The New York City Department of Buildings recommends that you do not close until you have obtained a permanent Certificate of Occupancy (CO). However, individual buildings continuously keep receiving Temporary Certificates of Occupancy (TCO) when the old one expires. Buildings, built before 1938, are grandfathered and do not need to have a CO unless there have been changes to the use, egress, or occupancy. Even in this case, the building requires to obtain a Letter of No Objection, which shows it complies.
Purchasing a building without a permanent CO contains specific risks, and you should understand what these entail.
Table of Contents
What is a Certificate of Occupancy?
A building cannot have any occupants until the Department of Buildings issues either a CO or TCO. A CO states a building’s legal use and the type of permitted occupancy. This is required for new construction. An existing building must amend its CO when there is a change in use, exit, or type of occupancy.
There are a host of things a building must pass before a CO is given. This includes construction, plumbing, and electrical inspections, as well as approval for the elevator, the building survey, and making sure there are no open permits or violations. The Department of Buildings will issue a final CO once the work is completed, and it matches the plans. There are many city building codes and zoning requirements, and a CO means the work complies with the law, the proper paperwork has been submitted, and fees have been paid. If there were any violations, these must get resolved before a CO is issued.
You can check a property’s existing or pending CO by using the Buildings Information System website.
What is Temporary Certificate of Occupancy?
If the Department of Buildings determines the building is safe, but it feels some issues need addressing, the department issues a temporary certificate of occupancy. These expire 90 days after issuance but can get renewed.
Why Caution is Warranted
While the building is deemed safe if a TCO was granted, you should still approach the situation cautiously. New York City “strongly recommends” that you negotiate your closing based on the building receiving a final CO. The city further urges you to ask an engineer or architect to find out what work remains. This also applies to co-ops and condos.
In a new building, the sponsor may try to have you close on your unit quickly. Legally, the sponsor can close the deal within 30 days after he/she receives the TCO, and the state needs to declare the offering plan effective.
Once you buy the unit, you are now responsible for obtaining the final CO. If you are anxious to move in; you can protect yourself by putting in the contract that the developer is responsible for finishing the work and obtaining the CO. In an existing unit, you can ask the seller to put money aside in an escrow fund to cover the expenses.
If the TCO expires and it is not renewed, it is complicated to obtain homeowner’s insurance. You will have problems if you want to refinance your mortgage or when it is time to sell.