What is a Certificate of Occupancy in Real Estate and When Do You Need One?

The document will also show:

• The property address

• The square footage of the structure
• The property’s zoning code
• The name of the property owner
• Any notes relevant to the safety of the property

To get an idea of what a certificate of occupancy looks like, check out these examples from Pennsylvania, Wichita, and Los Angeles.

When might you need a certificate of occupancy?

Whether you need a certificate of occupancy to live in or sell your house depends on several factors, which vary based on local rules.

Commercial and residential properties require different certificates. Each type of residence — single-family home, multifamily home, condo, etc. — needs its own certificate detailing the property type.

Some local regulations require a certificate of occupancy any time a home changes hands, whether it is sold to a new owner or rented to a new tenant. Others don’t issue certificates of occupancy at all for residential properties. This is true for the city of Shreveport, Louisiana, says the city’s Executive Director of the Metropolitan Planning Commission Alan Clarke.

Does your property already have a certificate of occupancy?

A certificate of occupancy was likely issued when your home was built; you should be able to use the original one when you sell your home — unless the building code changed, you made substantial renovations, or the property had been condemned.

In some municipalities, if you have an existing certificate of occupancy, you don’t have to get a new one — within reason — and can continue to use the one on file with the building department. If there’s a records office in your municipality, call them and see what they have already.

Where do you get a certificate of occupancy?

If you do need a certificate of occupancy, you can get it from the local zoning and/or building department. Call them up or drop by. Their job is to help you.

Your town should have a website where you can find the building department’s contact information and a list of the documentation and inspections that will be required. Otherwise, call your township office or city hall, which you can easily Google. Ask your real estate agent if you aren’t sure where to go.

“To get a certificate of occupancy for an existing home, you can apply for one at your local building department. In some cases, you need a set of architectural plans to apply,” states Lackey.

Architectural plans, which show the current layout of the property, may be needed for:

• A newly built home that doesn’t yet have a certificate of occupancy
• A home on which extensive renovations were done

Before you can obtain a certificate of occupancy, your property must pass a series of inspections.

What happens during the certificate of occupancy inspection?

To obtain a certificate of occupancy, a professional inspector employed by your local government must visit your property to confirm that your home complies with local building codes and is safe to live in. While it’s an official inspection, it should not be confused with the home inspection, which is typically ordered by the buyer’s lender.

“A home inspection is a pre-sale inspection and is informational only. That inspector has no jurisdictional code enforcement authority. A municipal inspection is a permitted project inspection, and the inspector has jurisdictional authority to pass or fail your property and issue orders to correct the problems. They’re two totally different animals,” explains Perez.

For a certificate of occupancy inspection, the municipality will send an inspector who will compare the structure to the current building code and check for violations. Some elements of the inspection include:

• Plumbing
• Electrical
• General building facets
• Fire safety systems, if needed
• Other safety items, such as whether your staircase has an attached banister

How much does a certificate of occupancy cost, and who pays for it?

Typically, when one is required for a real estate transaction, the certificate of occupancy is ordered and paid for by the seller. How much you’ll pay depends on where you live, with costs ranging from $100 to $260. This fee doesn’t include the costs of the inspections or any required repairs. You may negotiate with the buyer to share the cost of repairs.

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How long does it take to get a certificate of occupancy?

After your property has passed inspection, it can take up to several weeks to receive your certificate of occupancy. It could take longer, depending on how busy your local building office is. You may be able to expedite your certificate of occupancy for a fee.

Are you required to make the repairs listed in the CO inspection?

While the repairs recommended by the lender’s home inspection may be negotiable, any repairs required by the CO inspection are mandatory. A buyer may be willing to help pay for repairs — either way, you cannot receive a certificate of occupancy or proceed with your home sale until the repairs are made.

“The bottom line here is that if your municipality requires a certificate of occupancy, you cannot sell, live in, or use the property until the certificate of occupancy is issued,” says McEwen. You’re at the mercy of city officials, including the inspector, and must make the repairs required to pass the inspection in order to obtain a certificate of occupancy prior to selling.

Can you proceed with your home sale without a certificate of occupancy?

If local ordinances require you to have a certificate of occupancy and you proceed with your home sale without one, you could be fined or sued by the municipality, and your buyer’s mortgage company might halt the deal because the property isn’t considered safe to live in.

Remodeling? You may need to get a certificate of occupancy

As we stated earlier, whether you’ll need a certificate of occupancy for your home sale depends on your municipality and the extent of the renovations. Typically, the more you’re changing, the more likely you are to need one. The best way to find out if you need one is to call your local building department.

“Most likely, you won’t need one if you aren’t changing the occupancy classification — if the building is being used for business or residential — or the building code that applies to the property,” states McEwen.

Perez says his municipality requires a certificate of occupancy if the property was never occupied or the occupant had to live elsewhere while the home was remodeled. That’s usually only the case with a new build or an intensive remodel, not a simple one.

“For minor remodeling projects, we usually give them a certificate of compliance — showing the remodel is up to code — as opposed to a certificate of occupancy,” Perez explains.

A certificate of occupancy is about safety and peace of mind

A certificate of occupancy ensures a property is up to code and safe to live in, protecting the new residents from safety issues. It also protects the seller, the municipality, and the lender from any liabilities that may arise.

Before taking the first step of listing your home, call the local building or zoning office to see if you need to obtain or update a certificate of occupancy. An experienced real estate agent can help you figure out if you need a certificate of occupancy, and — if necessary — prepare for an inspection and negotiate repair expenses with the buyer. HomeLight’s free Agent Match can connect you with a top agent in your market who is familiar with local laws and common inspection issues to help your sale go more smoothly.

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