Do You Need a Certificate of Occupancy Inspection to Sell Your Michigan Home?

You are getting ready to sell your house when you discover that your city requires an inspection before the sale or before the new owner can occupy the property.

What exactly is the city looking for? What happens if the house does not pass? Does the seller have to make every repair?

The answer depends heavily on where the property is located.

In Metro Detroit, some communities require an inspection or approval when an existing home changes ownership, while others handle home sales differently. Even the name of the requirement varies from city to city.

What Is a Certificate of Occupancy Inspection?

Homeowners often refer to these requirements generally as a Certificate of Occupancy inspection, but your city may call it something different.

You may hear terms such as:

• Certificate of Occupancy

• Certificate of Approval

• Certificate of Compliance

• Residential certification

• Reoccupancy inspection

• Presale inspection

These are municipal requirements and should not be confused with the private home inspection a buyer may order during a real estate transaction.

Depending on the municipality, an inspector may look at items involving:

• Electrical safety

• Plumbing

• Heating systems

• Smoke and carbon monoxide alarms

• Stairs and handrails

• Exterior maintenance

• Windows and doors

• Structural or safety concerns

• Other local property maintenance requirements

Some municipalities also require separate documentation or certifications for certain systems. i.e. Fireplace

Why Would a City Require an Inspection When a House Is Sold?

A change in ownership gives municipalities an opportunity to identify certain safety, code and property maintenance issues before responsibility for the property transfers to someone else.

These programs may be designed to:

• Address unsafe conditions

• Enforce minimum property maintenance standards

• Identify certain code violations

• Reduce deterioration and neighborhood blight

• Verify required safety items

• Establish responsibility for unresolved violations

• Create a process for correcting problems when ownership changes

For example, the City of Wayne explains that its residential certification program is intended to maintain minimum property standards and safeguard life, health, property and public welfare.

Which Metro Detroit Cities Require an Inspection?

There is no single process used by every Metro Detroit municipality. Here are several examples of communities with residential sale or transfer inspection requirements.

Westland

Westland requires a Certificate of Approval for residential properties being sold or transferred. The city's process includes a code inspection and heating system certification.

Westland Buying or Selling a Home Requirements

Garden City

Garden City requires homes being offered for sale to be inspected for compliance with minimum housing standards and addresses Certificate of Occupancy requirements for resale properties.

Garden City Building Department

Wayne

The City of Wayne has a Residential Dwelling Certification program requiring residential dwellings to be inspected and certified prior to sale.

Wayne Building and Engineering Department

Inkster

Inkster has a residential inspection and Certificate of Reoccupancy process associated with occupancy of a home by a new occupant.

Inkster Residential Inspection Checklist

Lincoln Park

Lincoln Park requires residential dwellings to receive an exterior inspection before sale. The city uses a Certificate of Approval process for the sale or transfer.

Lincoln Park Residential Inspections Prior to Sale

Municipal ordinances, procedures, fees and requirements can change. Sellers and buyers should verify the current requirements directly with the municipality before relying on them for a transaction.

What Happens If the City Finds Repairs?

Finding violations does not necessarily mean the house cannot be sold.

Depending on the municipality, the nature of the violation and the circumstances of the sale, options may include:

• Seller completes the required repairs

• Property is reinspected after repairs

• Seller obtains final municipal approval before closing

• Buyer agrees to assume permitted outstanding violations

• City issues temporary approval allowing the transaction to proceed

• Buyer and seller enter into a compliance agreement

• Money is placed into escrow for required repairs

• Buyer receives a deadline to complete remaining work after closing

The important point is that each municipality establishes its own process.

For example, Westland provides a process that can allow a purchaser to assume remaining violations and obtain an Approval Letter to Close when its requirements are satisfied.

Lincoln Park also provides a process in which a purchaser may assume responsibility for outstanding violations and receive temporary approval for closing.

So if a city inspection finds problems, the next question should not automatically be, "Can I still sell my house?"

Instead ask:

What options does this particular city give the seller and buyer?

Should the Seller Complete the Repairs?

Just because a municipality may allow a buyer to assume certain repairs does not necessarily mean transferring those repairs is the best way to market the property.

There can be real advantages to completing reasonable city repairs before putting the house on the market.

Benefits of Completing Repairs Before Selling

• Market the property with municipal issues already addressed

• Remove uncertainty for prospective buyers

• Avoid asking buyers to estimate unfamiliar repair costs

• Reduce potential negotiation points

• Make the property more attractive to buyers looking for a move in ready home

• Avoid putting another responsibility on the buyer immediately after closing

• Potentially make the transaction easier for buyers using certain types of financing

• Present a cleaner transaction to a larger pool of potential buyers

A buyer looking at two similar houses may feel more comfortable with the one where the municipal inspection has already been completed and the required repairs have been addressed.

That can matter even when the repairs themselves are relatively minor.

When Might It Make Sense for the Buyer to Assume the Repairs?

There are also situations where completing everything before selling may not make financial sense.

Examples could include:

• An estate or inherited property

• A house already being marketed based on its condition

• A seller who does not have funds available for repairs

• A property requiring substantial renovation

• A buyer planning a major renovation anyway

• A seller who does not want to coordinate contractors

• Repairs where the cost and effort may not improve the property's marketability enough to justify doing them first

The right decision depends on the house, the repair list, the municipality, the likely buyer and the seller's goals.

The Better Question for Sellers

When a city inspection identifies repairs, sellers sometimes focus entirely on one question:

"Can I make the buyer assume these repairs?"

There is another question worth asking:

"Would completing these repairs make my house easier to sell and open it to a larger pool of buyers?"

Those are not necessarily the same question.

Sometimes taking care of a manageable list of repairs before marketing the home can eliminate objections and make the property easier for buyers to consider.

Other times, particularly when a property needs substantial work, selling it with the buyer assuming permitted repairs may make more sense.

My experience as both a Michigan real estate agent and licensed builder is useful in situations like this because the decision is not simply whether something can be repaired. The more important question is often whether completing that repair before selling makes sense financially and strategically.

If you are preparing to sell a home in Metro Detroit, checking your municipality's requirements early can prevent surprises once you are already under contract.

For more information about preparing and selling a Michigan home, visit SoldByCaleb.com.

This article provides general real estate information. Municipal requirements vary and can change. Always verify current requirements directly with the municipality responsible for the property.