WHAT IS IT AND WHY IS IT IMPORTANT IN A REAL ESTATE SALE?
You have probably come across this message when looking at homes online:
"BUYER RESPONSIBLE FOR OBTAINING C/O AND FIRE CERTS"
If you haven't bought or sold a home recently, this might not make any sense to you. So I've put together responses to the most common questions about the C/O process to shed some light on the topic.
WHAT IS A "C/O"?
C/O stands for "Certificate of Occupancy". Municipalities decided that they needed a way to make sure that residential dwellings were being kept to minimum building code standards. In other words, they wanted a way to make sure that all residential property bought and sold was suitable for habitability. So they created the Certificate of Occupancy, or C/O for short.
HOW DOES IT WORK?
Every time a home is sold, a town inspector evaluates the property and determine if there are any health hazards or safety concerns. Any “violations” the inspector finds must be corrected before the home is re-occupied by the new owner.
WHO PAYS FOR IT?
It depends. In this market there are a lot of “as-is”, short sales, foreclosures, and properties that need repairs. Many of these properties require signifnact repairs in order to pass a c/o inspection. Depending on the list of violations, obtaining a c/o can become very costly. Therefore, who pays for it it becomes a point of contention during every real estate sale.
WHY IS IT THE BUYER'S RESPONSIBILITY?
Normally buyers are only responsible for obtaining the c/o when buying foreclosures and auction sales. But because we are in a seller’s market, many sellers today would rather put the responsibliy on the buyer, even in a traditional sale.
DO YOU ALWAYS HAVE TO GET THE C/O BEFORE CLOSING?
Not always. There’s something called a conditional, or temporary, C/O that allows the buyer to correct the violations after closing. In this case, the buyer agrees in writing (usually an affidavit) that he/she will not occupy the property until the town reinspects and issues the full C/O.
WHEN DOES THE SELLER GET THE C/O?
If the home is in good to great condition, then it makes sense for the seller to get the C/O. It shows the buyer that the home is safe and habitable and worth the price. Conversely, by telling the buyer that he/she must obtain the C/O, the seller is admitting that the home needs some repairs, and this usually effects the price a buyer is willing to pay.
TIP: The insepctor checks for open permits on a property before issuing a C/O, so make sure all permits are closed out beforehand!
WHAT ABOUT THE FIRE CERTIFICATE?
Depending on the town, the fire certificate can be a separate inspection or part of the C/O. Regardless of how its set up, the point of the fire inspection is make sure the home is fire code compliant. There is no “conditional” option for the fire cert, so it’s either pass or fail. This means that if the required smoke alarms, carbon monoxide detectors, and fire extinguishers are not properly installed in their correct locations, the property will fail and it will delay the sale. The town will usually have a diagram to follow for the correct placement of the aforementioned items on each floor of the home.
TIP: ALL SMOKE ALARMS MUST BE SEALED, 10 YEAR BATTERY SMOKE ALARMS. THIS IS NOW A STATE REQUIREMENT.
SO GETTING THE C/O IS A PAIN IN THE BUTT?
It can be, for sure. how difficult it is to obtain a C/O will depend a lot on the condition of the property and the willingness of the buyer and seller to cooperate. But most importantly, having someone with experience to handle the process can be a major help.
Whether it's my buyer or seller client, I always help with the C/O. I do things like fill out and submit the application, schedule the inspection, meet the inspector, discuss violations with clients, supervise the repairs, and so on.
For the fire certificate, I first walk through the property and install smoke detectors etc where needed. Then I bring a backup kit of materials to the inspection in case I missed anything.
So if you have a good experienced realtor that knows what the inspectors are looking for, passing the c/o inspection can be easy and inexpensive.
Questions? Text me: 973-506-9866
Till' Next Time!
-Silvio / Realty 33
At Realty 33, We tap into 25+ years of experience and market know-how to help our clients make streetwise real estate decisions.