A certificate of occupancy (also known as a CO or clearance of occupancy) is a document which states that a home or other building has met all building codes and is suitable for habitation.

This document is required for loans on new construction or on properties located in certain areas which may have additions to the property or where the owners did not obtain a permit and work was done illegally.

For example:

If you recently made an addition to your house and either did not obtain a permit or the work was illegally performed, you will be asked for a Certificate of Occupancy, prior to being approved for the loan.