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If you’re selling your home, you may be wondering if and when you need a certificate of occupancy (CO) that shows your home is safe to occupy. Or maybe the requirement came up during your home sale, and you’re wondering what it is and why you need one.
In this article, we explain what a certificate of occupancy is and when you might need one during your home sale. To provide you with the most complete information, we talked to the experts:
Let’s get started.
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A certificate of occupancy (CO) is a document that confirms that your home is in compliance with local laws and safe to live in.
A certificate of occupancy typically serves three purposes:
The document will also show:
To get an idea of what a certificate of occupancy looks like, check out these examples from Pennsylvania, Wichita, and Los Angeles.
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.
A few examples of when municipalities might require a certificate of occupancy are:
Converting property type or use: If you’ve converted your property type or use, a certificate of occupancy may be required before it can be lived in. For example, if you’ve converted a multi-family home into a single-family home or vice versa, you might need a certificate of occupancy that reflects the code change. The same applies if you’re converting a business property (or church, barn, storage container, etc.) into a residence to sell it as a home.
Major renovations: You may need a certificate of occupancy to sell a home that you’ve made major renovations to — maybe you’ve gutted and restructured the layout, added a second story, or brought a condemned property up to code.
New construction: If you build a new home to sell, a certificate of occupancy will be part of the sale.
New owner or occupant: Your area may require a certificate of occupancy for a new homeowner or tenant. Or you may be required to get one if you’re selling multifamily property.
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.
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:
Before you can obtain a certificate of occupancy, your property must pass a series of inspections.
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:
Here is an example of how the inspection process might look:
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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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.
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.
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.
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.
