When a homeowner decides that they are ready to sell their home, they usually receive many articles and tips from their broker on how they can prepare their property in cost-effective ways in order to realize the best offer possible.
But there is an even more important checklist that a broker should review with each homeowner prior to placing the house on the market, and that is whether all the proper paperwork needed to complete the sale of the property is in order so that no unpleasant surprises pop up down the road, such as after a deal is made between seller and buyer and the parties are ready to close. All necessary documents should be accounted for so that the sale can go through with no delay.
Before a house is built, a permit must be taken out by the builder, giving him permission to build according to the plans he submits, for which he receives approval by the building department of the municipality where the property exists.
After the builder completes construction, he arranges for inspectors from the building department to officially inspect the property to ensure it was built according to the plans that the builder submitted to receive his permit.
When I mention inspectors, this includes plumbing inspectors, electrical inspectors, and other specialty inspectors according to the various building categories. The overall building inspector inspects the construction as a whole after the other inspectors complete their inspections.
Once this is complete, and if everything is done according to building code and in accordance to the original permit approved, the building department will issue a CO (Certificate of Occupancy), which shows that everything was built to building department compliance and is approved. A CO is required for all purchases and sales of property (except if the property is being sold as defective or non-compliant, which in this case signifies the property is sold “as is” and for much lower than market value).
For those buyers purchasing a home with a mortgage, this is a deal breaker, since lenders will not close on a property and provide a mortgage on a property that does not have a legitimate CO at the time of sale.
Fast forward to homeowners living over a period of time in their homes already in possession of COs going back to when they themselves purchased their homes. This would not seem to be an issue to worry about when the time comes and they’re ready to sell their home and move on. But—and I know there is always a “but”—in the case of homeowners that have added improvements to their home over the years during the time they owned the home, there may or may not have been issues related to these improvements that need to be checked to make sure that proper procedures were followed and all necessary building department requirements were in place before trying to sell their property.
Some improvements in particular require that paperwork be filed with the building department showing that the work done was in compliance with building codes and regulations.
For example, a deck being added in the front or back yard requires that the contractor apply and submit plans to get a permit from the building department giving him permission to do the requested improvement. In addition, a homeowner may have decided to turn their garage into a finished living space included in the house, or built an addition to the house, or maybe the homeowner added bathrooms or kitchens, all of which require a building permit.
Subsequently, when the work is completed, the contractor calls in a building inspector to inspect the work and issue a CC (Certificate of Compliance) from the building department stating that the homeowner’s improvements were constructed according to regulations and found to be in compliance.
Sometimes, homeowners do not realize that this is required and may do the improvements without filing for a permit or receiving a CC for the improvement, and when they try to sell their home, questions come up regarding the legality of the improvements they implemented in the home.
Both sellers wanting to sell their homes and buyers looking to purchase a new home should be very vigilant in making sure that all COs and CCs are in place before selling or buying a new home before they actually go into contract on the house. Otherwise, if prior to closing it comes up that one of these items is missing, the seller will be hard-pressed to resolve the issue and get the problem legalized or the buyer will be stuck with a problem if for some reason the work cannot be legalized in time for closing.
Missing COs and CCs can really hurt an otherwise wonderful sale and it is important to take the time to make sure all necessary compliance documents needed for a home are in place before making a deal. n
Anessa Cohen lives in Cedarhurst and is a Licensed Real Estate Broker (Anessa V Cohen Realty) with over 20 years of experience offering residential, commercial and management real estate services. You are invited to visit her website at WWW.AVCREALTY.COM. She can be reached at 516-569-5007 or readers are encouraged to send any questions or comments by email to anessa@avcrealty.com.
