Do You Need a Certificate of Occupancy? Insights for Investors

Understand what a certificate of occupancy involves, who requires one, the steps to get it, and why it's invaluable for property owners.

Nichole Stohler
Last Updated
November 30, 2023
Do You Need a Certificate of Occupancy? Insights for Investors

Have you ever wondered what a certificate of occupancy is and if your property needs one? This guide will explain everything you need to know about this important real estate document.

We'll go beyond defining the basics of a certificate of occupancy and walk through all the key details: how to obtain one, associated costs, and necessary inspections. Arm yourself with expert insights to verify property compliance and reduce risks.

Join us as we explore certificates of occupancy in-depth — what they are, why they matter, and how they impact your real estate investing business.

What is a certificate of occupancy?

A certificate of occupancy (CO) is an official document from local authorities stating that a property meets all building codes, zoning laws, and safety regulations and is suitable for occupancy.

The CO confirms that the property complies with structural integrity, fire safety, and local ordinance standards and proves the property is habitable and safe for occupants.

The local building department issues a CO after a thorough occupancy inspection process. This document is often required in real estate transactions, as it establishes the legal occupancy status of a property address and confirms compliance, which impacts resale value.

Why is a certificate of occupancy required?

Confirming that properties have valid certificates of occupancy is a non-negotiable for investors. CO regulations exist to uphold several key priorities, including:

  • Legal compliance: Local governments often require a CO before anyone can occupy or use a building to verify that a property complies with zoning laws, building codes, and safety regulations.
  • Safety assurance: The CO inspection process checks for fire hazards, structural issues, electrical problems, and other safety concerns. It provides reassurance that the property is habitable.
  • Real estate transactions: Banks frequently require a valid certificate of occupancy before financing real estate deals. For buyers and renters, the CO assures them the property is code-compliant.
  • Increased property value: Having an up-to-date certificate of occupancy can raise a property's value and marketability for resale or leasing.
  • Avoiding penalties: Occupying a property without a certificate of occupancy can result in fines and legal problems with the local municipality.

When do you need an occupancy certificate?

Protect your investment and avoid headaches by learning when an occupancy certificate is required. If you are a property owner or real estate investor, here are the main situations where you'll need to get this important certificate:

When buying a new property

New property owners, whether for residential or commercial purposes, must obtain a certificate of occupancy as a step in the transition into property ownership.

This certificate is an official validation confirming compliance with the building code and safety regulations and providing assurance regarding the property's legal status, safety measures, and habitability.

Property usage changes

If you, as the property owner, intend to modify the usage or function of a property, you may be required to update the existing certificate of occupancy accordingly.

The validation process guarantees that the adjusted spaces continue to meet the required safety codes and adhere to zoning laws applicable to the intended new use.

Updating the certificate of occupancy confirms that your property remains fully compliant with established guidelines while providing a safe and suitable environment.

Renovation projects

Property owners doing major renovations should be aware of the certificate of occupancy's role in validating that the modified spaces meet building codes with proper structural soundness and habitability.

Investors should recognize the CO's influence on a property's legal status, market value, and financial viability. Carefully considering CO requirements facilitates strategic decisions that align with regulations and support real estate investment success.

How do you get a certificate of occupancy?

Don't let the process overwhelm you — use this step-by-step guide to obtain your certificate of occupancy smoothly.

Step 1: Research CO requirements

  • Check your city/county website for certificate of occupancy application forms, fee schedules, and instructions. Or visit the local building department in person.
  • Verify what types of inspections and documentation are needed. Each jurisdiction is different.

Step 2: Prepare the required documentation

  • Documentation may include floor plans, site plans, inspection reports, permits, insurance forms, etc.
  • All documentation must have accurate, up-to-date information reflecting the property's current state.

Step 3: Comply with building codes

  • Hire licensed contractors/professionals to verify that work meets all codes. Building codes change over time, so new renovations require modern safety features.

Step 4: Request inspections

  • Schedule inspections well in advance. Inspectors often have full calendars and constrained availability, so booking early prevents extra delays.
  • Be on-site during inspections to answer any questions and discuss any issues that come up.

Step 5: Address any issues

  • Don't ignore inspection reports. Promptly fix any code violations or deficiencies noted.
  • You must remedy any issues before the new certificate of occupancy application can proceed.

Step 6: Submit the certificate of occupancy application

  • Submit the completed application form and all documentation, and pay the required fees.

The cost of a certificate of occupancy

The price of obtaining a certificate of occupancy can vary widely depending on your local building department regulations. While not inexpensive, view the CO as an investment in your property's compliance, safety, and value.

