Blog: Insights and advice on Hamptons real estate
Getting a new certificate of occupancy to buy a home might seem like more trouble than it's worth, but trust me: It's worth it
When buying a house in East Hampton, be sure to get a new certificate of occupancy before your closing.
The certificate of occupancy is the building department’s confirmation that your purchase does not violate major provisions of the local building and zoning code. That does not mean, however, that your property fully complies with the New York State building code — only that the local inspector checked those items that create the most problems.
After having closed thousands of real estate transactions in East Hampton, let me explain what can happen when you close without a certificate of occupancy.
Let’s say that one of your advisors tells you that getting a certificate of occupancy is a waste of time. In fact, the seller discloses that the only reason they can’t quickly get a certificate of occupancy is their backyard deck. You love the deck, but it violates zoning restrictions. Do you want the deck or a new certificate of occupancy? After all, the seller argues that you can enjoy the deck for as long as you own the property, but then cut it down if you need a new certificate of occupancy in the future.
Don’t believe it.
It took me years to understand title insurance, but now I can tell you exactly how crucial it is to have
Clients often ask why they need title insurance. If the title insurance company searched the real property records, and found no issues, isn’t the client simply buying insurance to protect the client against the title company’s possible mistakes?
No. Only after years of reviewing East Hampton real estate titles did I understand title insurance well enough to explain it to anyone.
You buy title insurance to protect you against errors that can’t be discovered by the title company before closing. That’s it in a nutshell.
Here’s an example from my practice: Almost two years after closing, the client discovered that the surveyor had shown the property as larger than it was. In fact, the client was losing 12 feet of valuable waterfront property. The surveyor had simply made a mathematical error. At the end of the day, the title company gave my client more than $100,000 in settlement.
Let’s take a closer look at that scenario.
I know that a title report sounds too boring for words, but you'll still want your attorney to review it with you
Ask your attorney to review the title report with you.
Would you be more excited by learning after you buy it that you can’t expand your house without the developer’s permission? This is a common restriction, or “covenant,” contained in title reports.
A real property covenant is just a promise made by a former owner of your property, concerning its use, that all later owners must honor. Covenants were a simple way to control land use before East Hampton passed its first zoning code (around 1955). Before then, if you sold your friend property near your house, you wanted to restrict your friend’s property use. Typical covenants prohibited such offensive uses as soap factories and brothels. Even if your friend would be a good neighbor, the next owner might not be as obliging. So you recorded a covenant to protect your property.