The Use and Occupancy Inspection: A Hidden Headache For Sellers?

The Use and Occupancy Inspection: A Hidden Headache For Sellers?

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

#realestate   #housing  #UseAndOccupancyInspection   #MuniciipalInspection

Copyright © 2020 by Annette Nelson. All Rights Reserved.