Factors that influence the costs include:

  • Local filing, application, and permit fees set by the municipality.
  • Number and type of inspections required: more extensive inspections mean higher costs.
  • Any repairs needed to address deficiencies flagged during inspections.

Though the upfront costs may give pause, the benefits make the CO well worth the investment. It reduces risks and boosts your property's short and long-term viability by:

  • Verifying legal and code compliance.
  • Confirming critical safety provisions are met.
  • Improving marketability by signaling adherence to regulations.
  • Upholding habitability standards.
  • Preventing potential municipality fines or legal issues.

The long-term value of securing your property’s reputation, financing prospects, and compliance outweighs the initial expense. When viewed through a risk management lens, the CO pays dividends across your property's lifecycle.

What happens during an inspection?

Wondering what to expect? Here's the rundown of what the inspection process looks like when seeking a certificate of occupancy sign-off:

  1. A professional inspector designated by the local authorities will do a comprehensive walkthrough and examination of the property to confirm adherence to local building codes.
  2. During the inspection, they will assess key areas, including:
  • Fire safety provisions and alarm systems.
  • Electrical wiring safety and function.
  • Structural security.
  • Plumbing systems and fixtures.
  • Other jurisdiction-specific safety requirements.
  1. After the thorough inspection, the inspector will provide a detailed report of their findings.
  2. If the property passes inspection, the property owner can move forward with obtaining the certificate of occupancy.
  3. If the inspector identifies any issues or deficiencies, the owner will receive a list of required repairs to complete before the CO can be issued.
  4. Once the owner has completed repairs, the property may need to undergo reinspection to confirm full compliance before the building department grants a CO.

Owners can use this stage to proactively identify and remedy any concerns impacting property compliance status or resale value.

Temporary certificate of occupancy

The local government or building department issues a temporary certificate of occupancy (TCO), enabling individuals or businesses to occupy and use a structure before its full completion. It grants the same rights and privileges as a regular certificate of occupancy but is only valid for a specific period, typically around 90 days.

When is a TCO issued?

A TCO is usually issued when a building process is not fully compliant with all building codes or regulations. It indicates that the structure is safe for occupancy but requires resolving any outstanding issues before obtaining a permanent certificate of occupancy. These issues could include incomplete major construction, outstanding inspections, or minor deficiencies that do not pose significant safety concerns.

What are the benefits?

The purpose of a TCO is to accommodate situations where partial use of existing buildings or structures is necessary or beneficial while completing final touches or remaining work. Individuals or businesses can start occupying and utilizing the space before it reaches full completion through this allowance.

Certificate of occupancy

Whether you're a homeowner, landlord, or real estate investor, a certificate of occupancy issued by local authorities should be on your radar. This document verifies that your property adheres to building codes and safety regulations, validating its legal occupancy status.

While obtaining a certificate of occupancy involves time and expense, the long-term value makes it well worth the effort. It boosts your property’s compliance, enhances marketability, and reduces potential issues down the road. When it’s time to lease out or sell your asset, a valid CO signals to prospects that your building meets standards for legal habitation and use.

By confirming your property is up-to-code, safe, and ready for residents, a final CO provides peace of mind and fosters confidence for all involved in a real estate transaction.

Certificate of occupancy FAQs

Who is responsible for a certificate of occupancy?

The responsibility for obtaining a certificate of occupancy falls on the general contractor. The existing building owner or someone working on the new construction project can also handle the CO.

What are the requirements for obtaining a certificate of occupancy?

The specific requirements for obtaining a certificate of occupancy can vary depending on the location and local regulations. However, common requirements may include the completion of construction, passing inspections by local authorities, compliance with zoning laws, availability of utilities and services, implementation of fire safety measures, structural stability, accessibility, and documentation such as industrial building plans and permits.

Can a building or property be occupied without a certificate of occupancy?

Occupying or using a building or property without its own certificate of occupancy is illegal. Local authorities enforce this requirement to make sure the safety and compliance of structures. Occupying a property without a CO may result in fines, penalties, or legal consequences.

Important Note: This post is for informational and educational purposes only. It should not be taken as legal, accounting, or tax advice, nor should it be used as a substitute for such services. Always consult your own legal, accounting, or tax counsel before taking any action based on this information.

Nichole Stohler

Nichole co-founded Gateway Private Equity Group, with a history of investments in single-family and multi-family properties, and now a specialization in hotel real estate investments. She is also the creator of, a blog dedicated to real estate investing.

Other related articles

No items found.
Rental rundown background image
Rental rundown hero image

Whether you’re a property owner, renter, property manager, or real estate agent, gain valuable insights, advice, and updates by joining our newsletter.

Subscriber Identity

I am a

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.