Frankly, the more I've thought about the requirement for a COC before a CO is issued, the more amazed I am. In fact I've never encountered a similar requirement in any town I've worked in. As Agent Selby notes, final stabilization is often lacking when a house is complete. Causes are numerous, but the most common is a seasonal constraint (it's difficult for grass to germinate in January). Not allowing occupation for such a cause sets up a tremendous legal vulnerability, in my opinion, for the town. I sure would clear it with town counsel before proceeding with anything similar. This sort of requirement is, in my opinion, guaranteed to make any commission immensely unpopular, which is not good for the home team.
Interesting thread here, but I find the underlying concept (& assumptions) somewhat dismaying.