Final Certificate of Occupancy Protects Real Estate Buyers

The New York City Department of Buildings (DOB) inspectors suspect of wrongdoings in a house when a Certificate of Occupancy (CO) is missing. It's the most common culprit when cracking down on work without a permit violations. Final CO is the final component of a construction process, but not every building has it, because it's not required.

Developers that take advantage of lack of requirement to have a final CO are often found to have no work permit or other violations. Temporary CO requirements are not complicated and allow some developers to sell the property quicker. Of course, the victim is a buyer who will carry the burden of proving that all fixtures and elements of a house, including the location of bedrooms and occupant load, are approved by NYC DOB.

Here are two examples that explain why and how developers avoid a Final Certificate of Occupancy.

1. Complicated, Expensive, and Lengthy Process. A CO is a certificate issued by the city government that verifies permitted occupancy of a building and lists uses for each floor. Because it requires an extensive process of approval, the existence of the certificate serves as evidence of an established layout. Two forms are compared: Schedule A of the work permit application that remodeled the building; And PW1A, which is the application for a Certificate of Occupancy. Therefore, unless remodeled afterwards, the certificate is evidence that approved plans should match the building, which complies with those laws that were applicable when the building was built. Therefore, major remodeling changes to a property will require compliance with new laws; And 110% change will require a new building application. Since the old building structure may have to be completely redesigned to meet new building laws, some developers decide to work without a permit or obtain a Temporary Certificate of Occupancy (TCO), which does not include a final inspection.

The NYC DOB issues the TCO if a structure is safe to occupy but requires additional work or permits to be eligible for a final CO. The TCO is active for 90 days from the date of issuance, while the final CO remains until structural dramatically changes.

The most likely reason to pursue TCO is the cost of Final CO, associated with hiring an architect, an applicant of record, and expediter; and the cost of permits, special inspections, and filing fees. Also, it may take as much as six month from the time of job approval to obtain a final Certificate of Occupancy. Not a lot of developers are willing to wait that long before they sell the property.

2. Violation Enforcement. Although NYC DOB doesn't require COs for every building, those that don't have a CO attract inspectors.

Structures without final COs are susceptible to violations, which may double with each new inspection. That said, the NYC DOB doesn't require COs across the board. Structures built before 1938 are exempt from CO requirements so long as their uses, exits and occupancy levels remain unchanged. Landlords that manage these properties can apply for a Letter of No Objection (LNO) to ascertain their legal uses. However, if the property had gone through physical changes that require a post-work permit, it is almost certain that LNO will be denied. To avoid costs associated with filing for permit, a developer can get an LNO for a commercial use within the category of permitted uses for a building, and sell the business, after building it's interiors without a permit.

"In both cases, an unsuspecting real estate buyer that did not do due diligence, will most likely be surprised to receive a violation for work without a permit." - say building violation expediters at Building Violation LLC, who provided the examples. Their rep comments: "The red flag in this case is of course is a lack of Final Certificate of Occupancy. This is something we often have to resolve with a Post Approval Amendment or a New Work Permit application."

Final CO can be compared to a car title, only it's not required. This lack of requirement creates an opportunity for developers to cut corners and victimize real estate buyers. Don't become a victim and do your research of a property you are looking to buy.