Definition
A certificate of occupancy is a municipal document confirming that a building has been inspected and is legally safe to live in. Cities typically issue one after new construction or a major renovation, and some jurisdictions require a fresh inspection and updated certificate before any home can legally resell. Where this requirement applies, the absence of a valid certificate can prevent the transfer or occupancy of the property entirely until corrections are made. For homeowners in cities with this rule, it's worth checking early in the selling process whether a point-of-sale inspection will be required, since surprise repair items can otherwise appear late and delay closing. The specific requirements, inspection criteria and associated costs vary significantly from one municipality to the next. Buyers purchasing as-is, particularly cash buyers, will sometimes take on this responsibility themselves as part of the purchase agreement.
Example
Before Harold could sell his house in his hometown of Dayton, his city required a point-of-sale inspection and a new certificate of occupancy before any transfer could be recorded. A city inspector walked the property and flagged a missing stairway handrail, two missing smoke detectors, and an exposed junction box in the basement. Harold hired a handyman to fix all three items for about $650, and the inspector signed off a week later. He admitted he hadn't even known his city had this requirement until his title company mentioned it early in the process. Only then was his buyer legally allowed to close and move in, which pushed his original closing date back by nearly ten days but avoided any legal complication at the transfer itself.