If you plan to move, rent to a tenant, or occupy a building for business purposes, you must obtain a use and occupancy permit. Without it, your right to exist or operate in an establishment will not be recognized by your local government agency or building department. You may also incur penalties, such as fines and eviction, if you fail to complete the necessary steps to obtain this permit.


A use and occupancy permit shows that a building is in compliance with all safety, construction and habitation codes. A building must have a permit before it can be opened to the public.

Why Do You Need an Occupancy Permit?

A use and occupancy permit validates the living conditions of a house or building. It provides proof that a building or structure has been inspected and has passed safety and health code requirements. It also indicates that a state's government agencies approved the use of a structure because its owner completed all the prerequisites to use it lawfully and open it up to the public.

What Types of Buildings Need a Permit?

An individual must obtain a use and occupancy permit in various situations, such as when constructing a new building, taking ownership of an industrial or commercial building, expanding a tenant space, replacing a revoked or expired permit, repairing major building damage or renovating a tenant space.

Some establishments that must obtain use and occupancy permits are hospitals, restaurants, schools and health institutions. There are also circumstances unrelated to real estate which require obtaining a permit, such as opening a Christmas kiosk or outdoor Christmas tree stand, and having a tent sale or other outdoor-related promotion.

What's the Importance of an Occupancy Permit?

Use and occupancy permits protect buyers, sellers, renters and tenants in the field of real estate. Anyone that rents out a building of any type must have this permit because it shows that the building’s external and internal structures are ready for tenants. In this way, the permit protects prospective tenants from renting or buying a place that has hidden health or safety hazards. The permit also protects the workers within a building by ensuring all areas of a structure are secure and safe.

Penalty for No Certificate of Occupancy

The terms of use and occupancy permits vary depending on the jurisdiction and state. For instance, in some states, permits do not expire and require renewal only when the use of or dimensions of a space change, such as after renovations or expansions to a space. This is to ensure that any changes made are still in compliance with building safety and health codes.

Most states issue penalties if a building owner violates provisions of the permit, such as not reporting changes made to a structure. These penalties may include fines – as low as $50 for a first offense and $300 or more for a second or third violation – and the loss of the right to occupy or use a structure.