BiggerPockets

Hey All,

So I am about to put an offer on a REO property. It is in good condition from the looks of it. Problem is and I'm not sure how to go about it is that the building has an "open permit" and no certificate of occupancy according to the listing agent.

It can be a 3 family but more a 2 family. The 1st and 2nd floors are 2 bed 1 bath kitchen and dining. Full basement. 3rd floor is 3 rooms that were turned into a bed/bath and kitchen, I wouldn't know if it would or can be legal.

If the offer is accepted which it looks like it would (cash deal at a good price and I have an end buyer to retail it to) how do I go a.bout getting the permits and CO's? I know once I lock down the contract I will get an inspector to check it out. I have to buy as is of course since its an REO, which will be my first one. What are costs for permits and COs in NY?

The goal is to keep it as a 3 fam but if I have to a 2 fam will do. Any info on this would be great and recommendations on good inspectors that can assist me with this once I lock the contract.
Thanks.

Thanks for the info.

i will be finishing it up. I will be selling it to my end buyer at retail price but still a good price. Not much work to be done unless i have to convert it back into a SFH. The goal is to keep it as 2-3 fam so it can appraise more and be an investment for my end buyer. Its an over sized colonial with a 3 car garage.
Good lot space for a Queens, NY property. I hope I can find a HML for it too.

I investigated one such property and was about to place an binding bid upon it, and was glad that I first went to the building inspector.

Just be nice and ask about the property. Has there been any issues as to why it does not have its Certificate of Occupancy as of yet? And any other questions you might be able to think of.

In my case I found out that the duplex had a exemption from the current zoning due to being grandfathered in. But the purchase would take that away and with current zoning laws no building was allowed on that small of a lot.

Sort of defeated the purpose of even bidding on it!

You should talk to the building inspector first about that property before placing a bid on it, your conversation just might make up your mind either way!!!!!!!!!

Daryl, I think you are misunderstanding me to some extent.

Do not ask the agent, or the inspector that you would take with you to look at the property.

Go to the county, or city offices and speak to the county building inspector, or the city building inspector. They will have a file on the property of all permits issued, what has passed inspection and what has not passed inspection. No buildings will recieve an certificate of occupancy until either the County or City building inspector has signed off that all required permits and inspections have been done.

Daryl, "an inspection" may or may not be useful is a situation like this. Property inspectors you hire before you buy a property are not "building inspectors" like jawsette is talking about. In my experience, most inspectors, the kind you pay $300-400 to give you a report on the condition, will point out a bunch of obvious stuff and one or two not-so-obvious things. I wouldn't trust them at all to give an accurate assessment of a half-finished remodel job.

The real source of information is the city or county building department. You should be able to call them and say "I'm looking at a property at <address>. It apparently has an open permit and incomplete inspections. Can you tell me the status of that permit and the inspections?" Give the specific address. I've found that in a situation like this, they are very helpful in telling me what's going on and what I need to do. I bought one property with an open permit for replacing the water heater. Since I was already doing that anyway, and covered it in my larger remodel permit, it was irrelevant.

If you want real advice, you need to get a general contractor in the property. But truly I would not use a GC or an inspector without talking to the city first. Either may lead you astray with work that maybe should be done, but that is not covered by the permit.

Yep, the building department is the one that issues permits. The can tell you what it will take to get additional permits. I've found that as long as you're trying to do things correctly these guys are willing to help you. Nevertheless, it can be stressful to deal with them.

The two family/three family question is one for the planning and zoning commission. They will have maps, maybe online, showing what's allowed where. They will show how many units are allowed in one building or on one lot. I'd start by checking that. You'll have to check their descrption of the zoning codes, since those are different in every area. In my area something like "R2" would mean duplexes are allowed, while a code of MF might be required to have a triplex. Some areas have nice brief descriptions easily available, be in some, I've had to go read the ordinances to figure out what they meant.

You can also check the country recorders and/or assessors records. Those may show a zoning code, too, and then you know whats really allowed.

I've seen LOTS and lots of illegal duplexes where the basement is converted. I've also seen numerous cases where a basement unit is added. I'm brutal in these cases. I start making phone calls and asking about the specific property and what its zoned or permitted for. I want to find out what the problems are before they become my problem.

Try searching around on the web. Some counties have good information on like, some almost nothing. Its often not that well organized and is sometimes very cryptic and can be frustrating. But its possible you can find some of what you need to know online.

Offer was rejected by bank.

Originally posted by Daryl A.

Hey All,

Thanks for the info and help. I dug up more info through the internet, building dept., making a few phone calls, and even from my attorney.

I have to get in touch with the original architect who put in for the permits and never finished. I got a list of what permits are needed from DOB and from my attorney. Won't be able to explain since I barely understand the paperwork, but my attorney does. Pretty much have to continue the project he never finished or have him finish it. The permit was for converting a SF to a 2fam. I guess the owner went all out and tried to make it a 3fam. The property looks done already but I believe when I get the property inspected initially when I purchase and when I need to get the permits the inspectors might dig in and poke some holes.

I'm going to pursue this property still but with a less offer than I originally stated to the listing agent. My projections for this project were way off especially if I need hard money.

I'll keep everyone updated. Thanks again.

Sorry it didn't work out for you but it sounds like it was for the best. In most jurisdictions if you come across a basement conversion and it has no windows and only one way in and out, then it is almost always going to be illegal. Fire codes dictate that bedrooms have ingress and egress which means someone can escape via a window in the event of a fire.

Having an illegal conversion of that kind is a gigantic lawsuit waiting to happen. Your insurance won't cover it either because it would be considered gross negligence.

I'll still keep my on it.

Daryl, I think you left your EYE looking for that fire escape, because you forgot it in the above quote. lol