It's not clear why a Temporary Occupancy Permit would have any effect on your situation other than to meet a requirement of the lender. A construction contract often has a provision for Substantial Completion which means the project is complete enough for you to use it while the remaining punch list items are being done. That should have no relationship to an Occupancy Permit.

Building Code Official and Builder here:

It is entirely up to your municipal code department/authority having jurisdiction to determine how or even if they will issue a 'temporary certificate of occupancy' for a house.

Legally speaking, you cannot occupy or use any building without a Certificate of Occupancy issued by the Building Official.

While building codes do "permit" a Building Official to issue a 'Temporary Certificate of Occupancy', that does not mean the Building Official is "required" to issue a Temporary C of O....or that he will.

Most jurisdictions are reluctant to issue any Temporary C of O except under the most extenuating of circumstances.

Why?

Because a 'Temporary C of O' comes with it a legally established and specific time allowance...usually 30 to 90 days...after which you will have to qualify for a Permanent C of O...OR MOVE OUT.

Because of the political ramifications of taking legal action against a homeowner/taxpayer to vacate their own home because of something their contractor may end up doing wrong...(like not complete the house, take off, and never be seen again)...means, in reality, few jurisdictions will agree to issue ANY 'temporary C of O' because they are just too complicated and too difficult to bring to a happy conclusion for everyone involved.

Only way for you to know for sure if your jurisdiction will even consider a temporary C of O is to call the building office directly and ask what their policy is.

Most will only issue a permanent C of O when the building is "entirely" (not "substantially") completed.

So you need to find out just WHO is telling you that you can get a Temporary Certificate of Occupancy and WHY.

I suspect it is your builder who is telling you this for his own benefit and not reflective of any legal reality you can expect from your Building Department.

So call the Building Department and ask about their policy for issuing Temporary Certificates of Occupancy...and don't be surprised if they tell you: "We don't issue them!"

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That said and word to the wise:

Do not EVER give any contractor a final payment until and unless you have the Permanent Certificate of Occupancy in your hands issued by your building department!

NEVER! Under ANY circumstance!

An experienced reputable builder will KNOWS THIS is what is expected and will not ask for anything less!

Really appreciate this info. Just so this layman can be sure may I ask specifically... if the city deems the interior safe and finished and done and DOES grant temporary occupancy but I DO NOT WANT to close and accept responsibility for a home with exterior issues still unresolved may I tell my builder "Nope, I'm not accepting temporary occupancy." I ask because as I understand it, my contract states that I may not delay closing as my builder holds the loan and pays the interest. He wants to close asap!

If he wants to close, he'll get his butt in gear and get things done. Too bad, so sad that he's only in a hurry to get his money and not to really finish the job. Do not close until the home is finished! You'll be living in an undone home with zero leverage to get any of it finished.

There are times when things outside a builder's control delay the final certificate of occupancy being issued. That said, in my experience, it's rare that exterior finishes are the issue requiring a temporary c.o. I'd go with Sophie's advice.

Again, city is unlikely to issue a temporary C of O on a residential property.

That said, you need to call the building official and discuss the matter with him.

Whether you can 'decline' a Temporary Certificate of Occupancy if the city chooses to issue one and decline closing is a question only your attorney can answer for you....and explain the legal implications against you if you do not follow through with your contractual obligations.

Again, if you have an objection to getting a temporary C of O, then voice your concern to the city building official and tell them why you do not want one.

Otherwise I agree with Sophie.,,,Builder needs to get the job DONE if he wants to get paid.

And while there indeed can be circumstances "beyond the builder's control", that is not an excuse for not completing the job...nor demanding a customer 'close' on an incomplete project...nor cajoling the building department to issue a temporary C of O when the owner does not want one.

Good Luck!