Condo Board Faces Hurdles with Expired TCO and Unresolved Permits

It’s not unusual for newly constructed condominiums to have building defaults, but a 30-unit condo built a decade ago is dealing with a different kind of problem. At this Tribeca condo, the sponsor actually defaulted a decade ago and left unit-owners with an expired temporary certificate of occupancy (TCO) and no final certificate of occupancy (CO), plus unresolved permits and violations. A CO or a TCO is the document identifying how a building can be used and lived in. Without it, condos face significant legal and financial hurdles, including the fact that banks won’t provide mortgages for apartment purchases.

Matching Plans to Reality

Faced with an expired TCO and no CO, the board took the sponsor to court and gained a monetary settlement, which included a provision that handed responsibility for acquiring the CO to the building rather than the sponsor. However, the original architect had not been paid by the sponsor, so a new architect needed to be retained to help the board navigate the problem. “Closing out permits that weren’t closed out by the original contractors or professionals can be very complicated,” says Paul Brensilber, the president of Jordan Cooper, which manages the building. If the plans don’t match what was submitted, as was the case at this condo, all the architectural drawings need to be updated and filed again with the city. Then a new 18-month construction inspection needs to be scheduled. “If you fail the inspection, you have to fix the problems and get another inspection, but until you pass, you can’t get the TCO reinstated,” Brensilber says. 

Race Against the Clock

TCOs can be obtained floor by floor, which allows the developer to close presold units. This is sometimes done when some areas of the building are completed and others are still finishing construction and not yet ready for occupancy. However, TCOs expire after 90 days and need to be renewed, which can be costly. “There are filing and expediting costs, and sometimes you have to update various schedules, so it can be very difficult,” Brensilber explains. Failure to renew a TCO does not necessarily mean the building is no longer safe for occupancy; nor does it mean the Department of Buildings requires that the building be vacated. However, it could lead to a violation for noncompliance. In addition, if a TCO is being renewed for the sixth time, a new construction inspection is required as part of the approval process. Ultimately, there is still an obligation for the building to secure a final CO.

The Takeaway

Boards of new-construction condos need to check the status of their COs. It’s very important to address violations and ensure that all permits are closed out, especially if the building has commercial units. In addition, any changes to the building — for example, adding a roof deck or switching the use of the commercial space — must be filed with the city and the correct permits obtained. “You may have to impose a moratorium on people doing renovation work in their apartments because if you’re so close to getting the CO, you can’t have those permits open,” Brensilber says. “In addition, all facade inspections must be up to date and any violations paid. If there are open issues, you have to resolve them.”