Thinking of Selling Your Home...Read this First

Although Scarsdale’s real estate market has held up much better than most, it is still a tough time to sell a house. Recently, the Building Department in Scarsdale, with little if any public discussion, instituted a policy change which will make the process of selling a home much more difficult and costly for many residents. The change relates to how a seller of an older home complies with its obligation to deliver a certificate of occupancy for the property or other evidence that such a certificate is not required.

The typical contract of sale to sell a home makes it a condition of the buyer’s obligation to close that the seller deliver a certificate of occupancy (or certificate of compliance) or evidence that none were required covering the building and all other buildings on the property authorizing their use as a single family residence.

Many homes in Scarsdale were constructed prior to the date in 1923 that the Village required the issuance of certificates of occupancy for all new construction. In the past, the owner complied with its obligation by obtaining a letter from the Village, commonly referred to as a Pre-Date Letter, in which the Village stated that according to Village records the house was constructed prior to the date that certificates of occupancy were issued. The process was quite simple; a request was made, a nominal fee paid, and the Village issued the letter.

Purchasers, their lenders, and their respective attorneys universally accepted the Pre-Date Letters without questioning whether certificates of occupancy or compliance should have been issued for subsequent renovations made to the Premises. The vast majority of homes in Scarsdale built prior to the issuance of certificates of occupancy have been renovated since the original construction. Unfortunately many of these renovations were performed without obtaining the required permits and certificates of occupancy for the work. A Pre-Date letter was never intended to be a certification by the Village that the renovations were performed in accordance with law.

As a result of this misunderstanding, the Village has adopted a new policy with respect to the issuance of Pre-Date letters. Under this policy, the Building Department will inspect the house following a request for a Pre-Date Letter. . If the inspector determines that renovations were made without proper permits, the homeowner is required to “legalize” the renovation -- that is to file plans, obtain a permit and certificate of occupancy for the renovation.

This is a very costly proposition, particularly when it relates to the legalization of finished basements and attics. In many cases these renovations were performed years ago by prior owners, and requiring compliance with current code is expensive. In some cases, the current owners purchased the house relying on the Pre-Date letter, and are now being told that they must spend thousands of dollars to obtain certificates of occupancy for renovations made before their ownership.

This often arises in the course of selling the house when there are significant time constraints. In once case, an owner who had purchased a house in 1993, relying on a Pre-Date letter, could not obtain a new Pre Date letter without legalizing a finished basement and mud room enclosure, both of which existed when they purchased the home. Legalizing the finished basement required obtaining a ceiling height variance from the State (a process that takes up to 4 months) and the total cost of bringing the renovations up to code exceeded $40,000.

This drastic change in Village policy seemed to have occurred without any public hearing and, in fact, without any written notification of the new policy. Only after several local real estate agents and attorneys raised this issue did the Village publish the new policy in November 2010. The policy is now available on the Village website under Hot Topics.

As of this date, however, it is unclear how the new procedure will be enforced. For instance, would it be fair to require a homeowner to “legalize” an attic that was clearly renovated many years ago by complying with current building code that requires the installation of a fire suppression system? Generally, decisions as to what must be done to legalize an existing renovation have been left to the discretion of the Building Department Inspector.

I suggest that anyone thinking about selling an older home that was built prior to the issuance of certificates of occupancy contact the Village Building Department prior to putting the home on the market to determine exactly what will be required to obtain a new Pre-Date Letter.

Keith E. Schutzman has been practicing real estate law for over 25 years. The majority of his practice is residential transactions in Scarsdale and vicinity. He lives and works in Scarsdale, and has been a resident of Greenacres for 18 years with his wife and their three boys who attend the Scarsdale public schools. Mr. Schutzman has been active in community affairs and coaching for many years. His comments about residential real estate have been sought out and quoted in major publications, including the New York Times and Money Magazine. Contact him at 914-713-0001 or by email at: KSchutzman@aol.com