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
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
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.