Many municipalities require a use and occupancy inspection when
a home is sold. Also called a U and O inspection,
this is separate from the buyer’s home inspection and almost always paid for by
the sellers. If no repairs are needed, the municipality (borough or township) issues
a use and occupancy certificate or permit. If repairs are required, the municipality will re-inspect the property once
repairs are complete before issuing the certificate.
Municipality Web Sites
If you’re in a municipality that requires a use and
occupancy inspection, you may able to find a list of items the inspector will check
on the township or borough web site. If you plan to sell, it’s a good idea to
review the list in advance and address any items you know will not pass.
Municipalities tend to focus on code violations and safety issues,
but the scope of their inspections varies. Some check just a few items, whereas
others have more extensive inspections. Municipalities may also require specific
certifications as part of the process, such as an HVAC or chimney
certification.
How the Process Works
In this area, sellers typically schedule the use and occupancy
inspection after an offer is accepted. The sellers usually must give the buyers
a list of required repairs, if any, and state whether they will make them. If the sellers refuse to make the repairs required
by the municipality and the standard PA agreement of sale was used, the buyers may
have the option to make the repairs so that the sale can proceed. They may also
have the option to terminate the sale—as long as they’re in compliance with all
of the relevant time frames. Since most sellers make the repairs their municipality
requires, buyers don’t usually face this choice.
What If Repairs Can’t Be Done Before Closing?
What happens If repairs can’t be done before closing due to
weather or other factors? In these cases,
the municipality may issue a conditional use and occupancy certificate so that closing
can proceed, with a requirement for the work to be done within a certain time.
When Buyers Pay the Costs
Though sellers usually pay for the municipal inspection and repairs,
there are some cases where buyers might agree upfront to assume this responsibility.
This happens most often with foreclosures. Listings for foreclosures frequently
state that the buyers must pay for the municipal inspection and repairs. If you’re
buying a foreclosure and agree to this arrangement, your risk that repairs could
be more extensive than you anticipated should ideally be offset by a lower sale
price.
Avoid the Headache
When selling your home, the best course of action is to address
any issues in advance that you think your municipality may flag. If something
unexpected comes up as a result of the use and occupancy inspection, keep in
mind that if you don’t agree to make the required repairs, your sale has a good
chance of falling through, and the repairs will be an issue again once you find
a new buyer.
Read more of Annette’s
real estate articles for the latest real estate advice.
If you’re planning to buy or sell a
home, contact Annette Nelson at (610) 247-7892 or annette@preferredhomes.com
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