How to Check Permits, Code Violations and Rental Registration Before Buying an Apartment Building
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Before you close on an apartment building, check the city and county records for five things: open or expired building permits, open code enforcement cases, the building's rental registration or license (and any required rental inspections), fire and life safety inspections, and unpaid fines, utility bills or special assessments that can become liens. These records are usually public, many are searchable online by address or parcel number, and a lender's zoning report covers some of them. Anything you find before closing can be fixed by the seller, credited, or priced into your offer. Anything you find after becomes the deal company's cost and delay.
This checklist fits into your due diligence alongside the property inspections. For zoning itself, see legal nonconforming zoning.
1. Building permits
What to look for: permits that are open, expired without a final inspection, or missing for work you can see (a converted unit, a new deck, a replaced boiler).
Why it matters: an open permit is work the city never signed off on. Cities often will not issue new permits on a property with open ones, which can stall your renovation. Unpermitted work may have to be opened up and inspected, or redone.
How: search the building department's online portal by address and parcel. Ask the seller for permit records and final inspection sign-offs. Compare to what the property condition report found.
2. Code enforcement cases
What to look for: open cases, notices of violation, orders to repair, and the history of complaints.
Why it matters: open cases can carry daily fines and follow the property to a new owner. A pattern of complaints (pests, heat, water leaks) tells you about deferred maintenance and resident relations.
How: search the code enforcement portal or request records from the city. Many cities post an online map of open cases. Ask the seller for every notice received in the last few years.
3. Rental registration and licensing
What to look for: whether the city requires apartments to be registered or licensed, whether this building is current, and whether the city runs periodic rental inspections.
Why it matters: some cities require registration before you can collect rent or file an eviction, charge per-unit fees, and inspect units on a cycle. A building that is not registered, or is behind on inspections, can face fines or a hold on renting units until it complies. The registration usually has to be updated after a sale.
How: check the city's housing or code department website for a rental registration program. Ask the seller for the current registration, inspection reports and any failed items, and put the transfer of registration on your first 90 days list.
4. Fire and life safety
What to look for: fire marshal inspection reports, fire alarm and sprinkler inspection and testing records, elevator certificates, and any open fire code violations.
Why it matters: fire code items (alarm systems, sprinkler service, fire separations, egress) are often expensive and urgent. Insurers and lenders ask about them.
How: request the last fire inspection report from the fire department and the seller, and the service contracts and test reports for alarm, sprinkler and elevator systems.
5. Fines, utilities and special assessments
What to look for: unpaid code fines, water and sewer bills, trash or stormwater fees, weed or demolition charges, and special assessments for sidewalks, streets or other improvements.
Why it matters: in many places these can become liens on the property. Some are recorded and show up on a title search; others are not recorded in the usual way or attach later. A buyer can inherit them.
How: ask the title company which municipal searches it orders and what its policy excludes. Request a municipal lien search or payoff letters where available. Get final utility readings and transfer the accounts at closing. See closing day funds flow.
Put it in the contract
- Require the seller to deliver permit records, code notices, registration and inspection reports early in due diligence.
- Require the seller to close out open permits and cure open violations before closing, or give a credit or escrow you are comfortable with.
- Make clear who pays fines and charges that relate to the time before closing.
- Keep your due diligence deadline after you receive the city's records, not before.
What should investors see?
Summarize what the record searches found and how each item was resolved (fixed, credited or budgeted). If anything remains open at closing, say so in the offering documents with the plan and the cost.
How DoorRaise fits in
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FAQ
Does title insurance cover code violations?
Generally not. Standard title policies exclude violations of laws and ordinances unless a notice was recorded. Check your policy's exclusions and ask about any available endorsements.
Can the seller close out permits after closing?
It is possible, but you lose leverage once you own the building. Prefer closing them before closing, or hold back money in escrow until they are done.
Does a lender check permits and violations?
Lenders usually order a zoning report that includes open violations and certificates of occupancy, but it may not cover everything on this list. Do your own searches.
How long do these searches take?
Online searches take minutes. Records requests and municipal lien searches can take days or weeks, so start them as soon as the contract is signed.
Next step: see how the purchase contract sets your deadlines in the LOI and earnest money.
Sources
- Fannie Mae Multifamily Guide, Section 301 (zoning and property compliance)
- Freddie Mac Multifamily Seller/Servicer Guide
This article is general information, not legal advice. Local rules vary widely. Talk to a local real estate attorney and your title company about your property. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.