Building Permits: An Overview of Processes and Practices in Ontario

Building permits are a lynchpin of construction and development across Canada. Put simply, the issuance or refusal of a building permit can have serious implications for a project. Any unplanned delay in permit issuance creates additional project risks, including increased financing and labour and material costs. The ability to obtain a permit, and the corresponding decision to issue a permit, thus carry significant weight for a project.

As permitting processes and practices vary between provinces and municipalities, this article focuses on Ontario.

In Ontario, the responsibility for issuing building permits (hereinafter, “permits”) lays with each municipality’s Chief Building Official (“CBO”) by virtue of provincial legislation: the Building Code Act, 1992 (the “Act”) and the Ontario Building Code (“OBC”).

The Act governs when a CBO can approve or refuse a full, partial or conditional permit. The CBO must issue a permit where certain enumerated criteria under the Act have been met, including that the proposed construction satisfies all “applicable law.” A permit can be issued in phases to reflect stages of construction (e.g., shoring, excavation, foundation, structural) or as a full permit.

The OBC sets out a non-exhaustive list of what constitutes “applicable law” (e.g., certain provisions under the Planning Act respecting control of land use and subdivision). The courts have further interpreted this list; for instance, while site plan approvals constitute “applicable law” subdivision agreements do not. Satisfaction of all “applicable law” is often not a straightforward or speedy endeavour, and typically involves engaging a host of other authorities and processes. Indeed, one of the main questions a CBO faces in exercising their authority to issue permits is whether all “applicable law” has been satisfied. This can be difficult for the CBO and the courts to determine.

“Partial” (or “phased”) permitting (as distinct from conditional permitting) can be one means of proceeding with the project while concurrently advancing other required processes. For example, in the case of Vandenheede Farms Ltd. v. Norfolk (County), the applicant owned a property zoned for agricultural purposes and filed a rezoning application to permit a craft brewery. Vandenheede applied for a partial permit to construct building “shells” only, and advised the CBO that if their rezoning was denied, they would simply use the buildings for permitted uses. The CBO granted the partial permit. The neighbouring owners appealed the CBO’s decision, claiming it was in contravention of “applicable law” (namely, the existing zoning). The Court dismissed the appeal, concluding that it was entirely appropriate for the CBO to take into consideration “all other relevant circumstances” in granting the partial permit. While the rezoning application was a relevant consideration, it did not prevent the CBO’s exercise of their discretion. The applicant could comply with “applicable law” notwithstanding a possible refusal of its rezoning application.

The permitting process can therefore be a significant source of risk to a project in terms of time and money for all parties, if not managed adequately. In order to facilitate development and ensure bureaucracy does not unduly delay construction, the Act grants the CBO broad discretion to issue conditional permits.

A CBO may issue a conditional building permit (“CP”) for “any stage of construction” where it believes that “unreasonable delays in the construction would occur” if the CP was not granted. While not defined, compelling impacts to a project that may result in “unreasonable delay” include:

• financial (e.g., there will be substantial increases in development charges, and a project is otherwise ready to commence);

• housing crisis (e.g., the project will significantly contribute to the housing stock); and • nature of outstanding approvals (e.g., final approvals are not in the applicant’s control).

An applicant must also satisfy the CBO of their compliance with zoning by-laws and enter into a CP agreement with the municipality. A typical CP agreement will require the applicant to assume all risk in commencing construction, agree to obtain all necessary approvals as would normally be required for an unconditional permit and assume the risk of restoring the site to its original condition if such approvals are not obtained. An applicant should not enter into such agreement lightly – for example, the cost to restore a site to its original condition can be substantial.

The CBO can revoke a CP where the applicant has not complied with the terms of the CP agreement, as well as other specified circumstances (for example, if the permit was issued on mistaken, false or incorrect information, or in error; or if construction or demolition has not seriously commenced within a certain time).

While it may appear that the applicant carries all risk associated with a CP, the decision to issue a CP is not without financial risk or administrative burden to the municipality. The negotiation and enforcement of a CP agreement, particularly if site restoration is required, is costly to the municipality. Challenges to a CBO’s decision can also result in costly and lengthy legal proceedings. It is therefore understandable that CBOs can sometimes be reticent to use their authority to issue CPs or may choose to restrict their exercise of authority (e.g., issue belowgrade CPs only).

As part of good project planning, the authors recommend establishing an early relationship and good rapport with the relevant CBO to understand their approach to the issuance of permits and to work collaboratively toward permit issuance.

The CBO’s decision to issue, refuse or revoke a permit can be a cause of dispute between various parties with an interest in the project, including the applicant, neighbouring landowners or occupants and interested environmental groups.

The Act provides for an expeditious resolution process for certain disputes through the Building Code Commission, most notably where a CBO has failed to make the decision to issue a permit or provide reasons for refusal, within the time period prescribed in the Act. In addition, various parties have a right to appeal a CBO’s decision to the courts. For instance, neighbours who feel they would be aggrieved by a permit could bring an appeal alleging that the permit does not comply with the Act (see, for example, Vandenheede Farms).

The notable exception to the foregoing is that there is no right to challenge a CBO’s decision not to exercise their discretionary power to issue a CP.

In Ontario, unless an applicant has satisfied all “applicable law” in respect to the project’s construction, there will be some uncertainty regarding the issuance of permits, requirements, timing and compliance. Issuance of a permit where all “applicable law” has not been met relies on the CBO’s discretion and a convincing case that potential “unreasonable delay” will outweigh the risks to and efforts required from the municipality.