When you’re thinking about entering the market as a landlord, the considerations are many. Before you get caught up in the minutiae of advertising the property, making cosmetic upgrades, or screening for the perfect tenant, be sure to consider the paperwork that may need to be completed before you may legally rent your unit. The requirements to move a tenant into a property vary greatly by municipality. A landlord should be prepared to encounter a process of legal filings, fees, and inspections, and should anticipate potential roadblocks. While the local requirements will dictate what must be done, a general understanding of the terminology and other considerations may make it easier to navigate this process.
Most municipalities require a certificate of occupancy and a landlord license, but these documents may be known by different titles, such as an occupancy certificate, a business license, or something else entirely. The city of Philadelphia recently replaced its required business privilege license with what it calls an activity license. According to the site LawHelp.org, a certificate of occupancy, a housing business license, and a registration or exemption referencing the Rent Stabilization Program are required to rent in Washington, D.C.
More About the Certificate of Occupancy
A certificate of occupancy, or CO, signifies that a building has been deemed suitable to be occupied, as specified by the local jurisdiction. This certificate is generally required for new buildings, for structures undergoing significant renovations, or a building where the use is changing. Certificates of occupancy may or may not require inspections, and come with fees that vary greatly as well. The inspections may include checks on infrastructure such as electrical and plumbing, as well as items that have been added afterward, such as fire detectors and appliances.
Determining whether a certificate of occupancy will be required for different kinds of dwellings is another question for landlords to address. Be sure to get specific instructions from your municipality. Is a CO required for a single family dwelling, or only a building with two or more units? Can you rent a room without a CO? What about an apartment or a condo, which should have a current CO for the entire building or community? Do I need a new CO each time a new tenant takes possession of the property?
The considerations for these situations are great, and the variations are many. The easiest way to head off any of these questions is to check with your municipality.
I’ve heard the city never checks on whether a CO has been obtained…
There is no question that securing the required forms to rent your unit will cost you time and money, even if the process moves along smoothly. It’s easy to convince yourself that a large government bureaucracy doesn’t have the time or resources to track down every rental property in town.
The risk you run without these documents comes if you need the assistance of the courts, perhaps to evict a tenant or recover monetary damages. The document “Tenants’ Rights in New Jersey,” published in 2014, advises renters that if a landlord has failed to obtain a CO prior to renting a unit in a municipality where the law requires it, that may help to form a defense from eviction, and may contribute to showing that the unit fails to meet minimum codes for habitation. The savvy tenant may know of this requirement and could research whether the proper documentation has been filed. For the New York City tenant, the New York City.gov site provides a CO search based on the propety address.
Plan ahead to be patient
It is important to do your research early and expect the process to take time. Be sure to allow for the necessary time to get your required licenses in order, and plan for those gaps in income, as well, before rent checks start being deposited into your account. The wheels of government are not known for turning quickly or making exceptions for individuals.
Where inspections are involved, there are appointments to be made and kept. If remedies are required, contractors must be hired, and re-inspections will be required. Within the whole process, staying organized and patient will serve a would-be landlord well.
Of course, wading through red tape is not the only consideration for a landlord renting a unit. Asking questions of your local housing or buildings office will help you get the answers you need and make sure you are using your time efficiently to show that your unit is safe and habitable, and that you have paid the required fees to rent your unit.
