What is a certificate of occupancy? Is it mandatory?

If you’re constructing a new building or renovating one, you need a certificate of occupancy (CO) aka use-and-occupancy certificate. It will be proof that the building abides by the local codes and is safe to inhabit. Your property will have to pass an inspection (or several ones) to find out if it meets safety codes. 

Getting a CO may be a problem in outdated structures, especially older homes if there are issues with outlets, plumbing pipes, and electric wiring. You won’t get a CO unless you renovate and fix those parts of the house.

What is a certificate of occupancy?

A certificate of occupancy is an official document that attests to the safety and suitability of a structure, be it a residence or office space. 

Issued by the local building or zoning department, the certificate establishes the property’s fitness for occupancy. Remember that compliance with building codes is a prerequisite for a property to be deemed suitable.

Additionally, the certificate describes the property’s classification, its designated use, and legal standing for residential or commercial purposes. 

What building information does a certificate of occupancy give?

Alongside details like the property address and owner information, the CO gives the following information. 

Description of specific legal use and property type

This outlines the property’s zoning classification, indicating whether it is intended for residential, commercial, industrial, retail, or mixed-use purposes.

Verification of code compliance

The certificate serves as evidence that the property adheres to and complies with the prevailing housing and building codes. It acts as an assurance that the structure is up to date with safety standards.

Confirmation of occupancy suitability

The document affirms that the property aligns with the codes and standards set by the local municipality, ensuring that the structure is suitable for habitation. Without a valid certificate of occupancy, it is legally prohibited to occupy the property.

Why is a certificate of occupancy essential?

A certificate of occupancy is often a prerequisite for finalizing the sale of a property. Whether you’re in the process of constructing a new property or selling an existing one, obtaining a CO is essential. Failure to secure this certificate may result in fines for each day that construction occurs or the property is occupied without the necessary certification.

The CO serves as a crucial assurance of the safety of the building or residential home, a factor vital in attracting prospective tenants. Potential renters are unlikely to commit without concrete evidence that the property is both secure for occupation and compliant with all relevant building codes.

Furthermore, the certificate serves as tangible proof that the property has undergone proper inspection. As a buyer, it’s advantageous to ensure that the seller possesses this certificate, reducing the risk of encountering substantial repair expenses after the purchase.

When do you need a CO?

Typically, minor home renovations do not necessitate the issuance of a new certificate of occupancy. However, certain home improvement projects may demand obtaining this certificate, contingent on local regulations and guidelines.

Newly constructed property

The sale of any newly built home or building necessitates a certificate of occupancy as part of the construction process.

Major home renovation

Major renovations or substantial enhancements to a property, such as revitalizing a condemned home or adding significant extensions such as a family room, a sunroom, or an extra bathroom, usually mandate obtaining a certificate of occupancy. This requirement is in addition to securing an initial building permit.

Change in property type

Each type of residence, whether it’s a condo, multifamily unit, or single-family home, has specific permitting and records associated with its designated use. Property owners seeking to convert their property to a different classification must procure a certificate of occupancy reflecting the alteration. For instance, transforming a single-family home into a multifamily dwelling by constructing a basement apartment requires a certificate after completing the work.

Change in property ownership or occupancy

In some municipalities, acquiring a new certificate of occupancy is necessary each time a property changes hands or when a new tenant occupies a rental property. It’s advisable to verify and comply with local building or zoning regulations to ensure adherence to these requirements.

Read more: The importance of escrow accounts

How to get a certificate of occupancy?

Getting this certificate is a crucial step, and it’s essential to follow the process correctly. You may need to fill out an application with your city’s building department and pay a small fee. If you’re building from scratch, you might have to obtain the certificate before starting the work.

To get a certificate of occupancy, you need to reach out to your local building or zoning inspection office and ask about the required documents. You can usually find this information on your local government’s website. Keep in mind that different places may have varying rules. For example, New York City will have different regulations than say San Francisco. 

Typically, your town or city will send an approved inspector to check your property for fire safety, electrical wiring, plumbing systems, and general additions such as doors and exits. They’ll compare these to building codes to identify any violations. The person applying for the certificate must be present during all necessary property inspections.

Once the final inspection is over, you’ll get a report outlining your property details and whether it meets the requirements. If everything is in order, you can claim your certificate and proceed with selling the property. If there are issues, you’ll receive a list that needs addressing before completing the sale. Your municipality will specify the time given for repairs, and you’ll need another CO inspection to move forward.

If the building or zoning department is not ready to give you a permanent certificate of occupancy, you might be issued a temporary certificate of occupancy (TCO). To qualify for this, your building needs to be reasonably safe. This temporary certificate is usually valid for about three months.

How much does a certificate of occupancy cost?

The cost of getting a certificate of occupancy can vary a lot because different towns have different rules. For instance, in Tamarac, Florida, it’s $260 for a safety permit, and then an extra $89 and $3 for every 1,000 square feet of the building. On the other hand, in West Chicago, it’s $100 plus an extra $0.12 for each square foot. Usually, the home seller pays this fee. And, the total amount depends on how big and what type of property it is.

Last thoughts

A certificate of occupancy, by the local government, is mandatory and non-negotiable. It’s like a permission slip for a building that says the place is safe to live or work in. The certificate has three important things written on it: what the building can be used for, that it follows all the rules and codes for safety, and confirms that people can live or work there legally.

Written by Ramona Sinha. January 13, 2024

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.