Certificates Of Occupancy
& The Sale Of Your Home
Most home additions, alterations or improvements require Building Permits and either Certificates of Occupancy (sometimes called a "C.O." or a "C of 0") or Certificates of Compliance (sometimes called a "C.C."). A Building Permit gives you, the homeowner, permission from your municipality (Village or Town) to perform certain work. The municipality issues the C.O. or C.C. only after a building inspector has inspected the premises and 1) verified that the work was completed according to the plans that were filed and 2) that the work was completed in compliance with all municipal Codes and safety regulations.
For people who have lived in their home for many years, the lack of Certificates of Occupancy or of Certificates of Completion is a major cause for delay in real estate closings. In Putnam and Westchester Counties, many homeowners have, over the course of their homeownership, installed "in-law" apartments with kitchens and baths in their homes. Many homes have additional rooms added. There are scores of do-it-yourself decks and handyman special bathrooms in our area. The municipalities are very strict when it comes to these improvements. Their position is straight forward and clear: Any work done without obtaining a Building Permit is illegal. The municipality takes this position even if the work performed is according to code and regulation compliant.
In most cases, illegal improvements have been in existence for many years without anyone ever questioning their existence. So why is it that a municipality does not discover the absence of a C.O. or C.C. until after the property is listed for sale? The reason that problems arise when a home is being sold is simple. Nobody looks at your home until you sell. Of course, on a rare occasion, an unhappy neighbor may report an illegal structure to the municipality, but that is extremely rare.
However, once you list the property for sale and enter into a contract, then people start evaluating the documentation for your home. First, an appraiser from your buyer's bank will visit your home. Then, a survey inspector will go to your home. These people perform their evaluations and inspections. They then take their findings to the municipality and check to make sure the municipality is aware of any improvements. It is important to note that these individuals do NOT report the illegal structures to the municipality. Instead, the appraiser will report his or her findings to your buyer's lender. The survey inspector's finding will be reported to the attorneys for both parties when the title report is complete. If there are discrepancies, the buyer's attorney or the lender's attorney, will notify the seller's attorney that a problem has been discovered prior to the home sale. Any discovered illegal improvements will create a title clearance problem for a Seller before closing. If the seller has not taken any steps to obtain a missing C.O. or C.C., then the closing will almost always be delayed.
So what types of improvements generally raise a title issue? Most municipalities require Building Permits for any addition, finished basement or attic, swimming pool, deck, enclosed porch, bathroom and/or shed. This requirement is for safety purposes. Where plumbing and electricity and structural issues are involved, Building Inspectors will want to ensure that the work is up to Code and that the premises will be safe to occupy.
Correcting these problems after the fact can sometimes be difficult. Portions of walls may have to be removed to allow for plumbing and electrical work to be inspected. Sometimes existing work even may have to be re-done in order to bring it up to current Code. (NOTE:At the time the work was done, it most likely conformed to Code and a Certificate of Occupancy would have been easy to obtain. However, since the work was not recorded at that time, in order to obtain a CO today, you have to conform to today’s code and additional requirements may have been added to the Code over the years that might necessitate having work, that was completed years ago, to be upgraded or redone.) For decks, the ground will have to be dug up in order to inspect and possibly replace footings. Sometimes where setback requirements are not met or septic systems cannot handle additional plumbing, decks, and bathrooms must be removed from a home. While removing illegal items may bring a home into compliance, it may also effect the sale price, as the buyers are no longer getting what they bargained for.
The best solution is to call your Town's Building Inspector before making any improvements. You will be told whether you will need a Building Permit.
NOTE: After the work is done, remember to call the Building Inspector to schedule an inspection so that the Certificate of Occupancy may be issued. Often Building Permits are issued to homeowners but the homeowners either forget, or do not realize that, upon completion of the work, they must officially conclude the process by having the Building Inspector visit their homes to inspect the work that was performed and issue a C.O. or C.C. .
If you are planning to sell (or if your home is already on the market), you should clear any violations before reaching an agreement with a prospective buyer. This will insure that you are legally able to include in the terms of your sale everything on the premises and it will certainly help to avoid delays in Closing.
Reprinted from the February 2005 newsletter by
Meyer & Spencer, LLC - Attorneys At Law
27 S Greeley Avenue
Chappaqua, NY 10514 (914) 238-2860
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