Certificate of Occupancy: What Is It and Why Is It Important?

In the rush and excitement of closing on your newly constructed home, there’s one important document that should not escape your attention: the certificate of occupancy (CO).

In fact, you should check with your builder prior to closing to make sure one has been issued for your future home. But, what is this piece of paper exactly and why is it so important?

A certificate of occupancy is a document issued by your city or local municipality’s building department stating that your newly constructed home complies with all current local building codes and is in a condition suitable for safe occupancy by the residents. A CO must be issued for your property before you can legally take up residence in the home.

“The Certificate of Occupancy is saying from a life-safety standpoint that your house is habitable,” said Anthony Natale, co-founder and president of Dallas-based Grenadier Homes. “It’s a very important document to have.”

How is the certificate of occupancy issued?

For a new-construction home, the CO will be issued to your builder as the entity that pulled the permit to construct the house. The certificate is issued after the home has undergone and passed your city’s home inspection process.

Each newly constructed home undergoes a series of city inspections during the building process to ensure each stage adheres to local building codes, from checking the plumbing under the foundation to the pre-pour foundation stage to the framing and mechanicals (electrical wiring, plumbing and HVAC).

“If a builder doesn’t pass an inspection — if something is not to code or there is a structural issue — then the inspector issues a red tag and the builder cannot proceed,” said Natale. “The builder must make the repairs and usually pay a re-inspection fee for the city inspector to come back out.”

Upon the home’s completion, a final inspection is conducted and, if the home passes, the CO can be issued to the builder at this point. The builder should then provide the CO to the home buyer at or before closing.

How else is a certificate of occupancy important?

In many cases, lenders may require a CO to be issued before completing financing for your home and your insurance company also may require one as well.

If your home is nearing completion and you want to make sure you receive a copy, Cory Monroe, president of NeWave Construction Inc. in Costa Mesa, Calif., suggested talking with your builder’s on-site point of contact to arrange getting the certificate when it becomes available.

What if I can’t find my copy? Where do I get one?

If you’re already moved in and have misplaced your copy or you don’t think you received one, check with your local building department to verify that a certificate is on file for your home and to learn how you can obtain a copy (usually for a small administrative fee).