. “The permit is still not closed out, so money is just sitting there.”
Fabbri wasn’t sure why this had become more common in the last year, but he had a few theories, namely that Covid-era slowdowns and construction halts had disrupted the process.
Some sellers may have filed permits for work that ultimately didn’t get done due to a law passed in the spring of 2020 banning non-essential construction.
But that explanation didn’t account for every situation he’d encountered. Some of the permits dated back to previous owners, not the sellers he was representing.
Issues with open permits have “definitely picked up, but they’ve always been out there,” said Shaun Pappas, a real estate attorney with Starr Associates. “As a sellers’ lawyer, I usually push back on it, and [the hurdle] goes away. But buyers have been more adamant about it recently.”
There are no easy solutions to dealing with open permits, Pappas said, especially because they often require convincing plumbers, electricians or other professionals to sign off on work they didn’t complete themselves. But “it’s rare that this becomes an issue that we can’t work around.”
He added that for buyers and sellers, it usually means one side has to absorb a risk, one that lenders and title companies also have to adjust to.
“One of my clients sold a house and didn’t realize the electrical work permit wasn’t closed and had to open up a wall to fix an electrical socket,” said Compass’ Tali Berzak, who added that the process cost the seller about $25,000.
Berzak said that one reason the problem might be coming up more often is because lenders are more scrupulous in their evaluations of prospective borrowers.
Adam Maiser, who Fabbri added to his team, pointed to the DOB’s transition to its new records platform, DOB Now, a process that began in 2016 and has since mostly concluded. Permit records have been publicly available online since the early 2000s, first through the DOB’s legacy system and later through DOB Now. But the transition wasn’t immediate: permits were migrated in batches, leaving gaps where some records didn’t immediately appear in the new system. As a result, title companies may have checked one database but not the other, missing open permits during an earlier sale, only for them to surface years later when the property was back on the market.
There doesn’t appear to be a short answer for why some agents might be running into open permits more often, and it’s likely a combination of Covid-era disruptions, tougher lender scrutiny and long-buried paperwork.
https://therealdeal.com/new-york/2026/01/24/old-permits-bring-new headaches-for-nyc-agents-sellers/