Skip to Main Content

Building permit

Building permit is a money term you need to understand. Here’s what it means.

What is a building permit?

A building permit is a document of authorization issued by a local government when an individual or company wants to build a new structure or begin construction on an existing structure for expansion or repair. Moving, demolishing or converting a structure also may require a building permit.

Deeper definition

When an individual or company files an application for a building permit, the corresponding local government agency reviews the application to make sure the proposed changes comply with all local zoning laws, land use standards and construction ordinances. While each municipality has its own unique set of laws, the government agency typically will ensure the proposed construction does not cause problems with:

  • Structural integrity.
  • Fire resistance.
  • Proper exiting.
  • Health concerns.
  • Water and sewer lines.
  • Extension of electrical service.
  • Industrial waste.

The applicant also may need to obtain permits to cover other aspects of the construction, including electrical, mechanical, plumbing, concrete or development.

Building permit example

Once again, the reasons for needing a building permit vary based on the local zoning and construction laws where the structure will be built. Typical situations when a building permit is required include:

  • Constructing a new home or business on a vacant lot.
  • Building a garage, barn, large shed or other similar structure on a residential lot where a home already exists.
  • Adding a large swimming pool (usually over 5,000 gallons) to a residential lot.
  • Enclosing a property in a fence over six feet high.
  • Expanding an existing home or business.
  • Demolishing an existing home or business.
  • Moving a fully constructed home, business or other large building to a vacant lot.
  • Adding large commercial or industrial signs to a property.
  • Adding plumbing or electricity to a home or business.
  • Installing a fireplace in a home or business.
  • Adding a deck or porch to a home.
  • Adding or removing walls from a home or business.
  • Finishing a basement.
  • Large excavation projects.
  • Adding new windows to a home or business when it is necessary to change the size of the frames.

Are you thinking of building, expanding, or remodeling a home? Learn more about how construction loans work.

More From Bankrate