A certificate of compliance is a document from a local or state authority saying that a property, or a piece of work on it, meets a set of rules. Which rules, and which authority, depends on where the house is. That is the catch with this term.
Some cities ask for a certificate before a house can be sold. Many do not. Others call the paper something else entirely, such as a certificate of occupancy or a certificate of inspection, and the rules behind it can differ even between two neighboring towns. This guide explains what a certificate of compliance usually means, when sellers run into one, and how to sell if you do not have one. Check the details locally.
What Is a Certificate of Compliance?
There is no national certificate of compliance. Building rules are set and enforced locally, so the name, the issuer and the meaning differ from one part of the country to the next, and a document that is routine in one county may not exist in the next.
In many places it is an official sign-off. It says that work or a property met a local standard on the date of inspection. That can cover a new electrical panel, a finished basement, or a whole-house inspection ordered before a sale, depending on what the local office issues.
In other places the same words mean something quite different. In California, for example, a "certificate of compliance" under the Subdivision Map Act is about the lot itself. It certifies that a division of real property complies with the subdivision law and local ordinances, and it has nothing to do with the condition of the house. (California Government Code section 66499.35)
So start by asking. What does your own city or county mean by the term, if it uses it at all?
Certificate of Compliance vs. Certificate of Occupancy
These two get mixed up constantly. A certificate of occupancy generally gives permission for a building to be used or occupied and confirms it meets the applicable codes. In Minneapolis, for example, it is required for new construction and whenever a building's use changes.
A certificate of compliance, or whatever your city calls it, is more often tied to a specific item. It may be a trade permit, a code case that was closed or a point-of-sale inspection. Some cities use one name for all of it. Others use three different ones, depending on whether the paper covers a trade permit, a closed code case or a sale-time inspection. Ask the building department which document your address needs. Get the exact name.
When Do Sellers Need a Certificate of Compliance?
Only when a local ordinance, a lender or an open permit asks for one. Most places do not require a certificate just because a house is changing hands, though it is worth confirming before you list.
- A point-of-sale ordinance. Some cities require an inspection and a certificate before a sale. In Shaker Heights, Ohio, the seller must get a point-of-sale inspection, and violations found must be corrected or covered by an escrow deposit before transfer. (Shaker Heights Point of Sale Procedure) In Cleveland Heights, owners must get a Certificate of Inspection before they agree to sell, and give the buyer a copy before the contract is signed. (Cleveland Heights Point of Sale Inspection)
- Open permits and finished work. A permit for a re-roof, a new panel or an addition may never have received final sign-off, and a buyer's lender or title company can ask for it to be closed before they will go forward with the deal. It happens a lot.
- A city code case. If the city cited the property, closing out the case may require an inspection and a written sign-off from the code office, and any fines that were set may keep accruing until that happens.
Those are examples. They are not a national rule.
How to Find Out What Your Address Needs
Call the building or housing department for your address. Ask three things.
- Do you require any inspection or certificate before a house can transfer?
- Are there open permits or open code cases on this address?
- What does the certificate cost, how long does it take and how long is it valid?
Fees, timelines and validity differ by city. Cleveland Heights, for instance, says its certificate is valid for one year, but that is one city's rule and not a standard. If the inspector finds problems, you will get a written list, and you then fix the items, or in some cities cover them with an escrow, and ask for a re-inspection.
Also ask for the permit history, because work done without a permit tends to surface during these conversations and can change what the city asks of you. For more on how cash buyers price repairs, see how cash buyers calculate offers. Our guide to selling a house with unpermitted renovations explains what that does to a sale.
Selling Without a Certificate of Compliance
You usually have three routes. The right one depends on your timeline and your budget.
- Get the certificate first. Fix what the inspector lists, pass the inspection, then list the house. Done right, this can net more on the open market. It only works when you have both the time and the money to do the work, because a long repair list can eat months and a sizable budget before the first showing. Plan for that.
- Negotiate with the buyer. Where the city allows it, a repair credit or an escrow can move the work to after closing. Ask your agent or attorney whether your city permits that.
- Sell as-is to a cash buyer. A buyer paying cash is not bound by a lender's property requirements, and the repair cost is priced into the offer. That offer is below what a repaired house might bring on the open market. Fair trade? For many sellers, yes. It is the price of skipping the work and the wait.
One point matters. A cash sale does not erase a city's own transfer rule. If your city requires a certificate or an escrow before title can transfer, the closing provider will still ask for it, and the buyer and seller then settle in the contract who handles it and who pays.
Eagle Cash Buyers evaluates houses in 43 states. Whether we can make an offer depends on the property, the title and our buying criteria. For more, see our guides on selling a house with code violations and selling a house as-is. If your house is in Ohio, our Ohio selling guide covers local transfer rules in more detail.
Frequently Asked Questions
Is a certificate of compliance the same as a certificate of occupancy?
Not always. Here is the usual split. A certificate of occupancy generally says a building passed its final inspection and may be occupied. A certificate of compliance, where a city uses the term, often covers specific work or a sale-time inspection. Some places use the names loosely, so ask your building department.
Does a certificate of compliance expire?
It depends. Some certificates carry an expiration date, such as the one-year certificate in Cleveland Heights, while others are tied to one project and never expire. Confirm with the issuing office. Do not guess.
What happens if the house fails the inspection?
You get an inspection report listing the items that failed. Make the repairs, and in most places you can ask for a re-inspection. Some cities also allow an escrow deposit for work finished after closing. Rules and deadlines vary widely, so confirm them with the city and a local real estate attorney before you decide whether to repair, escrow or sell as-is.
Can I sell a house without one?
Often, yes. Most places do not require a certificate just to sell. Where your city does, the sale cannot skip that step, though who pays for the work can be negotiated with the buyer.
