How do U&O inspections work in an 'as-is' sale?

When a property is being sold in a municipality that requires a use and occupancy (U&O) inspection, it’s typically up to the seller to go through the process of ensuring the property is up to code and obtain the resale certificate.

However, when a seller lists a property “as-is,” the buyer may take on the responsibility of navigating the U&O process.

As-is arrangements can arise between any seller and buyer, but they are common in sheriffs’ sales, bank sales and estates that heirs are seeking to liquidate quickly. 

So, how does it work when the person filing the municipal paperwork doesn’t own the home, and the owner has made clear they won’t make any repairs?

The answer varies from one town to the next.

Coatesville has a simple form to acknowledge the as-is aspect of the sale. Bristol Township has the buyer sign a hold-harmless letter (page 6) that indemnifies the township against any liability. Aston Township’s resale packet requires the buyer to sign both the seller and buyer portions of an affidavit covering certain code issues.

Lansdowne Borough doesn’t require any extra forms, but provides some notes on how to handle “as is” transactions.

The good news

State law — namely, the Municipal Code and Ordinance Compliance Act as amended by Act 133 of 2016 — protects both parties in an as-is sale just as in any other sale. Namely, it allows a buyer to promise to address code issues after the purchase, and negotiate accordingly. 

This is important, because it means the buyer doesn’t have to spend money repairing a home they do not yet own.

Notes to keep in mind:

• There are three types of resale certificates: a clear U&O certificate, a temporary/conditional U&O certificate, or a temporary access permit.
• All the provisions of Act 133 still apply in an as-is sale. That means the municipality must provide a resale certificate after its inspection, it can’t require escrow for the necessary repairs, and it must allow at least 12 months for those repairs to be made.
• We advise Realtors never to proceed to settlement without going through the local U&O process and obtaining a resale certificate. 

If you have questions about how to handle U&O concerns in an as-is transaction, contact us.