No “CO” means no go in Chappaqua, NY

No “CO” means no go in Chappaqua, NY

 If you are selling your home, please use my recently failed transaction as a guide to prepare your home for a future sale.  Unfortunately, sometimes a small problem can cost both a buyer and seller to lose out on what otherwise would be a mutually beneficial transaction .  When placing your home on the market, one of the first things you and your agent should do is make sure your house is legal.  When completing a sale, it is expected by the buyer that the house is delivered legally and without violation.  This is especially true if you are advertising specific features of the home in an attempt to raise its value. 

 What do I mean by “legal”?  There is a very simple process involved when making improvements to your home.  For the majority of improvements, a homeowner must pay for a permit and pass several inspections throughout the course of completing the work.  When done correctly, the town will issue a certificate of occupancy, or “CO” for short, upon completion.  This process can be very intrusive and lead to unexpected costs from the local town.  Often times this process is avoided due to fees collected by local municipalities.

 The most common improvements that are made without applying for permits include adding a deck, finishing a basement or attic and adding a bathroom.  There are many other alterations that may show up throughout a transaction.  My point is not to criminalize you if you did not file for permits and get the proper CO’s when necessary.  However, your agent should make it clear that you will have to legalize any improvements made that are not recorded with the town.   One can only assume that you would argue that these features improve the value of your home, right?   It wouldn’t be ethical to argue that your deck adds $5,000 in value and at the same time say, “But, by the way, it isn’t legal and shouldn’t be there.” 

 Let me get to my story.  I had a deal in Chappaqua, NY that was going under contract.  All the details were ironed out and we were heading for an easy sale.  The house had a nicely finished basement which was heavily advertised in the listing with great detail and several pictures.  I went to the town to make sure each of its components had its appropriate certificate of occupancy.  Sure enough, the basement was listed with the town as unfinished.  I brought this to the attention of my broker and the listing agent.  This SHOULD NOT have been an issue.  Clearly the house was represented as having a finished basement.  The owner simply had to file the paperwork and get the CO.  This would have cost him approximately $500, give or take; a small fee on a $500,000 sale.  As you may have guessed, the owner felt he was “giving the house away" and decided he was not filing for the CO.  This is not unusual as homeowners aren’t familiar with real estate protocol.  Not a problem… the listing agent will step in and inform the seller that this is not an option, won’t she?  Whether it’s us, or any other buyer, this will have to get done.  Well, the agent attempted to get the point across to the seller but he insisted that he will not apply for the CO.  He expected us to purhcase the house with an illegal basement.  Again, this is quite common in the business and in several cases I’ve had to get on the phone with the seller’s attorney to explain the situation.  In every case, their own attorney advised the seller that the house must be delivered legally and that they will have to file for a permit and complete the process.  

Needless to say, this deal died because the seller refused to deliver a “legal” house.  Each side lost tremendously.  It was a shame that this transaction failed.  If you are selling your home, please be prepared to obtain the proper permits in order to deliver your home to your buyer.  Refusing to pay this minor cost will most likely lead to a MUCH bigger loss in the long run.       

Thomas Ricapito Headshot
Phone: 914-804-3048
Dated: April 19th 2012
Views: 10,610
About Thomas: I got into real estate sales by accident in 2006. At the time, I recently earned a Bachelor's Degre...

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