Certificate of Occupancy (What It Is And How It Works: Explained)

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What is a certificate of occupancy in simple terms?

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Let me explain to you what is a use and occupancy certificate and why it’s important!

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What Is A Certificate of Occupancy

A certificate of occupancy, also known as the use-and-occupancy certificate, is a legal document issued by a local zoning or building agency certifying that a real estate property complies with applicable building codes and is thereby suitable for occupancy.

If you are buying or selling a real estate property, or constructing a new one, you’ll need to know what a certificate of occupancy is as you are likely going to need one.

The reason that is the case is that mortgage lenders and most buyers will ask that you provide your local government’s confirmation that your property complies with various safety and building codes.

In addition to confirming that your property is suitable for occupancy, the certificate will also provide the real estate property’s asset classification such as whether it’s residential, commercial, industrial, or other.

There are different types of certificates of occupancy, such as:

• Residential Certificate of Occupancy
• Commercial Certificate of Occupancy

A residential certificate of occupancy is one that is issued for a residential property like a home, condo, multi-family residential building, or something similar.

A commercial certificate of occupancy is one that is issued in relation to commercial properties such as office spaces, commercial buildings, or other types of properties used for business.

Temporary Certificate of Occupancy

In certain jurisdictions, it may be possible to get a temporary certificate of occupancy.

Just like a standard certificate of occupancy, with a temporary certificate you are given the legal certification that your property is suitable for occupancy but only for a certain period of time.

Typically, if a temporary certificate is issued, it’s because your property has areas that are suitable for occupancy but still under some form of minor construction.

Once your property construction or renovation is complete, you will then need to ask for and get a regular certificate of occupancy.

Certificate of Occupancy Definition

How do you define certificate of occupancy?

A certificate of occupancy is defined as follows:

As you can see, a CO is a document that states how a property can be used for occupancy.

Why Do You Need A Certificate of Occupancy

If you are involved in a real estate transaction or you are looking to build a new property, you’ll realize that an occupancy certificate is a very important document.

In many cases, you’re legally required to get a certificate when you are buying or selling a real estate property.

Also, you’re also required to have your occupancy certificate when you are building a new home.

By having a “certificate of occupancy”, you are able to demonstrate that your real estate property was inspected by zoning authorities and that they have confirmed it meets the building code requirements.

In other words, the certificate lets others know that your building has passed various safety standards and it’s suitable to be occupied.

How Certificate of Occupancy Works

Let’s look at how certificates of occupancy work in general.

How To Get A Certificate of Occupancy

Getting a certificate of occupancy is not very complex in most cases.

In general, you’ll need to go on your local government’s website or the agency responsible for the zoning of your area and get a certificate of occupancy application.

You’ll complete the application by providing the required information.

When you file, you will likely have to pay a fee to have your application reviewed.

Requirements For Certificate of Occupancy

When you apply for a certificate of occupancy, you are not automatically given one.

In fact, you will need to meet certain requirements and pass a series of inspections before the city, municipality, or zoning agency issues your certificate.

For a new home or property, the most common requirements to meet is to pass:

• The fire inspection requirements 
• The electrical inspection requirements
• The plumbing inspection requirements
• The general building inspection requirements 

On the other hand, if you are buying or selling a real estate property for which a certificate of occupancy was already issued, the issuance of a new certificate may be simpler and with the passing of one single inspection.

Certificate of Occupancy Challenges

Generally speaking, when you apply to get a certificate of occupancy, the zoning department will inspect your property, validate that it meets the safety standards of the applicable building code, and issue your certificate.

However, in some cases, the city may not issue your certificate.

Particularly, when your property does comply with the building code or there are reasons that the zoning authority considers that your property does not pass their requirements, they will refuse to issue your certificate.

If you’re looking to sell your property, to avoid any delays or even losing your buyer, it’s important that you get your certificate of occupancy ahead of time.

The building code and safety standards constantly change and evolve, as a result, the property you bought a long time ago may have complied with the code at the time but is no longer compliant.

When your zoning authority does not issue your certificate, they’ll give you specifics on why your application was rejected.

Within the timelines given, you’ll need to make the necessary corrections to your property to ensure it becomes compliant and then you can reapply. 

Certificate of Occupancy FAQ

Let’s look at some of the common questions that are asked related to certificates of occupancy.

Do I need a certificate of occupancy 

Every jurisdiction will have a different requirement for who may need a certificate of occupancy, as a result, you should verify the specific requirements.

However, to give you a general idea of if you need a certificate of occupancy, here is a short list of instances when you may need to get one:

• You are building a new home or real estate property 
• You are converting your property from one use to another (commercial to residential)
• Your property is changing ownership 
• You are going to do major construction on your property 

How to get certificate of occupancy 

The procedure you’ll need to follow to get a certificate of occupancy varies from one place to another.

Every property is subject to specific zoning laws, building codes, and other applicable laws.

In most cases, the process of getting an occupancy certificate is as follows:

• Go on your local governments’ website or call them
• Download their certificate of occupancy application online, fill out an online form, or visit your local government office to get a copy of the application 
• Complete the application 
• Pay a fee 

When do you need a certificate of occupancy 

Typically, you’ll need a certificate of occupancy when you are dealing with a real estate property such as transacting one or building one.

Here are the most common reasons when you’ll need to get yourself a certificate:

• If you are building a new property 
• If you are selling or buying a real estate property 
• When the occupancy of your property changes
• When a property’s “use” is being changed (example, going from commercial to residential)

How long does it take to get a certificate of occupancy 

This is a difficult question to answer as there are many variables that may affect how long it may take for you to get your certificate of occupancy.

In general, if you already have a built property on which a certificate of occupancy was issued and your property is still compliant with the building codes and safety laws, you should expect to receive the certificate as fast as your city is able to do its general inspection.

However, if you have built a new property, the city may want to conduct various inspections, such as:

• Plumbing inspection
• Construction inspection
• Fire alarm inspection 
• Safety inspection 
• And more

These inspections may take longer to perform and some of them may be done in phases.

For example, the rough plumbing may need to be inspected and the finished plumbing work may need to be inspected again.

You’ll need to verify with your zoning department as to the expected delay to get these inspections done.

Can you sell a house without a certificate of occupancy 

If you are selling your home, you are most likely going to need a certificate of occupancy.

The reason that’s the case is that most buyers do not have enough capital to purchase the property from you “cash”.

As a result, they’ll need a mortgage to finance their purchase.

As part of mortgage and financing conditions, in almost all cases, the buyer will have the obligation to get a certificate of occupancy to prove that the property being purchased confirms to the code and is suitable for occupancy.

On the other hand, if you are selling to someone in an all-cash deal, the buyer may not ask you for a certificate.

Perhaps, the buyer is a professional looking to renovate your house, correct all the non-conformities, and resell the property for a profit in the future. 

What Is Certificate of Occupancy Takeaways 

So there you have it folks!

What does a certificate of occupancy mean?

Why is it so important?

In summary, a “certificate of occupancy” or CO is a document issued by your local government confirming that your real estate property complies with the applicable building code and applicable laws rendering the property suitable for occupancy.

In other words, your local government agency or department is confirming that your property is safe to live in.

A certificate of occupancy will typically state:

• How your property can be used (this is to prevent a property to be used in a way that it was not designed for)
• Your property is suitable for occupancy 
• Your property complies with all standards and codes 

I hope I was able to explain to you what a certificate of occupancy means, why it’s important, and how it works.

If you have specific questions relating to a CO or are facing a legal issue, be sure to consult with a qualified real estate attorney or expert.

Remember, this article is intended to give you general information on the topic to get you started in your research.

Good luck!

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