Certificate of Occupancy NYC

The PropertyClub Team
Mar 19th 2019
If you’ve ever been involved in an NYC real estate deal, you may have heard the phrase Certificate of Occupancy. This piece of paper, which is at times taken for granted, may be the difference between a tenant paying rent or an investor or real estate developer obtaining financing to purchase a building. As such, it’s essential that you understand this document whether you are buying, renting or renovating the property.

What is a Certificate of Occupancy?

A Certificate of Occupancy, also abbreviated to C of O or CO, is a real estate document used by the Department of Buildings, to indicates a building's legal use as well as the type of permitted occupancy. For example, a C of O will state whether a building is a residential, commercial or mixed-use property. The C of O will also indicate the number of residences or units that are allowed in the building. Overall, this document verifies that the property complies with all relevant building codes and is safe for occupancy. If a property doesn't have the proper C of O, the city can always issue a “Vacate Order.”

What is a temporary Certificate of Occupancy?

A Temporary Certificate of Occupancy (also known as a TCO) is similar to a CO in that it grants the same rights as a CO, but only temporarily. TCO's are issued when a building or part of a building is safe to inhabit but the building, for whatever reason has outstanding work or permits to obtain before the city can issue a permanent C of O. Temporary C of Os are typically issued for 90 days at a time. 

What if your building has an I-Card instead?

New York City did not require Certificates of Occupancy until 1938. As such, some buildings built before 1938 do not have one. If this is the case, then an I-Card is usually accepted as the legal record of existing occupancy.

However, buildings with I-Cards may need to be issued a C of O, if any lawful alteration or conversion work was performed in the building after the last date listed on the I-Card.

What is your building doesn’t have an I-Card or C of O?

If you are a renter in a building that doesn’t have a CO, this means that your landlord is not permitted to collect rent from you. As such, the landlord will be unable to sue you in housing court in the event you stop paying your rent. However, a landlord may still evict you in what’s called a holdover proceeding.

If you’re buying an apartment, you will need at least a temporary C of O to start the financing process. However, many lenders expect to have the final C of O issued prior to approving financing. However, if the building is new construction, don’t be surprised if the date for obtaining a final C of O keeps changing.

Do you have to update your CO when you renovate?

If you're undergoing substantial renovations or purchasing a property you intend to renovate; you probably need to update the C of O and obtain the proper permits to complete the desired work.

Any renovation or alteration that creates a change in the number of rooms, or a change in the legal use of the building will require a permit. (e.g., a two-family that turns into a three-family by adding a basement apartment). 

A qualified architect or engineer can review your renovation plans to flag any potential issues and inform you when an updated C of O will be required for your project.

What if I’m purchasing an “as-is” or bank owned property?

If you are purchasing “as-is” or “bank owned” property, typically you will be responsible for correcting any C of O problems that exist and/or are discovered. As such, it’s important to review your purchase agreement, to determine the scope and cost associated with purchasing the property, especially if C of O problems are discovered.

Co-ops vs. Condos

Unlike units in condos, individual apartments in co-op buildings are not issued C of Os. In a co-op building, there's one C of O for the entire building. This means that if there’s a problem with the C of O, it remains up to the Co-op Board to correct those issues.

When purchasing a condo (or any other type a building except a co-op), C of O problems are usually spotted on the title report.  If problems are discovered, you should first figure out if the issues are fixable by hiring an architect and an experienced expeditor. While an expeditor can help to dramatically speed up the otherwise notoriously lengthy paperwork process, you can still expect the process to take anywhere from 3 months to years depending on the type of building as well as the renovations involved.