Careers Business Ownership The Basics of a Certificate of Occupancy Who Needs a CO and How to Get It Share PINTEREST Email Print Hero Images/Getty Images Business Ownership Industries Landlords Retail Small Business Restauranting Real Estate Nonprofit Organizations Import/Export Business Freelancing & Consulting Franchises Food & Beverage Event Planning eBay E-commerce Construction Operations & Success Becoming an Owner By Erin Eberlin Erin Eberlin Erin Eberlin is a real estate and landlord expert, covering rental management, tenant acquisition, and property investment. She has more than 16 years of experience in real estate. Learn about our Editorial Process Updated on 05/25/20 There are certain requirements you need to follow when you purchase a property. One such requirement may be to obtain a certificate of occupancy (sometimes simply referred to as a "C of O"). The purpose of this certificate is to confirm that your property is fit for human occupancy. Here are six basics of the certificate of occupancy that every property investor must understand. The 6 Basics of a Certificate of Occupancy To understand if you need to apply for a certificate of occupancy, there are six basic questions that can be answered. 1. What Is a Certificate of Occupancy? 2. Who Needs a Certificate of Occupancy? 3. Where Do You Get a Certificate of Occupancy? 4. How Do You Obtain the Certificate? 5. What If You Do Not Pass Inspection? 6. What Happens if You Don't Get One? 1. What Is a Certificate of Occupancy? A certificate of occupancy is an essential document for every rental or investment property owner. This document usually serves three purposes. It tells you: A. What the Structure Is Used For: The certificate of occupancy describes what class the property is in. It could be classified as a residential building, which includes single family and multifamily properties, a retail property, a commercial building, an industrial building, or a mixed use property. This classification is to prevent the property from being used in a way it was not intended, for example, using a residential property as a hair salon. B. That the Structure Is Suitable for Occupancy: A certificate of occupancy serves as proof that a property has complied with all standards and codes and is now fit for occupancy. Depending on what the structure is used for, this could be occupancy by a residential tenant, by a commercial tenant or by a retail store and its customers. C. That the Structure Complies With All Building Codes: Obtaining a certificate of occupancy will serve as proof that the building has conformed to all housing and building codes. This is helpful if a tenant tries to complain about violations at the property. 2. Who Needs a Certificate of Occupancy? It is important to check with your local town because each town has different requirements. Some common reasons for needing a certificate of occupancy are: New Construction- Newly constructed buildings usually need to apply for a certificate of occupancy.Property Conversion- When a property is changing from one use to another, a certificate of occupancy is usually required. For example, a warehouse that is being converted to residential lofts.Change of Ownership- When a multi-family property, industrial property, or other commercial space changes ownership, a new certificate of occupancy is usually required.Major Construction- Some towns will require you to get a certificate of occupancy for construction that can change the occupancy of the property or that changes the way in which you exit the property. 3. Where Do You Get a Certificate of Occupancy? A certificate of occupancy can be obtained through the local government, usually in the town or county's building department or department of housing. The request has to be made before any work is actually done. A certificate of occupancy will not be issued, however, until the property has passed all inspection requirements and any fines on the property have been paid. 4. How Do You Obtain a Certificate? In order to obtain a certificate of occupancy, your property must pass a series of inspections. These inspections may include a plumbing inspection, an electrical inspection, a fire safety inspection, and a general building inspection. Professional inspectors are employed by local governments or agencies approved to issue a C of O. 5. What If You Do Not Pass Inspection If your property does not pass the inspection, you will be given a list of items that need to be corrected so that your property will conform with all building and safety codes. You will be given a certain amount of time to correct these issues, such as within 60 days. Once you have completed all repairs, you can call to have your property re-inspected. You may have to pay an additional fee. If you pass, you will be granted your Certificate of Occupancy. 6. What Happens if You Don’t Get One? If it turns out your local laws require you to get a certificate of occupancy for the type of property you have or for the work you are doing and you did not, you could be fined or even sued by the town. This fine could accrue for each day you had the property but did not have the certificate of occupancy.