Certificate of occupancy

Definition

The local permission for a building to be used the way you use it.

Why It Matters

It names a USE and not an owner, which is what makes it a buyer's problem: the question is whether the certificate on file covers the business actually running there. It often does not, because a previous owner changed what the space does or built something without pulling a permit, and nothing forces that to surface until somebody applies for a license or an inspector walks in. Work done without a permit becomes the new owner's to legalize, at the new owner's cost and on the inspector's schedule. Ask for the certificate itself, read the use it states against the business you are buying, and check whether the jurisdiction requires a fresh one on a change of ownership, because several do and the application is where unpermitted work gets found.

In numbers: A $6,000 a month lease on a space whose certificate does not cover the use is $72,000 a year for a room the business can be ordered to stop using.