SS247: What is a Certificate of Occupancy?

SS247: What is a Certificate of Occupancy?

A Certificate of Occupancy is an important legal document issued by a local government. In this episode, Charles discusses what a Certificate of Occupancy is why it is required.

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Talking Points:

  • A Certificate of Occupancy or CO is a legal document issued by a local government, zoning department, or building department that certifies that a building or structure complies with all applicable building codes, zoning laws, and other regulations, confirming that the property is suitable for occupancy. 
    • The certificate of occupancy is issued after a final inspection, once all inspections have passed, all necessary paperwork has been completed with the city, and no outstanding items are pending.
    • It is typically given after a property has been constructed, there has been a major renovation, or there has been a change in the property’s use, like you converted your garage into an apartment, or if you made your duplex into a triplex. If you purchase a property with significant fire damage, it will usually require a CO as well.
    • The certificate of occupancy specifies the building’s permitted use, such as whether it is residential, commercial, or industrial, and it may also include the number of units or maximum occupancy. 
    • A certificate of occupancy is required in most, if not all, US municipalities.
  • There are a few different types of certificates of occupancy in Florida, for example:
    • Certificate of First Occupancy: For newly constructed dwellings.
    • Second Occupancy Certificate: For existing dwellings, which may require renewal.
    • Certificate of First Occupancy of Rehabilitation: For dwellings that have undergone significant renovations.
  • Why is a Certificate of Occupancy Important, and What Does it Signify?
    • Confirmation of a Property’s Legal Use. It indicates the property’s zoning classification and confirms the property is being used as intended.
    • Code Compliance. It shows proof that the property is up to date and in compliance with all local housing and building codes. This may include building codes, zoning laws, accessibility laws, fire safety regulations, and environmental regulations.
    • Verification of Legal Occupancy. It serves as verification that the property conforms to the codes and standards outlined by your local government and that it can be legally occupied. Especially important with newly constructed and majorly renovated properties.
    • It Protects Owners and Occupants. If you are a property owner or a tenant, a CO offers an assurance that the property is legally compliant and safe.
    • Signifies a Project’s Completion. As an investor, a contractor, or a developer, obtaining the CO represents the completion of a project. If you are an investor, ensure that your contract stipulates the contractor will obtain and close all necessary permits and secure a Certificate of Occupancy before receiving final payment.
    • Enhanced Marketability. A valid Certificate of Occupancy enhances the marketability of your property, as many banks require a CO to finance it. When you are selling a property with a Certificate of Occupancy, you increase the buyer pool.
  • Obtaining a certificate of occupancy can be a long and tedious process, especially if multiple permits and inspections are required. Investors planning to purchase, rent, or renovate a property should verify if COs are necessary in their city. If unsure, they should consult their real estate attorney. If required, ensure the subject property has one or that your contractor will obtain one after the renovation is completed.

Transcript:

Charles:
Most people are unaware of what a certificate of occupancy is and even fewer know when you legally need one. So let’s take the guesswork out of it. Welcome strategy Saturday, I’m Charles Carillo, and today we’re discussing what is a certificate of occupancy, when do you need it and how to ensure and never delays your project or investment. If you’re buying, renting, or renovating a property, this might be the most important document you’ve never heard of. So let’s get started. A certificate of occupancy or CO is a legal document issued by a local government zoning department or building department that certifies that a building or structure complies with all applicable building codes, zoning laws, and other regulations confirming the property is suitable for occupancy. The certificate of occupancy is issued after all final inspections and once all inspections have passed, all necessary paperwork has been completed with the city and no outstanding items are pending.

Charles:
It is typically given after a property has been constructed, there has been a major renovation or there has been a change in the property’s use like you converted your duplex into a triplex or your garage into an apartment. If you purchase a property with significant fire damage, it will usually require a CO as well. That happened once with us with a fire damage three-family property. Now the certificate of occupancy specifies the buildings permanent use, such as whether it is a residential, commercial, or industrial property. And it may also include the number of units or maximum occupancy that’s allowed for that property. Now a certificate of occupancy is required in most, if not all US municipalities. So there are a few different types of certificates of occupancy in Florida, for example, and they might be similar to your local municipality as well. Number one is a certificate of first occupancy for newly constructed dwellings, or there’s also second occupancy certificate for existing dwellings, which may require renewal certificate of first occupancy of rehabilitation for dwellings to have undergone significant renovations and why a certificate of occupancy is important.

Charles:
And what does it also really signify to buyers and sellers? Number one is it confirms a property’s legal use. It indicates the property’s zoning classification and confirms the property is being used as intended code compliance. So it shows proof the up to date and compliance with all local housing and building codes. And this may include building codes, zoning laws, accessibility laws, fire safety regulations, and environmental regulations. It has a showing of verification of legal occupancy, so it serves as a verification that the property conforms to the codes and standards outlined by your local government and that it can be legally occupied, especially important with newly constructed and majorly renovated properties. It protects the owners and occupants. If you are a property owner or a tenant, a seal offers an insurance. The property is legally compliant and safe. It signifies a project’s completion. So as an investor, a contractor, or a developer obtaining the CO represents the completion of a project.

Charles:
If you’re an investor, ensures that that your contract stipulates that the contractor will obtain and close all necessary permits and secure a certificate of occupancy before receiving final payment. That way you know that the property is done to the ability of having a tenant in there or being able to sell it. It enhances the marketability of the property. So a balance certificate of occupancy enhances the marketability of your property as many banks require a CO to finance it. And when you’re selling a property with a certificate of occupancy, you can easily increase the buyer pool because now buyers with traditional lenders are able to finance the property and obtaining a certificate of occupancy can be a long and tedious process, especially if multiple permits and inspections are required. And investors planning to purchase rent or renovate a property should verify if cos are necessary in their city.

Charles:
And if they’re unsure, they should consult their real estate attorney and if required, ensure the public property has one or that your contractor will be able to obtain one after renovations are completed. So I hope you enjoyed, please be able to rate, review, subscribe, spent comments and potential show topics@globalinvestorspodcast.com. If you’re interested in actively investing in real estate, please check out our courses and mentoring programs@syndicationsuperstars.com. That is syndication superstars.com. Look forward to two more episodes next week. See you then. Have you always wanted to invest in real estate but didn’t have the time, didn’t know where to find the deals, couldn’t get the funding, and didn’t want tenants calling you? Since 2006, I’ve been buying income producing properties in great locations that provide us with consistent passive income while we wait for appreciation in the future and take advantage of tax laws while we’re waiting. And unlike your financial advisor, we invest alongside our investors in every property we purchase. Check out invest with harborside.com. If you like the idea of investing in real estate, if you like the idea of passive income, partner with us@investwithharborside.com. That’s invest with harborside.com.

Speaker 2:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of syndication Superstars, LLC exclusively.

 

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