Construction Permits: Why You Need One & How the Process Works

Getting a construction permit that's required to build a commercial property can be a frustrating process. Here's what you need to know.

Chris Peters
Construction Permits: Why You Need One & How the Process Works
Share this:

In one of our latest blogs, we discussed the entitlement process, why investors might need to have a specific property rezoned, and what the process is to make those zoning changes [read more about the process in The Entitlement Process: What Does it Entail?]. Once a property has been rezoned, the next step in completing the business plan is to obtain construction permits. In this blog, we’ll discuss why permits are needed and what the typical process is to obtain those permits. Each state, county, city, etc. is different, however, we will outline the typical requirements.

Why You Need a Permit

A municipality typically issues permits to help ensure the planned construction work complies with certain rules, regulations, and codes and meets minimum standards for safety in order to protect the health, safety, and welfare of all those involved with the project. Permits are typically required when there is any construction involved, including the demolition and/or repair of an existing building and the construction of a new building. Permits can also impact insurance coverage as an insurance carrier will only insure a property if it meets certain codes. Failure to obtain permits or comply with a municipality’s rules and regulations can result in delays, fines, and even potential legal action.

The Process of Obtaining a Permit

The first step in obtaining a permit is to submit an application and plans to the municipality.  There are often application fees and costs associated with obtaining new permits which can range from hundreds to thousands of dollars. The plans typically involve detailed engineering reports (soil, structural, electrical, etc.)  architectural drawings and renderings, construction budgets, etc. The more complex the project, the more detailed the plans that need to be submitted and reviewed.

After an application and plans have been submitted, the investor will likely need to meet with the department that heads up the permitting process. This meeting will often involve an overview presentation of the project and detailed questions about each step of the process. Depending on how complex the project is, there might be legal counsel, architects, engineers, general contractors, project consultants, and others involved that can answer detailed questions as they pertain to their expertise within the project. For example, an architect may answer questions about why the building has a certain layout and an engineer might answer questions about the soil composition or how deep footholds will need to be in order to support the entire building. An attorney may answer questions about the legal structure of the project and all the parties involved. Again, the more complex the project, the more groups involved.

Once the permits have been received, the project can commence. There will need to be inspections along the way, typically after certain milestones have been completed such as foundational work, rough plumbing and electric, insulation, and HVAC installations.

The permit process can take as little as a few weeks or as long as several months (or even years if the project is complex and there are delays). Permits also have a finite life so the project will need to be completed and inspected prior to the permit’s expiration date.

Investors that are interested in a renovation or new construction project should bring on partners that have experience with the permitting process as it can be an extremely detailed process that requires a lot of knowledge and hard work.

Black StackSource logo

StackSource is a tech-enabled commercial real estate loan platform. We connect investors who are developing or acquiring commercial properties with financing options like banks, insurance companies, and debt funds through a transparent online process. We’re taking the best of commercial mortgage brokerage and updating it for the 21st century. Learn more at StackSource.com.

Sign up with your email address to receive real estate finance news, hot lender alerts, and updates from StackSource.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.