The Hidden Pitfalls of Buying a Business: Understanding Permits and Certificates of Occupancy
By Helen Callier
October 30th, 2024
Businesses are being sold all over the country to folks wanting to have more freedom in their careers and seeking a road to wealth. From barbershops to laundry mats to neighborhood bars, car washes, coffee shops, boutique shops, and more, opportunities to buy businesses are increasing which is great for the local economy. In fact, in the United States, 60% of millionaires are business owners which presents an opportunity with a proven path for many to pursue especially when millions of Baby Boomers are looking to sell their businesses and retire.
We applaud all those taking the entrepreneurial path and encourage new perspective owners to conduct thorough research on existing brick and mortar businesses because here’s what I know for sure from phone calls from new business owners.
The new business owner purchased an existing business with a facility. They eagerly call the City to request a Certificate of Occupancy in their business name then the unexpected and never even thought about happens when they find out that the previous owner completed construction at the facility which was not permitted by the City. The new owner really liked the location with lots of foot traffic and cars passing by, but never thought to inquire about a Certificate of Occupancy (CO) or any prior work done on the building. This is what is sometimes called a “gotcha” or immediate learning lesson which requires more money to be invested into the business.
Terms like change of use, construction plans, asbestos survey and other words that seem foreign were not discussed when pursuing and negotiating your business deal. Head scratching, the new owner calls PermitUsNow’s toll free line requesting assistance in obtaining a Certificate of Occupancy in their name. They ask what is required to obtain a Certificate of Occupancy.
The new owner is then informed that the construction work already completed requires a building permit before the City will issue a CO. To apply for a building permit, at a minimum, they’ll need a set of construction plans to show the work done.
New owners then will inquire about the cost for plans, other steps and how long will it take as they have already started paying for the space. If this is story sounds familiar or you know a new business owner in this situation, below are
- Circle back with the previous owner and ask for a copy of their CO.
- Ask previous owner if they have any plans or contractor’s scope of work for construction completed without a building permit
- Determine if can do a name change only if the business use is the same and work was deemed as minor repair requiring City Occupancy Inspection to issue CO.
- If work completed was major i.e. remodel, addition, renovation, etc. then conduct a site visit to take measurements
- Develop set of construction plans representing work completed.
- Apply for a building permit with all necessary documents and then buy a building permit once approved by City.
- Call for an Occupancy Inspection and address any deficiencies. Request CO.
In Conclusion
Pursuing your dreams via owning a business is a smart move. If a business of interest has a brick-and-mortar building, make sure to conduct due diligence on any changes to the building, permits issued and CO is reflective of actual business use. At PermitUsNow, we assist contractors, architects and project owners in saving time, money and energy in obtaining building permits. We remove headaches with building permitting and allow clients to do what they love to do best and that is to build their customers’ dreams. Feel free to call us toll free at 1.844.PERMIT.4 and we’ll be happy to assist you.
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