12:29 PM 07/07/2012
I'm trying to go into contract on a brownstone represented and set-up as a 3 family (3 boilers, 3 gas meters etc.). It was built in 1899 as a 1 family and a title search shows that in 1937 it was still a 1 family but 20 years later an alteration was filed for enlarging a bathroom and it is listed as a 2 family dwelling. The work was completed but doesn't seem to be signed off. Nothing else comes up in the title search. The mortgage deed on ACRIS from the 1970's shows the house as a 2 family (although a couple of the multiple refinances state the property is a 1 family while the rest say that it is a 2 family). The DoF classification (which I understand has no legal bearing) shows it as a 3 family. There is no C of O, no LNO and no I-Card online. The DoB site (BIS) states "Dept. of Finance Classification CO-Walk-Up Apartment." When I look it up on the HPD site, it says that the property isn't registered but at the top of the screen in small print it says there are 3 A units. The seller states that they have a letter from the LPC stating that it is a 3 family (we haven't seen this yet and I'm not sure it has any relevance). No permits appear to be filed for any of the conversion work and there are no violations.
Our strong preference is for the house to be a 3 family. I'm trying to understand what my options are if I pursue this deal and after several hours of looking through the posts on this site, this is what I have come up with:
1) Buy it as a 3 family through requiring the seller to get a LNO before closing. Our lawyer has stated that DoB isn't really issuing these anymore. Is this true? If not, would the illegal work done in the house need to be signed off to get it or is it just a matter of hiring an expeditor and filling in the application? The work is definitely not up to code for a 3 family (the house doesn't have a fire escape or sprinklers for example);
2) Buy it as a 2 family and ask for money in escrow to get the 3 family C of O after the deal closes. I don't think the seller would go for this (she has a few eager buyers on deck) and once again we would run into the issue of legalizing the past work (which I understand to involve paying a legalization fee rather than fines on the illegal work) and bringing everything up to code. We particularly want to avoid the cost of putting in sprinklers;
3) Buy it as a 2 family and re-configure it as a 2 family. We had been planning on doing some work on the house (new deck, moving a kitchen from the garden level to the parlor, moving bathrooms and kitchens around on the other floors, finishing the basement) that will require plans and pulling permits. In this process I expect that we will probably end up re-doing most of the illegal work but will we need to bring the entire house up to code? Will we need to install sprinklers in this case? Are there any other costly issues that I should be aware of? Will the bank have an issue with the 3 meters and 3 boilers for the appraisal? Is there a chance that DoB might be able to successfully argue that the house is a 1 family or is there enough on file for the 2 family classification not to be challenged?
4) Buy it as a 2 family but continue using it as a 3 family. In this case, what I understand is that any new work would also need to be completed illegally, I could have major issues evicting tenants, and the problem would come up again when I sold the house. Needless to say, I'm not comfortable going down this route.
The other issue complicating this deal is that the seller is not guaranteeing that the house will be delivered vacant ( the remaining tenants do not have leases and were just given eviction notices by the seller).
Am I understanding the situation correctly? Apologies for so many embedded questions.
Thanks in advance for your help (especially on point 3)!
When you go on the HPD website see if the house has an MDR number. It's right there next to where it says the A and B unit count. Chances are it doesn't which makes it under a 3 fam. If there is an alteration saying its a 2 the that what it is unless enlandlord really has something from LPC saying it's a 3. If he does have something that proves it to be a 3 then you would typically register with HPD to get an MDR number at closing. The registration form comes with the 3 fam and up multi family ACRIS docs. Ragarding the open permit that is an issue too, you won't be able to do any work until you close it.
9:43 AM 07/08/2012 | -1 Votes
Buying without a guarantee the house will be empty means it will not be empty, and you will have to go through the eviction process. Could be very difficult, especially if the house is illegally being used as a three family.
10:24 PM 07/08/2012 | 0 Votes
This sounds like a mess.
First, don't be spooked by the fact that the seller says that they have other buyers waiting in the wings. Those buyers will need to clear the same hurdles with their due diligence that you are and will probably come to the same conclusions.
Most troubling here is the fact that they will not deliver the building empty. Eviction proceedings can drag on for years. Couple that with the fact that there may only be two units instead of three might leave you unable to occupy your own house for a long time.
The vacancy guarantee is something that would be a deal killer for me. If you would be willing to take that risk, a serious discount would be in order.
I'd walk away.
10:15 AM 07/09/2012 | 1 Votes
I would definitively require the house to be delivered vacant as a condition for closing. We did, and it was a good thing - it provided the seller with the stick needed to clear the remaining tenants out (similar to your situation, no lease).
As for the LNO, we went with solution 1/ last year, and it took the seller about 4 weeks to have the LNO issued (so at least back then the dob issued them). Complicating factor is that you will need sprinklers or a fire escape once it is a three family (actually, you'd pretty much need this anyway since it seems HPD is already treating it as such).
We also had a completed, but never closed out, permit from the 1960s on the books, but per the building dept the LNO superseded that and effectively closed it out.
1:16 PM 07/11/2012 | 0 Votes