Buying or Selling a House? A New Act May Help Eliminate Potential Pitfalls

February 13, 2017
Posted in Real Estate Law
Buying or Selling a House? A New Act May Help Eliminate Potential Pitfalls

The Amended Municipal Code and Ordinance Compliance Act (“Act”) took effect on January 2, 2017. This act will be very helpful for people who are buying or selling real property. Many municipalities have ordinances that require an inspection prior to the sale of a property. Different municipalities have different standards. Some do a thorough inspection and come up with a punch list of items that must be corrected in order to obtain a use and occupancy permit for the purchaser.

You can imagine that if you have a settlement date coming up or a mortgage rate lock which is getting close to expiring, a township requiring a lot of work whether it be paid for by the buyer or seller could interfere with the settlement date or the mortgage rate lock.

Because of these issues, the Municipal Code and Ordinance Compliance Act was adopted and recently amended. The new rules are as follows:

  1. If there are no property maintenance issues or other code violations with the property, then the use and occupancy certificate must be issued immediately.
  2. If the inspection reveals violations, but no substantial violations, then a temporary use and occupancy certificate is issued, which gives the buyer the ability to live in the property while the violations are being corrected.
  3. A substantial violation is a condition that makes a building “unfit for habitation”. That is defined as “A condition which renders a building, structure or any part thereof, dangerous or injurious to the health, safety or physical welfare of an occupant or the occupants of neighboring dwellings. The condition may include substantial violations of a property that show evidence of: a significant increase to the hazards of fire or accident; inadequate sanitary facilities; vermin infestation; or a condition of disrepair, dilapidation or structural defects such that the cost of rehabilitation and repair would exceed one-half of the agreed-upon purchase price of the property.” Where a substantial violation occurs, you are entitled to a temporary access certificate. This certificate authorizes the purchaser to access the property for the purpose of correcting substantial violations. No one may occupy the property during this time.

A municipality may not require escrowing any funds or posting of bonds or any similar financial security as a condition of issuing the certificates.

A new owner will have 12 months from the date of purchase to bring the property into compliance, or in the case of substantial violations, to alternatively demolish the building.

After the expiration of 12 months, or sooner at the request of the property owner, the municipality shall re-inspect the property to determine compliance. If the municipality finds that the violations have been corrected, then a use and occupancy certificate will be issued.

This revised act will eliminate a lot of the uncertainty experienced by buyers and sellers when it comes to getting use and occupancy permits.

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