Open Building Permits: The Hidden Risk When Buying an Ontario Home

Step 1: Understand why a permit stays open

A building permit’s normal life cycle is: the owner submits drawings → the municipality issues the permit → work is done → a final inspection passes → the permit is formally closed. The failure point is that last step. Plenty of owners finish a renovation, move in, and never book the closing inspection — so the permit sits open on the municipal record indefinitely.

According to the City of Toronto, property owners are “required to schedule a final inspection upon completion of their project to close the permit,” and unless the conditions on the permit’s face are met and the project passes inspection, the permit stays open.

The situations I see most often: a new backyard deck, a finished basement, a removed load-bearing wall, an HVAC swap, a bedroom addition — the drawings were approved, the work got done, and the final inspection just never happened. The trickier version: the work didn’t match the drawings, or the plan changed mid-project, so it can’t pass inspection and the permit drags on.

Step 2: Understand why this is the BUYER’s problem

The core logic is one sentence: the liability runs with the property. Once a deal closes, the Ontario conveyancing process migrates most physical and financial liabilities to the new owner, and under the principle of caveat emptor — buyer beware — the opportunity to demand repairs from the seller largely vanishes once the deal registers.

Here’s where it actually bites, ranked by what my clients hit:

• Financing. According to the Ontario Court of Appeal in EPRF Holdings v. Fergus Bloor Inc. (2024 ONCA 707), an open permit goes to the root of title and affects the marketability of, and ability to finance, the property. Lenders are reluctant to fund a home carrying an unclosed permit and unclear liability.
• Home insurance. Insurers frequently won’t cover unpermitted or uninspected work — especially anything touching electrical or structural safety.
• The municipality can make you fix it. The municipality can require inspection, corrective work, or even that concealed work be uncovered and redone to current code — and that bill lands on the current owner.
• Future resale. When you go to sell, the same issue snags your buyer. You’ve simply inherited a hot potato to pass down the line.

Step 3: Don’t forget electrical — ESA permits are a separate track

Many buyers (and some agents) watch only the municipal building permit and forget that electrical work runs through an entirely separate system — the Electrical Safety Authority (ESA). Swapping a panel, adding circuits, wiring a basement: each requires a filing (a “notification”) to ESA and, once complete, its own ESA final inspection.

According to ESA, once the electrical work has been reviewed and passed, ESA issues a Certificate of Acceptance to the person who filed the notification — and that certificate “proves your electrical work meets the Ontario Electrical Safety Code” and is “an important document for insurance purposes, resale, and peace of mind.” The flip side: if no Certificate of Acceptance exists, the electrical permit may still be open.

So checking for open permits means checking twice: once for the municipal building permit, once for the ESA electrical notification. I’ve seen a spotless building-permit record hiding an open ESA notification — the two tracks have to be searched separately.

Step 4: How to check — a two-track municipal + ESA search

Timing is everything: do this during the conditional period, before your inspection and financing conditions come off — not after you’ve signed. The moment you waive conditions, you hand over most of your leverage.

Municipal side (Toronto as the example): the City of Toronto provides an official Building Application Status tool to search permit status by address. According to the City of Toronto, that system holds permits that are “10 years old or less (from the date of application), and where the permit has been closed or canceled for no longer than one month,” with data updated “as of the previous business day.” For a fuller picture, you can request a Property Information Report, which sets out “active building permits, violations, work orders and the zoning designation” that may apply. (Municipalities outside Toronto have their own open-permit or building-records search — the process is similar: search by address.)

ESA side: you can request an ESA record for the address to see whether any electrical notification remains open.

Build this into your inspection condition and have your agent, inspector, and lawyer verify both tracks. The effort here is trivial compared with fixing it after closing.

Step 5: How to resolve it — close, adjust price, or hold back

Finding an open permit doesn’t mean walking away — it means resolving it in the contract. Here’s the priority order I give clients:

Option 1 (preferred): the seller closes all open permits before completion. The seller arranges the final inspection / ESA inspection, obtains the sign-off or Certificate of Acceptance, and formally closes the permit. This is the cleanest outcome — nothing left hanging on title.

Option 2: an APS condition to backstop it. The concept is a clause requiring the seller to close all open permits before completion; and if there isn’t time, a holdback — funds retained at closing and released to the seller only once the permit is closed — to keep the risk pinned down with money.

Option 3: a price reduction or adjusted terms so you handle the closing yourself after completion — only worth considering when you fully understand the scope and cost of the remediation, and the riskiest of the three.

A calibrated word on title insurance: it can sometimes provide coverage that lets a deal close — in Thomas v. Carreno, the seller couldn’t close the permit before completion but arranged a title insurance policy plus a holdback so the deal could proceed. But title insurance is not a cure-all: where an open permit has been disclosed, coverage may be limited, and it won’t make the work itself compliant. It’s a backstop, not a substitute for closing the permit. Which route to take, and exactly how the clause is worded, is a call for your real estate lawyer.