What is a Certificate of Occupany?

Jeremy Larkin: 00:00 I'm standing here today with my good friend, Spencer Anderson, Sunwood Homes. I'm Jeremy Larkin with the Larkin Group. We're just talking about this challenge, this crisis that home buyers get into when they're building a new home. If you haven't dealt with hundreds of transactions every year, it's hard to even process that buyers plan months, even years, to move across the country, right?

Spencer A.: 00:22 Mm-hmm (affirmative).

Jeremy Larkin: 00:23 They come out. They design a home plan. They spend four to six months building the home. They pack the truck. They have their sister, their cousin, their brother-in-law, a professional mover, and they find out, "Oops. We can't move into the house, and we have all of our stuff sitting outside because we don't have a CO."

Spencer A.: 00:40 Absolutely.

Jeremy Larkin: 00:41 Spencer, tell us what a CO is today.

Spencer A.: 00:43 Okay, so CO, it's a very important document that you need in order to move into your home. What that stands for is a certificate of occupancy, and in layman's terms, that means that your house is worthy of human beings living inside of it.

Jeremy Larkin: 00:56 Per the city code.

Spencer A.: 00:57 Per the city code. And basically what they do is they come in right when the build job is done, and your inspector goes through and says, "Yes, all the outlets are working. They're working in a safe fashion. You're not going to start a house fire." They go through, they test the insulation. They see that the home is efficient. It's holding the air that it needs to, and make sure that every single one of the faucets work and make sure that the drainage on the property is working as it should. So, basically any of those really big, "Oh, crap," problems that could happen, they ensure from a city code standpoint that that's not going to happen.

Jeremy Larkin: 01:31 But what about this? But I'm the buyer. I paid for the house. I want to move into the house. I don't care about that stuff.

Spencer A.: 01:38 Well, technically you do not own the home until we have a CO done, and then you can close on your loan.

Jeremy Larkin: 01:45 Yeah. So, so critical. And if I could describe the number of times, whether it was a brand new home or a used home, that we had the agent representing the buyer call us and say, "The buyer is in front of the house with the moving truck. They can't move in." What type of snags could come up for a buyer with a certificate of occupancy?

Spencer A.: 02:05 So, we'll run through with just a small scenario and kind of-

Jeremy Larkin: 02:08 Yeah, and we're in, by the way, we're in a brand new home.

Spencer A.: 02:09 A brand new home. This is lot nine at Brookwood. This is our new model.

Jeremy Larkin: 02:14 It's incredible.

Spencer A.: 02:14 It's going to be, we're actually just got a CO done two days ago, and we're going through and putting through all the finishing touches. As you can see, a couple of doors are missing here. We got some tape on the windows. Final cleaners are going to come through, and we're going to cross the T's and dot the I's on this and have it staged up here in just about a week.

But going through why that CO is so important and kind of the snags you can run into, let's just say that someone is moving from across country and the builder that you're working with says, "Okay, we're going to be done by November 10th, and that's when the CO is going to happen." They'll probably have the CO a couple of days beforehand to give them a little bit of time.

Jeremy Larkin: 02:47 And not only am I planning on the tenth, this is an extra fun wrinkle. I've moved out of my house somewhere else.

Spencer A.: 02:52 It's sold. It's gone.

Jeremy Larkin: 02:54 Grief.

Spencer A.: 02:54 Someone else has moved in.

Jeremy Larkin: 02:55  So, what could happen? Let's talk electrical.

Spencer A.: 02:57 Absolutely. So, let's just say this. You're moving, and come through, and the builder has their CO. They say, "Yes, we're done. We're going to be coming through." The CO comes through, and they find out that there is a wiring issue that needs to be fixed before the city will issue that certificate of occupancy.

Well, now it's a problem of how quickly can we get the problem fixed? And let's say you're working with a smaller builder who reaches out to his electrician. Well, the electrician in a market like this is extremely busy, and he calls up-

Jeremy Larkin: 03:24 I'm out six months.

Spencer A.: 03:24 Well, not six months, but very well he could say, "Hey, I can't get someone out there for seven to 10 days to fix that problem." And so, now it's in a little bit of a scramble. So, you have this problem that needs to be fixed, and then once it's fixed then you need to get the city back out to inspect it and give it their stamp of approval. But now you have a person-

Jeremy Larkin: 03:42 Ouch.

Spencer A.: 03:42 ... that's trying to wait, and maybe they're living out of a trailer for seven to 10 days.

Jeremy Larkin: 03:46 The whole thing's painful. I just want to go back to bed. And this is a great example. So, you guys have, because I'm working with Sunwood Homes. We're representing them to sell the property. I know you have at least two really good tools that you use to mitigate these disasters. What are they?

Spencer A.: 04:00 So, very simple. One, we have a client interface called Buildertrend, and what that allows you to do is have 24/7 access to the building schedule and know exactly where we are in the process. If there's a weather delay that comes up that pushes back the process two days, you know that. You can check it at 3:00 in the morning in your PJ's.

Jeremy Larkin: 04:18 I love that.

Spencer A.: 04:18 It's right there on your phone.

Jeremy Larkin: 04:18 Beautiful.

Spencer A.: 04:19 Second thing that we have is we have experience in volume. And basically what that means is when we need something done in a certain, you can call it an emergency situation, but we have that relationship with our subcontractors that when we say jump, they say, "How high?" So, when we need to get that CO done, we don't get pushed back 10 days. It's, "Okay, I'll have a guy out there this afternoon." And that just honestly comes with building that relationship, and the type of company that we are.

Jeremy Larkin: 04:44 Yep. Yeah, yeah. The last thing you want is to work with a contractor who says, "My sub comes out once a week and spends 10 minutes on the job and leaves and comes back."

Spencer A.: 04:54 Yeah, yeah.

Jeremy Larkin: 04:55 And these guys don't do that. So, thank you, Spencer Anderson, Sunwood Homes.

Spencer A.: 04:59 Thank you, Jeremy.

Jeremy Larkin: 04:59 Appreciate it. If you got questions about COs, certificate of occupancy, the building process, designing a plan, anything about the home building process, visit us at mysunwoodhomes.com.