Realtors and anyone that has dealt with CO issues...

For houses that had CO issues, did the bank have an issue with it and wouldn't let you or your client close? I want to see what the majority of banks are doing now about this. The house we're about to go to contract on doesn't have a CO for a bathroom in the basement and I want to see how likely it will be that the bank won't let us close because of it. The sellers do not want to get the CO. TIA!

Re: Realtors and anyone that has dealt with CO issues...

is there a tub in the basement?

Re: Realtors and anyone that has dealt with CO issues...

In my experience, it really depends on the bank, but if it's a half bath, most will let it slide. I've had two recent sales where there were half baths (one on the second level of a cape, one in the finished basement of a colonial) with no C/Os, and the bank didn't make an issue of it. It wouldn't even show up on a title report, I don't think. So it may not even come to the bank's attention.

But I've also found that larger commercial banks (e.g., Chase), as well as credit unions, are often more strict with C/O issues than a specialty mortgage bank.

ETA - If your bank won't let you close without the CO, and the seller doesn't want to get it -- or you don't want to delay the closing by taking the time to get it -- it can always be removed (if it's a half bath, this is really easy...). That's why I always tell my customers, if something in the house is a "gift" (meaning there is no C/O and the seller isn't going to get it), then don't attach any value to the item or feature (be it a deck, pool, half bath). It may have to go.

Message edited 3/15/2012 12:37:50 PM.

Re: Realtors and anyone that has dealt with CO issues...

Re: Realtors and anyone that has dealt with CO issues...

Our experience was in the town of Islip. If you are planning to do ANY work on the house that requires a permit they will inspect the basement for compliance and you will be required to bring the house up to compliance before they will give you a new CO. We did not know when we closed, that the half finished basement should have been added to the CO and it was lacking some things to put it into compliance. Several years later when we added a dormer, they inspected the basement and we had to pay about $900 in "permit fees" plus another $1500 to our contractor to do a bunch of stuff (like fireproof door, sheet rock over the furnace, etc.) to bring it up to code. If you do end up doing work they will either make you tear it out or get permits depending on what they will allow. In our case, there was no water in the basement other than the washer & hot water heater so they were not concerned that it would become an illegal apt. but a full bath will trigger extra concerns, like adequate exit doors, window size, etc.

If you do plan on doing renovations later you may want to negotiate a reduction in the cost or money left in escrow to cover costs to get the CO so it's on the seller's dime, not yours. After our experience I would not buy without a completely accurate CO - I don't want to end up paying for their negligence.