When purchasing improved property in New York, buyers often inquire about a Certificate of Occupancy (“CO”) or the lack hereof. The purpose of this article is to explain in non-legal terms what is a CO and why purchasers should care. This article will also differentiate between a Certificate of Compliance from a Certificate of Occupancy and dispel some myths about COs.
First, what is a CO? In New York, in order to build a structure one must obtain a Building Permit from the local municipality (i.e. a Town, Village or City), build the structure and then obtain a Certificate of Occupancy. The Certificate of Occupancy is the document stating that the local building inspector has inspected the structure and the structure complies with the State and local building code.
A Certificate of Compliance is a term often associated with a non-habitable structure such as a fence, swimming pool, gazebo, tennis court or shed.
There are several reasons why a purchaser should care about COs. First, if a purchaser is applying for a mortgage, the lender may require that all structures shown on the survey have a CO. Second, if a Code Enforcement Officer issues a Violation for a non-compliant structure after the closing and the structure does not have a CO, the purchaser may be responsible for “legalizing” the structure. Legalizing a structure can sometimes be time consuming and expensive. Lastly, a purchaser may wish to use a structure for a particular purpose which may or may not be authorized under the CO. For example, a detached garage may have a CO for a garage but not living space. Similarly, a bonus room above an attached garage may have a CO for storage only, but not living space. A purchaser may wish to scrutinize the permits for the property to determine what is currently permitted. If the purchaser wishes to change the use of a structure, a zoning analysis may be appropriate in order to determine whether the proposed use is permitted under the local zoning code.
To dispel a myth, not all structures require a CO. For example, in some municipalities a small storage shed may not require a permit so long as it does not exceed certain dimensions and it otherwise conforms to local zoning (e.g., it meets the setbacks and is not located within a steep slope or designated wetland, etc.). To complicate matters further, some jurisdictions may require a Certificate of Compliance for exterior air conditioning condenser units and emergency generators, and other municipalities may not.
In addition, some structures are so old that they pre-date zoning and no CO exists. In those cases, it is customary for the local municipality to provide a “pre-date” letter.
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