What is the Purpose of the Certificate of Occupancy?
A Certificate of Occupancy represents the municipality’s assurance that a home is legally occupied and conforms to zoning and minimum repair and maintenance standards as of the date the Certificate of Occupancy was issued.
It normally ensures that: a) Plans were properly filed with the building department before construction occurred, or if construction was first undertaken, that the property owner satisfied the building department that the addition to the residence was performed in compliance with the law b) Architectural drawings were filed and the building department determined whether there is compliance with setback requirements c) if additional bedrooms or baths were added to a home with a septic system rather than a municipal waste system, Health Department approvals were obtained for the expansion of the premises and the septic system in its present design is adequate to serve the expanded needs of the premises d) The plumbing and electrical inspectors have examined the premises to determine that all improvements were made in compliance with the Building Code regulations at the time the inspection. e) The Building Department certifies that the addition has been completed in accordance with all codes, rules and regulations and has been properly inspected.
Based upon the issuance of a Certificate of Occupancy, notification is given to the Office of the Assessor in the municipality in which the property is located to advise the Assessor that improvements have been made to the premises. These improvements could result in a change in assessed valuation and therefore, a change in the tax levies that are imposed upon the premises.
What is the Effect of Not Having A Certificate of Occupancy?
A purchaser of property which does not have a Certificate of Occupancy for all improvements may find: 1) the improvements do not comply with setback requirements and need to be moved or be made the subject of applications to the Zoning Board of Appeals for Variances 2) the improvements may not have been made in accordance with the Building Code and may need to be upgraded 3) the improvements may never be the
subject of a Certificate of Occupancy without the expansion of septic fields which may or may not be able to be improved or expanded upon 4) the property has been under-assessed based upon its actual improvements and upon compliance with all of the rules with respect to obtaining Certificates of occupancy, therefore there is likely to be a substantial increase in real property taxes.
New York’s Property Condition Disclosure Law:
Article 14 Of the Real Property Law of the State of New York sets forth the Property Condition Disclosure Act and calls for a seller to provide information about various physical conditions at a property. One of the questions in the Property Condition Disclosure Statement is: #9: Are there any certificates of occupancy related to the property? Yes, No, Unknown, NA (if no, explain below)
What Does the Real Property Contract Form State About Certificates of Occupancy?
Paragraph 16 of the contract commonly used in the New York Metropolitan Area addresses Certificate of Occupancy. The contract is made subject to and the purchaser’s obligations are conditioned upon the fulfillment by the seller of certain conditions under Article 16. These include: Paragraph 16(b) The Delivery by Seller to Purchaser of a valid and subsisting Certificate of Occupancy or other required certificate of compliance, or evidence that none was required, covering the building(s) and all of the other improvements located on the property authorizing their use as a single family dwelling at the date of Closing.
If the bank attorney does her or his job efficiently, the bank will insist upon a Certificate of Occupancy for all improvements.