Certificates of Occupancy

All residential premises (except individual co-operative apartments), require a Certificate of Occupancy (referred to herein as a c/o). A c/o is issued by the local building department and literally certifies that the premises are fit to be occupied. A c/o is issued when a house (or condominium) is built, and has passed a final inspection by the building department. You cannot legally occupy a house if a c/o is not in place.

In order to build a house, an application is made to the building department in the municipality where the property is located. The application requires the payment of a filing fee and the filing of architect's plans for the proposed building. The plans are reviewed by a plan examiner, and if approved, a building permit is issued. The building inspector will make inspections of the house in various stages of construction, to insure that it is built in conformity with the plans submitted. After the final inspection is made, a c/o will be issued and will remain on file indefinitely with the building department. (An additional inspection is made by electrical inspectors and is also required to be submitted before the c/o will be issued).

When you purchase new construction, no closing can be scheduled until the c/o is issued. (In some jurisdictions, temporary c/o' s are issued pending a final inspection. An escrow is held after the closing until a final c/o is issued). In fact, the issuance of a c/o is the trigger for the setting of a closing in new construction.

But the real problems arise when changes, alterations and/or additions are made to existing homes. Many changes, (particularly those deemed to be "structural"), require additional certificates of occupancy or certificates of completion. Many homeowners make changes to their home without filing for a permit and obtaining a c/o, under the mistaken belief that this will avoid an increased assessment for real estate taxes. The assessment department and the building department are separate entities, and the assessors routinely travel their jurisdictions, and note and assess changes to homes, regardless of whether c/o's have been issued. Whether or not a particular change to a home requires a certificate depends on the jurisdiction, however more and more building departments are requiring c/o's for just about everything.

A properly drawn real estate contract will include a representation that the seller will deliver to the purchaser at closing, a c/o for the premises as they presently exist. This means that it is the seller's responsibility to obtain c/o's for the house and all of the changes made to it that require them. (Exceptions are sometimes made for removable items such as above ground pools, fences, sheds and decks). If c/o's were obtained when the changes were made, the seller doesn't need to do anything more, because a title search will show that the proper certificates are on file with the building department. If c/o's were not obtained, the seller needs to file an application to "maintain" the change (as opposed to an application to build it). Sometimes a fine is imposed because the premises are in violation of the building departments rules.

You shouldn't agree to purchase a house that does not have all of the required certificates in place. Here's why:

You may be purchasing premises with unsafe structures that have not been built in accordance with building department requirements; and
You may be purchasing premises with illegal apartments, additions, and so on, that violate setback and other restrictions imposed by the building department and other regulations, and may have to be removed; and
Your lender is not likely to overlook a missing certificate even if you will. If the lender refuses to close until the situation is corrected, a delay or cancellation of your transaction may be the result; and
You may be inheriting someone else's violation, and making it yours.
When inspecting your prospective home with an engineer, ask him/her to point out which items may not be original to the home and may require c/o's. Ask the seller or realtor whether the c/o's are in place so that this issue can be identified and addressed early in a transaction. If you are unsure of whether a certificate is required, call the local building department and ask. You may inquire without disclosing the address of the property. You may also visit the building department and look at all of the items on file for a particular property.