Do You Need a Certificate Of Occupancy to Sell Your House?

Having gone through the construction or renovation process, you are eager to get potential buyers and close the deal. Chances are you are already in contact with a real estate agent to help you sell the home quickly. Better still, you are on your social media platforms convincing potential buyers why your house is the best choice. But how will they know your house is habitable?

One important step as a real estate seller is to acquire a certificate of occupancy. It is an official certification that your house is safe for residency. In some states, it is illegal to sell your property without one but for others, it is not.

A potential buyer is likely to cancel a contract without a certificate of occupancy, especially if your house is newly constructed or refurbished.

Some local building departments issue a temporary certificate of occupancy when a property is befitting occupancy but has some pending issues to be worked on before being granted a certificate of completion. A buyer or a seller here are a few basics you need to know about a certificate of occupancy.

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Purposes of a certificate of occupancy

A Certificate of occupancy is a document issued by a local building department confirming that a property is fit to occupy. It serves the following purposes:

  1. Explains the zoning classification of the structure. It elaborates on the class the property belongs to. Whether it is residential, commercial, or industrial. This is to ensure a property is used for the purpose it was meant for.
  2. Provides assurance that the structure is appropriate for occupancy. The certificate serves as evidence that the property meets all the building standards and codes, therefore suitable for habitation.
  3. It proves that the property has satisfied all housing and building codes as per the local building department requirements.

Who requires a certificate of occupancy?

It is crucial to check with your local authorities on the scenarios you will need a certificate of occupancy. Even though not all constructions require it, it is essential to get one. The well-known situations that require a certificate of occupancy include:

  1. Constructing a new home or commercial property – The fact that it’s new it is obvious that it has never been occupied before. Therefore a certificate of occupancy is a requirement to ensure the building is fit for tenancy.
  1. Buying a home – A seller may not always require a certification of occupancy to sell a home. However, as a buyer, it is important especially if your financing option is a mortgage.
  1. Converting a property – It is a requirement when changing the use of a property. Say, for example, you are converting a storage facility to an apartment building.
  1. Remodeling a property – In certain circumstances, when rehabilitating a home or coming up with an addition to the property, a certificate of occupancy may be necessary.

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How to obtain a certificate of occupancy

To acquire certificate occupancy, you must make an application, and pay the relevant fee to your local building department.  If you are constructing a new property, it is advisable to make the request before beginning any work.

The type of inspections to be administered is subject to the location of the property and the intended use of the structure. The department will carry out the required inspections before you are issued with a certificate of completion.

If you don’t pass these inspections, you will be given a short grace period to fix the required issues before another inspection is scheduled.  The most known inspections include:

General building inspection

It is carried out by a licensed state general inspector. The inspector examines that the electrical and plumbing systems are up to standard and the structural integrity meets the local building and housing codes.

Fire safety inspection

It is conducted by a fire marshal that inspects whether; the property is fitted with enough smoke detectors, the sprinkler system and fire extinguishers are readily accessible. The fire marshal will also ensure that a given number of people can get into the property at a specific time without any issues.

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 Implications of not getting a certificate of occupancy

After inquiries from your local building department, you are informed that you need a certificate of occupancy. Because of one or two reasons you don’t apply and get it as required. In such a case, any of the following is likely to happen:

  1. Pay heavy fines. The fine amount depends on the type of property. It is important to note, these fines increase with time.
  2. Get barred from selling the property by the relevant local department. In some cases, the buyer withholds part of the payment until a certificate of occupancy is obtained.
  3. The city can sue you. It is rare but it can happen.
  4. In extreme cases the property can be demolished.

Conclusion

Regardless of the structure, you are constructing, it is essential to get a certificate of occupancy before closing the project.

It will not only make your home attractive to potential buyers but also provide proof that it is safe and up to standard. In cases where it is needed, failure to obtain it will lead to unexpected costs like fines that will dig into your profits.

Be great today,

Nick Foy, Founder | Under30wealth.com

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