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A-OK on C of O?

An out-of-date Certificate of Occupancy (C of O) can cause problems with sales and loans. Don’t believe it? Look at the case of a duplex apartment renovation in an Upper East Side co-op. The upper level of the apartment was classified as a professional space, while the lower level was classified residential. The co-op owned it and wanted to sell the entire apartment as residential space, thinking that usage could reap a higher price. The board had a purchaser lined up, but the would-be-buyer wanted assurance that the entire duplex was a legal residential unit before completing the deal.

All buildings must have a C of O, and you must change it when – as with the Upper East Side duplex – a resident is structurally altering the apartment in a way that will change the use, egress, or type of occupancy.

Failure to obtain a revised C of O can make apartment transfers exponentially more difficult. And when a board refinances its property’s underlying mortgage, lenders have been known to require the building to obtain a revised, permanent C of O within three years or the loan could be rescinded.

The second component of obtaining a revised C of O involves cleaning up all outstanding violations – then having the Department of Buildings (DOB) sign off on all work. The cost can vary widely, sometimes running as high as $100,000.

You may be reluctant to have a DOB inspector poking around your building, but you need to get over it. An inspector’s sign-off is essential for an up-to-date C of O.

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