Whether you’re selling a property, buying it, or building it brand new, you’re liable to run into the term “certificate of occupancy.” You might even have some knowledge that this certificate is important. But what exactly is it, and why do you need one?
Here, we’ll talk about everything you need to know about certificates of occupancy. We’ll discuss what they are, how to obtain one, and why you need it. Let’s get started!
What Is A Certificate Of Occupancy
A certificate of occupancy is an official government document that certifies that a building is safe for occupancy. It will include the owner’s name, the street address, and additional information about the property. This information includes:
-
The type of property. This verifies what type of use the property is legally zoned for. For example, it might be a residential property, commercial, industrial, retail, or some combination of the above. It’s important to note that the certificate is valid only for the intended use. So if the certificate of occupancy is for residential use only, you couldn’t use the building for commercial purposes.
-
Code verification. As part of the certification process, the property will be inspected to make sure it’s up to code. Without this inspection, a certificate of occupancy will not be issued.
-
Confirmation that the property is fit for occupancy. A building might be up to code, but still not fit for occupancy. The exact requirements will depend on your local regulations and the type of use the property is intended for.
[ Thinking about investing in real estate? Register to attend a FREE online real estate class and learn how to get started investing in real estate. ]
When Do You Need A Certificate Of Occupancy
Certificates of occupancy don’t need to be issued for every minor change to a property. For example, no certificate will be required if you’re painting the walls or replacing the bathroom fixtures. That said, there are certain circumstances where you’ll need to have one issued. These include:
-
New construction. When a building is first constructed, it will need to have a certificate of occupancy before it can be sold from the developer to the buyer.
-
The property is changing hands. This will differ from municipality to municipality. In some cases, there’s no need to have a certificate re-issued when the property changes hands. In other cases, it’s necessary for all property sales. In some, a certificate of occupancy must even be issued when a rental property has a change in tenancy.
-
You’ve performed a major renovation. A certificate of occupancy is typically required when you build an addition onto your house. Typically, you would need to get a building permit ahead of time, and a certificate of occupancy when the work is complete. If you’re rehabbing a condemned property, a certificate of occupancy will always be required. Without this certificate, you won’t be able to sell the property.
-
The property type has changed. Different types of property have different code and permitting requirements. For example, single-family homes, multi-family homes, and duplexes may all have different standards. If you’ve taken a single-family home and modified it into a five-unit apartment building, you’ll need to obtain a new certificate of occupancy. The same goes for changing zoning types, such as repurposing a commercial building for industrial use. You’ll also need a new certificate if you’re changing property classes. So even if you’re converting from one type of commercial use to another, you might still need a certificate of occupancy to reflect those changes.
Why Is A Certificate Of Occupancy Important?
To begin with, a certificate of occupancy is a legal requirement for many property transactions. For example, if you’ve renovated a house, you won’t be legally allowed to sell it without first obtaining a certificate of occupancy. The legal consequences can be particularly severe if you’re building new construction, and you could potentially be fined for every day the property is in use without a valid certificate.
But beyond the legal requirements, there are other good reasons to get a certificate of occupancy. Most importantly, it guarantees that your building is safe – or at least safe enough to pass a detailed inspection. So even if you’re not legally required to obtain a certificate in a given situation, it might be a good idea. It will give peace of mind to potential buyers, and potentially increase your sale price.
As a buyer, this is a smart thing to keep in mind. If the seller is unwilling to obtain a certificate of occupancy, that’s a sign that the home may not be as advertised.
Where Do You Get A Certificate Of Occupancy?
A certificate of occupancy will be issued by your local government. Because local governments use their own terms and have their own structures, you might have to do a little digging. In most cases, the certificate will be issued by your town, city, or county, through either the building department or the department of housing.
In fact, you have to request a certificate of occupancy before any work can be performed. In your request, you’ll have to describe the nature and scope of the work. Then, when the work is completed, an inspection can be performed, and provided there are no issues, your certificate can be issued.
How To Get A Certificate Of Occupancy
In order to obtain a certificate of occupancy, you’ll need to fill out an application, and pay a small fee. Once the work is complete, you’ll need to pass a series of inspections. Every locality has its own requirements, but depending on the nature of the work, this could include:
-
An electrical inspection
-
A plumbing inspection
-
A fire safety inspection
-
An overall building inspection
Keep in mind that different individuals may perform these inspections. If you need multiple inspections, they might not all happen at the same time.
What If You Do Not Pass Inspection?
If you don’t pass inspection, don’t panic. This is a normal part of the certification process. When you fail, you’ll be given a list of items that need to be altered or fixed. You’ll also be given a time frame in which to complete the repairs, typically 30, 60, or 90 days depending on the jurisdiction and the scope of work.
After you’ve performed all necessary repairs, you can have the property re-inspected. In most cases, you’ll have to pay an additional inspection fee. Assuming you’ve successfully resolved all the issues, you’ll receive your certificate. In the worst case, you may be given additional items to fix, and the process will repeat.
What Happens if You Don’t Get A Certificate Of Occupancy?
If you don’t obtain a certificate of occupancy, you could end up in legal hot water. Depending on your local regulations, your local government could fine you, or even sue you in court. In the worst case, you could be fined a certain amount for each day the property was occupied without a certificate. This can be expensive if you’ve been using the property for a while.
Summary
A certificate of occupancy is a legal requirement for many property changes and real estate transactions. It’s meant to ensure that the property is safe for its intended use. Thankfully, the process is routine and straightforward. As long as you’re in good communication with your building inspector, things should go smoothly.
Ready to start taking advantage of the current opportunities in the real estate market?
Click the banner below to take a 90-minute online training class and get started learning how to invest in today’s real estate market!
