But your “live-on-the-edge” lifestyle doesn’t matter when the time comes to sell your home. Most cities these days have come up with standards for what makes a place safe to live. These are called building codes.
The rules vary by local jurisdiction, but some municipalities even require that you produce a special permit called a certificate of occupancy (“CO”) that shows a property is up to snuff as part of a real estate deal.
Heavily renovated homes and new construction are the most likely candidates to require a CO but if your city requires one, you’ll need to get an additional inspection to prove you’re in the clear.
Let’s dig into it.
What exactly is a certificate of occupancy?
A certificate of occupancy is a document that states the legal use type of your property, verifies that it’s up to code, and confirms that people can safely live there. The document will show the property address, a legal description of the property (including use type and square footage), the zoning code, the owner, and any notes relevant to the safety of the property.
It boils down to this: You can’t live in or use a property until the certificate of occupancy is issued, says Shannon McEwen, the Assistant Manager of Building Permits for Clark County, Nevada, who has worked in the county’s building department for almost 20 years.
Cases where you need a certificate of occupancy, depending on your city
Whether you need a certificate of occupancy to sell your house depends on a few different factors which vary based on local rules:
Commercial and residential uses require different certificates, and each type of residence—be it a single-family home, a multifamily home, condos, or something else—all need their own certificates detailing the property type.
You’ll need a certificate of occupancy that matches the use of your home—so if you’re selling a multi-family home but converting it into a single-family home first, the certificate should reflect the code change. The same applies if you’re converting a business property or gathering space into a residence to sell it as a home, like buying a dilapidated church and turning it into a house.
If the property started out condemned and you made a lot of changes, you’ll likely need to get a certificate of occupancy to sell it. Even if you’re remodeling, depending on the quantity and type of work, you might need to get one.
The bottom line here is that, in municipalities that require it, if the property didn’t have a certificate of occupancy before due to its condition, you’ll need to get one in order to sell the home—and that generally means changing the condition of the home to be up to code.
If it’s a brand new house that you just built to sell it, a certificate of occupancy will be part of the sale.
Rules and regulations vary depending on the municipality you’re in. Where some municipalities don’t issue certificates of occupancy at all for residential uses (like the city of Shreveport, Louisiana, says the city’s Executive Director of the Metropolitan Planning Commission Alan Clarke), some municipalities might require a new one every time you move. Check with your local government office to figure out what you need to do.
A certificate of occupancy was likely issued when your home was built; you should be able to just use that one—unless the building code changed or you made substantial renovations.
If you do need one, here’s where to get it.
When you need a permit like a CO, the local zoning and/or building department is your friend. Call them up. Drop by. Their job is to help you.
Your town should have a website where you can find the building department’s contact information; otherwise, call your township office or city hall. The phone number should easily show in a Google search. Ask your real estate agent if you aren’t sure where to go.
“To get a C of O for an existing home you can apply for one at your local building department,” said Eugene Lackey, Supervisor of Building Construction Inspections for the City of Cincinnati. “In some cases you have to have a set of architectural plans to apply,” for instance if the home has already been built and doesn’t yet have the C of O, or if extensive renovations were done to the property. The plans show the current layout of the property.
But wait! Does your property already have an existing certificate of occupancy?
In some municipalities, that means you don’t have to get a new one—within reason—and can continue to use the one that’s been on file with the building department. If there’s a records office at your municipality, call them and see what they have already.
What you need to know about the certificate of occupancy inspection
They don’t hand out certificates of occupancy like lollipops at the bank. Nor can you tell your local building office “I promise my house is safe!” and expect that to suffice.
You’ll need to have a pro employed by your local government come out to take a look and confirm your home qualifies for a CO. It’s an official inspection…not to be confused with the home inspection ordered by the buyer of your house.
“A home inspection is a pre-sale inspection and is informational only,” said Pleasant Prairie, Wisconsin, Building Inspection Superintendent Sandro Perez, whose office issues certificates of occupancy when necessary.
“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 you and issue orders to correct the problems. They’re two totally different animals.”
For a certificate of occupancy inspection, the municipality will send out an approved inspector who will compare the building to current building code and check for violations. This can include plumbing, electrical, general building facets, fire safety systems if needed, and sometimes even some smaller stuff like whether a staircase has a banister attached.
You’ll get a report at the end of the inspection. If you pass, great! You can claim your certificate and move forward with your sale. If you fail, you’ll get a list of problems that need to be fixed and a certain amount of time to make the repairs (the time given depends on your municipality). Then, once all the repairs are complete, you’ll need another inspection to check it all out and get the green light to move forward.
Keep in mind, if you need a certificate of occupancy and decide to go ahead without getting one, you could be fined or sued by the municipality, and your buyer’s mortgage company might put the kibosh on the entire deal because they won’t want to lend for a property that hasn’t been deemed safe to live in.
Remodeling? You may need to get a CO just for that
You may need to get a certificate of occupancy if you’re doing a remodel on your house. It depends on the municipality and extent of the renovations, but generally, the more you’re changing, the more likely you are to need one.
Perez says the department in his municipality requires a certificate of occupancy “only if the space was never occupied or the occupant left the residence during the remodel period.”
That’s usually only the case with an intensive remodel, though, not a simple one that doesn’t require the homeowner to temporarily move out. For the simpler jobs, “we usually give them a certificate of compliance [showing the remodel is up to code] as opposed to a certificate of occupancy,” Perez said.
Both Lackey and McEwen agree—it depends on the scope of the renovation, and calling the building department is the best way to know what you need.
“If the occupancy classification [what the building is used for, like business or residential] or code analysis [what building codes apply to the property] isn’t changing,” McEwen says, you likely won’t need to get one, though.
You can share the repair responsibility with the buyer
There are two main costs you can occur on the path to getting a certificate of occupancy: the inspection fee, and the repair costs.
The inspection fee is generally the seller’s responsibility. Getting proof that your house is safe to live in is something that should be done even before putting the home on the market.
In addition to the original inspection fee, the seller is responsible for the cost of any further inspections required by the building department to make sure everything is up to code. The cost ranges based on the size of the building and where you live, but on average, you can expect to pay about $100. Many times, this cost will be built into the sale as part of property transfer fees.
Just like with a standard home inspection before a sale, the needed repairs determined by a certificate of occupancy inspection can be negotiated between the buyer and seller. Try to make sure all the repairs are done and the follow-up inspection completed before selling the house—unless the buyer is willing to take responsibility for these.
There is generally an exception to these costs, though. If you’re selling your house as-is or if it’s a bank-owned house, the buyer is responsible for the costs of getting the certificate of occupancy—including the inspection and repairs. This will all be outlined in the sale agreement, so make sure to read it carefully.
Ultimately, though, you’ll need to do what your municipality says you should do. Before taking even the first step of listing your home, call the local building or zoning office to see if you need a certificate of occupancy, if your property already has one, and if it needs to be updated. If you need to get a new one, be prepared for an inspection with repairs that will be required before you can sell your home.
It can be a bear to wade through, and expensive depending on what needs to be done, but it may be the only way to meet your goal of selling your house.