Jon Connelly, Designated Broker for Century Plaza, has provided a copy of the Certificate of Occupancy (CO) for the building in response to claims made on this site and others that the developer did not have Permanent CO’s and was therefor in breach of the purchase contracts with buyers.
In past conversations I have had with him and through written blog comments Jon has insisted that it is normal and acceptable for buyers to close their purchases and move into a newly constructed property with Temporary CO’s (vs. Permanent CO’s), depending on what work still needs to be completed. Jon supported his position by pointing out that a number of condos have successfully closed therefor the City of Phoenix and the buyer’s lender must be OK with Temporary CO’s vs. Permanent CO’s.
Frankly, I know very little about CO’s but I do believe Jon is an honest and experienced real estate broker so I will give him the benefit of the doubt but I would like to point out one aspect of his argument that I do not find iron clad.
Lenders require that all common areas be completed prior to making a loan to a purchaser. I also know that the ”mechanism” for verifying this is a form, often called the Home Owner Association (HOA) Questionnaire, which is to be completed by a representative of the HOA. Strangely, because HOA’s are often “controlled” by the developer until roughly 75% of the condos have been “delivered” (sold and closed) to buyers the HOA Questionnaire is usually completed by the developer himself or one of his employees. I consider this to be a possible conflict of interest. Of course one might point out that the individual buyers appraiser will visually confirm that all work has been completed. To that I would say that I have seen numerous examples of appraisers overlooking uncompleted work either intentionally or unintentionally.
I explain all this because if Permanent CO’s are required by mortgage lenders then I assume that they rely on a similar mechanism (i.e. an HOA Questionnaire completed by the developer with confirmation from an appraiser). If this is the case then I consider this to be an imperfect process and prone to mistakes and exceptions.
So, Jon, I believe you in general but your past statement that the lender’s would not allow a buyer to close on their Century Plaza condo if Temporary CO’s weren’t acceptable is in my opinion a tad weak. But again, with the Permanent CO’s the issue is probably moot.
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