Many think of due diligence as a good practice which is applicable primarily to Purchasers. However, Sellers of apartments, single-family home and commercial properties also need to be aware of the importance of early due diligence which can avoid significant issues at a later stage of the transaction.

For example, it is prudent, as Seller’s attorney, to immediately determine whether Seller’s title has old open permits which were never closed. Open permits are an increasing concern to Purchaser and their lenders.

The process of closing an open permit often involves tracking down the original contractor, which is not always a simple matter if much time has elapsed. If the work was completed, the contractor would need to complete and file certain forms which so state but that is not the end of the process. Inspectors for the local authority then need to inspect the work and confirm that it has been completed. This is not always a simple matter. There is at least one jurisdiction in the East End of Lond Island where inspections are “months” behind. In addition, if the inspector is then pressured to complete his or her inspection, there is always the risk that they will, upon their inspection, find a new problem, particularly, as is the case from time to time, when a Seller dismantled some safeguard that was installed in order to pass a prior inspection.

If the work which is the subject of the open permit has not been completed, there may be a mechanism, to classify the work as never having been commenced and to have the open permit withdrawn.

In either event, open permits are an often overlooked area of due diligence that a Seller’s attorney should ask his client about at the outset and, if there are potential issues, immediately commence the process to close the permits and prevent a late-breaking Closing issue which can be time-consuming and costly.