You’re ready to sell your home. You decluttered, depersonalized, applied a fresh coat of paint, and made those garden beds look like Babylonia. You’re looking at maximizing the return on your investment, envisioning the next vacation, maybe an island in the Caribbean or a European adventure to see your favorite football club.

Then your agent asks you to order a U & O inspection.

“A who and what?” you ask.

“A Use and Occupancy inspection,” your agent says.

“Doesn’t the buyer order the inspection?” you ask.

Then your agent describes the potential code violations from the U & O inspection and how it could cost you the all-inclusive margaritas, the deep-tissue couples massage on the beach, or those midfield seats at Camp Nou.

Maybe it doesn’t quite happen like that, but a U & O inspection is real for home sellers in the Philadelphia area. Leaving a few updates to chance could prove more costly than imagined.

A Use and Occupancy permit is required by about half of the municipalities and boroughs in the Philadelphia area for the resale of residential property, commercial property, or a rental property transition. A resale code inspection is conducted by a township or borough approved licensee, who will assess the property to ensure a variety of functionalities are acceptable according to local code. If there are noted violations, the seller incurs the responsibility, unless negotiated with the buyer, and must make the necessary repairs, which could range from installing a handrail or a few extra smoke detectors to replacing sidewalks or an overhaul of the heating unit.

A resale inspection is separate from the more common home inspection, which may be required by a mortgage lender and an integral part of an Agreement of Sale. Though some of the investigating areas overlap, the seller is required to present findings to a contracted buyer and negotiate any remedies if there are known violations. Failure to account for a U & O could be a costly expense for a seller or at least make a home less appealing for a buyer. Worst-case, if certain procedures are not followed, it could lead to a termination of a sale.

Though each standard varies from one municipality to the next, below are some common requirements:

Sidewalks and driveways free of trip hazards

Yards properly maintained (some specify grass less than 6”)

Rubbish free

House numbers greater than 4” (some say 3” or more if not visible from street)

Smoke alarms on every level (some require in every bedroom and hallway)

Fire extinguisher available

Functioning exhaust fans (especially if the room has no windows or poorly operating windows)

No peeling paint or chips

Handrails for any stairs with more than 3 or 4 steps

GFCIs in bathrooms, kitchen, and laundry rooms whenever close to a sink

Full chimney inspection

Full electrical or HVAC inspection.

Again, this only a basic list. Full requirements should be obtained from the local municipality and can be found on most websites or by calling the code enforcement department.

Following a resale/ U & O inspection, the municipality will provide a permit based on three conditions:

Normal U & O permit. This permit means there are no violations and allows new owners to move in at settlement.

Temporary U & O permit. This permit means there were found violations but allows buyers to move in immediately and make repairs within 12 months. In most townships, the new owner will need to schedule a follow-up inspection once the remedies have been applied.

Temporary Access permit. This permit means there were significant violations and allows buyers of homes deemed “unfit for habitation” to enter the building without residing and make repairs within 12 months.

In 2016, Pennsylvania passed Act 133 in response to U & O inspection findings delaying the transfer of real estate. Under this amended law, a municipality cannot withhold a Use and Occupancy permit based on code violations found in a point of sale inspection. A sale can proceed regardless of any required updates, but within an Agreement of Sale, the responsible party for those repairs becomes a point of negotiation.

In Pennsylvania, Page 11, Paragraph 15B of an Agreement of Sale states that within 30 days after the contract execution and no later than 15 days prior to a closing, the seller must order the U & O inspection. After 5 days of receiving notice, the Seller must provide the certificate to the buyer as well as their intentions to make repairs or not make repairs. If the seller is putting this responsibility on the buyer as stated in a listing, the buyer has the same time to order and provide the report to the Seller.

If the seller makes the repairs, the deal continues as agreed. But If the seller elects not to make repairs, a negotiation period follows for the next 5 days during which the buyer can accept the responsibility or terminate the agreement. If the buyer fails to respond after 5 days, they accept the responsibility. If repairs or improvements are required and the seller fails to provide a copy of the notice, the seller is then responsible for all repairs.

Most townships that require a U & O certificate for residential sales also require one for rentals. If this this applies, an inspection needs to be ordered for each new tenant and possibly every 2 years if the tenant remains.

New owners with a Temporary U & O who fail to correct any violations within a year could be subject to a fine between $1,000 to $10,000.

Moving forward, if a homeowner is considering selling and the municipality requires a resale inspection, the owner should understand what that entails. Do they want to be surprised, sell a home with issues and pass those issues onto a buyer, or sell a home with zero hang-ups? A seller can decide which situation is best for them and which option will lead to the strongest offers. While strategies are debatable, timing is not. If applicable, a resale inspection should be ordered prior to listing if not immediately after an agreement is reached. To maximize efficiency, a homeowner can even order well before so the stress of selling and moving can be alleviated further. In the end, the homeowner calls the play.