What You Need to Know About Certificates of Occupancy in D.C. Before You Invest

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Buying and selling real estate involves a lot of red tape and a profusion of documents to complete. Your real estate professional will make sure you get everything accomplished for a successful merger, but there is one thing you don’t want to overlook: the certificate of occupancy (C of O). It’s a document that can make or break a real estate deal. 

A certificate of occupancy certifies that a dwelling meets all codes set forth by the DC housing authority and designates the property as either commercial or residential. It also determines how many residents a residential property can have and the maximum capacity for a commercial building. 

Obtaining a certificate of occupancy in D.C. is vital to ownership of any property. This article will go over what a C of O is, why you need it, and what to do if you don’t have it.

What Every D.C. Real Estate Owner Should Know About Certificates of Occupancy

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A certificate of occupancy proves compliance with the Zoning Regulations (DCMR Title 11) provisions of the DC Construction Codes and the Green Building Act; without it, the property owner can expect legal issues. There are several factors concerning certificates of occupancy that every DC real estate investor should know:

  • The Importance of a Certificate of Occupancy in DC.

A C of O is so crucial that it can stop mortgage and payments and win legal battles. A structure must comply with the DCMR Title 11 zoning regulation provisions of D.C. Construction Codes and the Green Building Act before being used as a business. No one can legally occupy a structure without it. The only exception is single-family homeowners. 

  • Temporary Certificate of Occupancy

The District issues a temporary C of O when a structure is fit for occupancy but still needs some work. The building may be reinspected later to receive a permanent certificate of occupancy once it reaches full compliance. A specific application must be used to apply for a temporary certificate of occupancy.

  • Types of Applications

There are six types of applications for a certificate of occupancy in D.C. An application exists for each different kind of change that can occur, such as use change, ownership change, and occupant load change. There are also applications for revisions, temporary occupancy, and new structures. Certificates of occupancy for new structures have three subsets: condition, completion of core and shell, and establishment. They mainly seek to establish that work on the building has been done to code before it is occupied.

  • Submission Process

The DC Permit Center processes applications through the Department of Consumer and Regulatory Affairs. It will either approve or deny your application for a certificate of occupancy in roughly 30 days. A certificate of occupancy number is issued upon approval, and that number is required to apply for a business license. They will also explain why they deny any application. That should guide the owner to make the suggested upgrades and improvements and reapply.

  • Penalties for Not Having a Certificate of Occupancy

Not having a certificate of occupancy is a big deal. The city can order the property vacated, sue the owner, and impose thousands of dollars in fines, beginning from the day of first ownership. 

  • Registered Agents

A registered agent collects legal documents for a business and serves as a point of contact for all legal communication. A registered agent isn’t required, however, to get a certificate of deposit. 

  • They Can be Used as Leverage

Buyers can use problems with a certificate of occupancy as leverage in a real estate deal. If there is any problem with the C of O that’s holding up a deal, buyers can use it to back out or negotiate a lower price.

A tenant renting in an apartment building without this key document has no legal obligation to pay rent. The city must issue a vacate notice for any structure that doesn’t hold a valid certificate of occupancy. Not understanding their importance and how to properly apply for one can be devastating for a business.

How to Apply for a Certificate of Occupancy

Woman applying for a certificate of occupancy online

Filling out an application is easy, but it must be done completely and thoroughly to be approved. These simple steps should help you avoid any issues in the process and get your application approved on time:

1. Determine the Type of Application You Need

Your business circumstance determines the type of application you should be filling out. A new business, a new owner, and specific changes and revisions require separate applications. You may be required to apply for more than one type of certificate.

2. Determine Current Methods to Apply 

The current process requires applicants to create an account on the DCRA Portal, which will prompt you on what to do from there. The COVID-19 pandemic caused a change in how applications were submitted, though, and new changes could happen at any time. Make sure you know the current acceptable methods for applying, because a late application can cause you to be denied. 

3. Gather the Required Documentation

Obtaining a certificate of occupancy requires that the structure has passed all necessary inspections. You will need the certification numbers for successful fire, plumbing, electrical, and general building inspections to apply for a certification of occupancy in DC.

4. Submit Application and Fee

Apply in whatever manner is currently mandated, along with the required fee. The fee associated with this application is based on the structure’s square footage and is calculated when the application is submitted. 

A certificate of occupancy is not something you want to overlook, so it’s important to get professional assistance if you’re uncertain of how to proceed. Not having one can even hurt the financing of a new building. It can significantly throw off the mortgage process, because lenders don’t work without one. 

Ask a D.C. Real Estate Expert for Help

Reach out for help if you don’t fully understand the process around certificates of occupancy in DC and how to make sure you have yours in order. Nomadic Real Estate has been working with residential property owners since 2005 to ensure they are on top of regulations like this so they can earn the best return on their investment.

Our team excels at knowing the Greater DC area and finding the best-fit properties for our clients. Contact our offices for more information about your property management needs.

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Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
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Unit Comparison Report:

  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
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Income Statement Month-Over-Month:

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Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

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Download a statement to see month and YTD financials:

You'll also find a month-over-month operating statement:

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Responses will show up in the conversation ticket:

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You can reply in-line using the comment box:

Each conversation will be logged in its entirety:

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

View a snapshot of income and expenses on your dashboard:

See every transaction in real-time on your ledger:

Statements and forms will be posted to your documents library:

View a suite of real-time financial reports:

See a running list of all bills, and drill down for more detail:

Under Bill Details, you'll find dates/descriptions/amounts and more:

You can also communicate with your Account Manager through the portal:

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.