Buying a House With Open Building Permits or Unfinished Work in Ontario

You like the house, but then you learn the finished basement was built without a permit, an addition has a permit that was never closed, or the renovations look unfinished. You want to know who carries the risk and whether to walk away.

This article explains how to check permit status, how conditions in your offer can help, and what to ask a lawyer. It does not decide the question for you, because the answer depends on the property, the work and the contract.

Why permits matter to a buyer

In Ontario, a building permit is required before most construction, additions, renovations and changes of use. Permits exist so a municipality can check that work meets building rules. Work that was done without a permit, or a permit that was opened and never closed, leaves a question mark over whether the work was inspected.

RECO's buyer checklist tells buyers to find out whether proper permits were obtained for any renovations. That is practical advice: the cost and effort of dealing with a problem can fall on whoever owns the home once the sale closes, so it is better to learn about it first.

How to find out what permits exist

The municipal building department can confirm what permits exist for a property. Your lawyer or real estate representative can often help you ask for this information. Compare what the municipality has on record with what you can see in the home.

• Ask the seller which renovations, additions or finished spaces were done and when.
• Ask who did the work and whether a permit was taken out.
• Contact the municipal building department about permits for the address.
• Compare the permit records with the actual rooms, such as a basement apartment, addition or deck.
• Have an inspector or contractor look at unfinished work and estimate completion costs.
• Ask your lender and insurer whether the work affects them.

Using conditions in your offer

A condition lets you check something before the deal becomes firm. Conditions such as a satisfactory home inspection must be waived or performed by the agreed time before the deal becomes binding, and they must be used in good faith. If a condition is not met, depending on how it is worded, the buyer may terminate or the contract may end automatically, with the deposit returned.

Once all conditions are waived, the agreement is firm and binding. If permit problems turn up and you still want the home, speak with a lawyer before you waive anything. They can tell you whether it makes sense to negotiate a lower price, a seller commitment to fix the issue, or an extension of the condition period.

Do not hold back your deposit while you decide. Paying a deposit late or withholding it can itself breach the agreement, and in RECO's example a buyer who held back a deposit until after an inspection may have given the seller grounds to terminate and seek damages.

Who bears the risk?

There is no single answer. It depends on what your agreement says about the seller's promises, what the seller disclosed, what you knew, and whether you waived your conditions. A seller's promise to deal with permits before closing should be in writing in the agreement. A verbal assurance can be hard to rely on later.

If you have already closed and then discover the problem, keep records and speak with a lawyer promptly, because time limits can apply to legal claims.

What to do next

Decide what matters most: price, safety, timing or the ability to walk away. Then bring your documents to a lawyer, who can explain your choices and the risks of each.

• Gather the listing, any seller disclosure, your offer and the permit information.
• Get a written estimate for what it would take to fix or finish the work.
• Ask for any agreed fix to be written into the agreement or an amendment before you waive conditions.

Frequently asked questions