Building permit vs occupancy permit: what's the difference?

When you look at a Section 32 for a property that's had building work done in the past decade, you'll likely see references to building permits and occupancy permits (or certificates of final inspection). Understanding the difference between these two documents, and what it means when one is present and the other isn't, is one of the more practically useful things a buyer can know.

This is one piece of our complete Section 32 guide, which walks through the whole Vendor's Statement in one place.

The building permit: approval before work starts

A building permit is issued before any significant building work begins. In Victoria, you need a building permit for most structural work, extensions, new buildings, demolitions, and many significant renovations. The permit is issued by a registered building surveyor (either a private building surveyor or a council building surveyor).

The building permit confirms that the proposed work has been reviewed and approved. It says, in effect: the plans for this work comply with the Building Act 1993 and the National Construction Code, and this work is approved to proceed.

Without a building permit, the work cannot lawfully start. A building permit isn't a rubber stamp. The surveyor reviews the plans and specifications and confirms they meet the relevant standards.

The occupancy permit: sign-off after work is complete

An occupancy permit (or certificate of final inspection, depending on the type of work) is issued after the building work has been completed. It's issued by the same registered building surveyor who issued the building permit.

The occupancy permit confirms that the work was actually completed in accordance with the approved plans and the Building Code. It says: this building or structure is safe to occupy and was built as approved.

For occupied dwellings, a certificate of final inspection may be issued instead of an occupancy permit in some circumstances. The distinction depends on the type of work, but the principle is the same: it's the sign-off that the completed work meets the required standard.

Why you need both, not just one

The building permit shows that the work was approved to proceed. The occupancy permit shows that the work was completed properly and signed off.

If a property has a building permit on record but no occupancy permit, it means the work may never have been formally completed or inspected. The surveyor approved the plans but never issued a final certificate. This could mean:

• The work was started but not finished
• The work was finished but was never inspected or didn't pass inspection
• The permit was issued but the owner never followed through with the required inspections

This is sometimes described as work having an "open permit," meaning the permit was issued but the sign-off was never obtained.

Unpermitted building work: a different problem

Unpermitted work is building work that was done without a building permit at all. This is separate from the open permit issue above, and in some ways more serious.

Common examples include backyard decks, pergolas, garages, carports, granny flats, and room conversions done informally without going through the proper approval process.

The presence of unpermitted work creates several potential issues:

Insurance: Some insurers may exclude or limit coverage for damage to unpermitted structures or work.

Lending: Lenders sometimes have concerns about properties with significant unpermitted work, particularly if it affects the liveable area or structural integrity.

Future sale: When you come to sell the property, the same issues you're dealing with now will need to be disclosed to your buyer.

Safety: Unpermitted work hasn't been checked for compliance with building standards. There's no guarantee it was done properly.

Retrospective approval: It may be possible to obtain retrospective approval (sometimes called a building over or a permit for existing work), but this involves getting a building surveyor to inspect the existing work, which may require changes to bring it up to standard.

What the Section 32 discloses

Under Victorian law, vendors are required to disclose in the Section 32 any building permits issued in the last seven years. The disclosure should include the permit, the nature of the work, and whether an occupancy permit or certificate of final inspection was issued.

When reviewing a Section 32, look for:

• Any building permits listed
• Whether each permit has a corresponding occupancy permit or certificate of final inspection
• Any permits that are listed without a final certificate

If you see a permit without a final certificate, ask your conveyancer and consider asking the agent why the certificate wasn't obtained.

What a building inspection can reveal

A pre-purchase building inspection, conducted by a qualified building inspector, may flag building work that appears to have been done without permits or without proper sign-off. Inspectors can identify work that doesn't match standard building practice and note it in their report.

However, a building inspection is a visual assessment. The inspector can note that work appears potentially unpermitted but can't confirm permit status from the physical inspection alone. Permit records are held by the building surveyor and, in some cases, the council.

For a thorough due diligence on a property with extensive or unusual building work, you may want to search council records for permits as well as relying on what's disclosed in the Section 32.

When open permits become your problem

If you buy a property with an open building permit (one issued but never completed with a final certificate), you inherit the obligation. The building surveyor still has an open matter on their files, and in some cases they or the council may eventually follow up.

More practically, if you want to do additional work on the property in the future, the existing open permit may complicate the process.

Getting the final certificate on outstanding permits can sometimes be done retrospectively, but it requires the work to be inspected and may require remediation if it doesn't fully comply with the approved plans.

Practical approach as a buyer

Before you commit to buying a property with disclosed permits:

1. Check whether each permit has a corresponding final certificate or occupancy permit.
2. If any permits are open (no final certificate), ask your conveyancer to investigate further.
3. Have a building inspection done that specifically looks at any major work.
4. If the work appears significant and unpermitted, consider getting a more detailed assessment or getting advice on the cost of regularising the situation.
5. Factor the risk and any potential costs into your purchase decision and price. Open permits and unpermitted work are among the contract red flags worth taking seriously.

This isn't about walking away from any property with complex permit history. Many properties have minor outstanding matters that can be resolved. But going in with clear information means no surprises after you've settled.

Sources

• Building Act 1993 (Vic): the law requiring building permits and occupancy permits for building work in Victoria, issued by a registered building surveyor.
• Sale of Land Act 1962 (Vic), section 32: the Vendor's Statement requirement to disclose building permits issued in the previous seven years.

Sources verified 25 July 2026.