As intimidating as getting a certificate of occupancy may seem, it does not have to be extremely hard. We are here to assist you to go ahead with confidence by answering your most often asked questions concerning the certificate of occupancy.
The criteria vary significantly depending on the location of the property, so check with your local government to be sure of your next actions. This post will define a certificate of occupancy, when it is required for short-term rental owners, and how to get one in key U.S. locations.
What exactly is an occupancy certificate?
A certificate of occupancy serves many functions. To begin with, it is a certificate that certifies that your property is safe for habitation and meets all required regulations. It also says that the property complies with all construction regulations in the region. Finally, it specifies whether the property is utilized for residential, commercial, retail, or industrial purposes.
A valid occupancy certificate is nearly usually required by law for any building that will house people. If you’ve ever purchased or sold a house, you’ve probably had to deal with the process in some way. As the owner of a short-term rental property, you must understand the certificate of occupancy and ensure that you meet all of the criteria.
Is a certificate of occupancy required for short-term rentals?
Yes, in a nutshell. Any facility where people will dwell, whether long-term or short-term, will almost certainly need a certificate of occupancy (with a few exceptions).
A valid certificate of occupancy is required to obtain a vacation rental license, so you will come across it along the way to becoming a short-term rental property owner. It is illegal in most states in the United States to rent a property without a lease.
Assume you are purchasing a home that is already in use as a residence and have no plans to make any changes. In that case, you might not need to obtain a new certificate of occupancy. Even if you don’t need to apply for a new one, you’ll need to locate the previous owner’s certificate.
In any case, it’s one of those areas where no surprises are welcome. To ensure that you comply with regulations, you should always be aware of your property’s certificate of occupancy status.
When is it important to get an occupancy certificate
In a few cases, obtaining a certificate of occupancy will be required. If you are in one of the following situations, you must apply for one.
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Constructing a new structure
Because they have never been occupied before, new constructions almost always require a certificate of occupancy. It can take some time to complete all of the inspections, so you should start thinking about getting your certificate as early as possible in the process, especially if you want to start your short-term vacation rental business with a new build.
Changing a property’s use
A new certificate of occupancy is required if you want to alter the use of a property. Converting an office space, for example, into a residential apartment. Because the requirements for each use are typically different, keep in mind that you will almost certainly need to make changes to the property to obtain the certificate. It is best to contact the appropriate government agency in your area to determine what is expected of you.
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New Property Occupancy Certificate
Building extensions
In most cases, a certificate of occupancy is required when constructing additions such as additional rooms, porches, and so on. Before issuing a certificate, every square foot of a property is thoroughly inspected, and your addition will be held to the same standards. Check the requirements of your area before beginning any renovations to avoid fines.
Making any structural changes that affect exits and/or fire safety
This is especially important to understand when dealing with fix-and-flip properties. If any of the changes you intend to make affect how you exit the property, you must apply for a new certificate of occupancy. This is primarily due to its impact on the structure’s fire safety. Remember this as you plan your renovations.
When a property changes ownership and/or tenants but the use of the property remains the same, no certificate is required. As a result, if you intend to purchase a property that is already listed as a residential property and does not intend to make any structural changes, you will most likely not require a new one. To legally rent the property, you will need to obtain the current certificate of occupancy from the previous owner.
What are the consequences of not having a certificate of occupancy?
The consequences of failing to obtain a certificate of occupancy when required are not to be taken lightly.
It is largely determined by local laws. In general, if you are caught renting a property without an occupancy certificate, you may be sued by the local government and/or fined for each day you did not have the certificate. It could have a significant impact on both your business’s trajectory and your wallet.
Most states issue both temporary and permanent certificates of occupancy, and you should have one on hand for the duration of your short-term rental property business.
The primary requirements for obtaining an occupancy certificate
Because requirements vary by region, you should always check with your local government for a definitive answer.
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Several inspections
The certificate of occupancy’s primary purpose is to demonstrate that a property is safe for occupancy. That means you’ll have to go through a slew of inspections before getting your certificate, including everything from construction to plumbing and electrical. This is why the process can be time-consuming, and you should begin as soon as possible.
Where applicable, a building permit
For any new construction (whether from the ground up or renovations/additions), you will most likely be required to present your building permit. In the case of fix-and-flip properties, a temporary certificate of occupancy (valid for 90 days) may be required while the property is being flipped but no tenants have been found. Every situation is distinct.
The act
The deed is the legal document that proves ownership has been transferred from the seller to the buyer. When applying for the certificate, you will most likely be required to provide the deed to demonstrate that you legally own the property
Who is responsible for issuing the certificate of occupancy?
The local government in your area issues certificates of occupancy. It is usually the responsibility of the housing department. When in doubt, a quick Google search for “certificate of occupancy in your city>” will provide you with a good idea of who is in charge and what the requirements are.
The main takeaways
Whether it is your responsibility to apply for a new certificate of occupancy or not, it is critical to be aware of your property’s certificate of occupancy history and to ensure that you comply with regulations. The process does not have to be complicated, but it does take time, so get started as soon as possible.
Remember that you cannot rent a property without a valid certificate of occupancy – this is critical! Being well-prepared in this area is the best way to position yourself and your company for success. After all, we want you to be successful with your short-term rental property business right away!
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