You may need to obtain a Certificate of Occupancy (CO) from the City of Chicago before securing a loan with A and N Mortgage Company. The key is knowing when you must apply for a CO and when you can proceed without one.

What Is a Certificate of Occupancy?

A Certificate of Occupancy is an official document that attests to the soundness of a building. It lays out:

• How a building will be used: The City of Chicago doesn’t want residents using their homes for massage parlors or their massage parlors for apartment buildings. To avoid inappropriate use, the city issues a Certificate of Occupancy. The CO classifies each structure according to its general purpose: residential building, commercial or industrial building, retail property, or mixed-use property. The city also determines whether residential buildings are single family homes or multifamily homes.
• Whether a building is suitable for occupancy: Before issuing a Certificate of Occupancy, an inspector will examine the property to ensure that people can safely occupy the building. The purpose is to ensure that the building is ready or suitable for its designated purpose (e.g., single family home).
• Whether a building has met all rules and regulations: Municipal codes lay out strict rules and regulations regarding the construction of buildings. The Certificate of Occupancy verifies that a particular structure has conformed to all applicable housing and building codes.

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Why Would I Need a Certificate of Occupancy?

The average homeowner does not need to apply for a Certificate of Occupancy. If you’re buying a single-family home that you plan to occupy, for example, then you can finalize your home loan with your mortgage lender without worrying about a Certificate of Occupancy. Only a few structures require a Certificate of Occupancy. They include:

• Newly Constructed Buildings: Certain types of newly constructed buildings require a CO. They include:
  • Multiple dwellings with four or more units
  • Non-residential buildings over 10,000 square feet
• Substantially Renovated Buildings: When such structures (multiple dwellings with four or more units and non-residential buildings over 10,000 square feet) undergo substantial renovation, alteration, or repair, a new CO must be obtained.
• Converted Buildings: If a property owner wants to convert a single-family home into a multi-family home, or a residential property into a hair salon, they must first apply for a new CO.
• Change of Ownership: The city sometimes requires a new CO when a building changes hands.

Visit the City of Chicago’s website for more information about the types of property that require a Certificate of Occupancy.

What Does a Certificate of Occupancy Involve?

Obtaining a Certificate of Occupancy can be a time-consuming process. It typically involves a series of inspections. Depending on the type of building and the reason it needs a new CO, the city may conduct:

• A general building inspection
• A fire safety inspection
• A plumbing inspection
• An electrical inspection

Since the point is to ensure that the building is structurally sound, safe for use, and compliant with local building codes, the city will inspect every aspect of the house it deems necessary.

Who Needs a Certificate of Occupancy?

Anyone who owns property subject to the above conditions needs a Certificate of Occupancy. Investment property owners and property owners who plan to rent out all or part of a home or building may also need a Certificate of Occupancy.

If a property owner bought a single-family home, for example, and then decides to rent out part of the house, they will need a CO in order to validate the change in use.

While the inspection and verification process can be time-consuming, official validation helps property owners protect their investment and cover their legal bases should a tenant complain to the city or file a lawsuit.

Not sure whether you need to obtain a Certificate of Occupancy before closing the deal on a new home? Contact A and N Mortgage to get helpful advice from an experienced representative. We’ll guide you through the process so you can have peace of mind it is done correctly.