renting an illegal unit

4 Replies

I am interested to buy a multi-family property.  It is a 2 unit in city's record; but the provious made it a three units.  The property worth much more if I can rent it as three units; other than two.  And city has been really tough on granting more units in this area based on past experience.

I was advised to put a kitchennete instead of a full kitchen in the illegal unit, so it is not a "unit"; I was also told to sign a joint lease with 2nd floor - that this is a "roommate" situation"; I was also told to just to sign a lease on 3rd unit but let the tenant know/clear that this is a illegally unit and he/she willingly chose to live their.

Any ideas?  Bottom line: I wan to rent the 3rd unit space without legal trouble down the road hopefully both with city and with tenant.

Many thanks.

What would it take for you to make the unit legal? A well thought out appeal to the city for a variance? Seems to me whoever is giving you advice on how to get around the law has their own agenda... are they the seller? In any case, if you rent a unit and violate a law in doing so you could be in big trouble. If the unit does not meet fire and safety codes, it could lead to a disaster. If a tenant knows the unit is "illegal" and later has a dispute with you, they could use it as ammunition against you and/or bring it to the attention of the authorities. Either make the purchase based on it's being two units and negotiate with the city to make it three, or pass on the deal if it doesn't work for you.

Marcia.  Thank you for your advice. Those who advices me are local fellow landlords. I also need to clarify that city's record has the third floor space as living space already. It is zoning.  

Any advice on how to work w city to get the 3 units as occupancy. 

You can always turn the illegal unit into storage and/or a laundry room which you can charge the legal tenant for. Hope everything works out well for ya! I personally would not want to deal with an illegal unit. Some of the things to consider, how many gas/electric meters are there? If there are only 2 and that 3rd unit is hooked up to one of them, you might run into a dispute btwn tenants of who's responsible for what which will get the land lord involved. Just some of the things to consider...

Make it legal.  Way less stressful.  Plus, you will have absolutely no recourse against a tenant in an illegal unit.  You can never sue them and win, because the contract is illegal.