Illegal Multi-Family Conversion: What are my options?

8 Replies

We purchased a property in Chicago at auction that is one of the standard Chicago greystone multi unit structures. However, this was illegally converted to a single family residence I believe sometime back in the 90s or early 2000s. When we closed, I received the zoning info showing that it was still zoned for multi-unit. I checked the permits on the building and have not seen any pertinent to the conversion, so I am assuming it was not done legally or potentially up to code and certainly not with proper zoning approval. The assessor office still taxes it like a 2 unit property. 

We were thinking of going FHA 203k to finance the construction, but we will have to pull permits for the loan. So here is what I'm thinking could happen:

  1. FHA makes us  get an architect or engineer to confirm the single family plans making sure the structure is sound and has been converted safely. To me, engaging these professionals seems costly. To keep it as a SFR, we would save on a 2-story porch ($18k) as well as another kitchen ($12k) and a few other needs for multi unit.
  2. We could keep it as a 2 unit, but then we have to create a new wall to separate the units again, adjust the main staircase, do the 2 story porch along with a 2nd flr HVAC, dual water heaters & electrical, kitchen and maybe move and/or add a wall. Possibility is that we get a repair and replace permit, but I would need to find someone who knows the original layout as a multi-unit and put it back as it was (not sure if this is an architect, engineer, etc.)
  3. We keep it as a SFR and use cash for reno but will there be issues when we sell an illegally converted home?

The higher cost rehab is ok bc we will live here for a while. My goal is to have a nice place to life for a while that we will fix up and maybe sell for a profit 5 in a few years due to equity created in rehab. It's like a slower flip, I guess. 

Any thoughts? 

Your best bet is to hire professional called an "expediter" to handle this.

Here in NYC, I can get one to come take a look for $150. In your area, I googled one, see one: Expeditor

These guys know zoning, permits etc. I have issues with an illegal conversion and they coordinate everything from drawings, filing for permits etc. If you can have them do a free consultation, so much the better. Usually you can have the initial consultation applied if you use their services.

@Aja McClanahan - I think you need to get an experienced contractor/architect and maybe a zoning attorney involved.  Chicago was built 1890-1920 and our zoning map was done in the 1970 - so pretty much everything is grandfathered in.  

If your property is on a side street I bet it is zoned RS which is residential single family (RT is the zoning for apartments) which means your zoning cert as a 2 is grandfathered in, not usually a big deal.  All my properties are grandfathered in to the non-conforming zoning.  

But there is a provision in the code that states something along the lines that the if the owner does changes it has to go to the current zoning, so probably a SFH. I bring this up because you need to clarify that the changes the previous owner made were not enough to void the 2 unit zoning and that you could bring it back to the original zoning

Hi @Aja McClanahan ,

I converted a multi family to a single family and the code people were pretty much falling over themselves to buy me lunch. Once I showed the second kitchen was out, he came in and was happy as a clam and never saw him again. This is the same guy that wrote up infraction after infraction on the previous owner.  This was also in rural NY not Chicago so your mileage may vary

@Brie Schmidt brings up an interesting point about the zoning may now be single family, if that's the case do you want to forever and totally make it a SFR? Because if you do then going back to an investment property is not as easy. I would make sure you decide which method allows you the most flexibility.

Good Luck!

Originally posted by @Aja McClanahan :
Originally posted by @Mindy Jensen:

@Aja McClanahan, you should definitely make it to @Brie Schmidt 's meetup. 

 Yes plan to this month! (Finally)

 It is next Tuesday 12/5

If it's already converted, what's the scope of work you want to do as it sits (as a sfh)? If the hvac, plumbing, electric and structural work is already done, you can apply for everything else under a repair/replace permit which doesn't require an architect or plan review. There aren't any city inspections involved under the repair/replace permit either.

If you're trying to make it a legal sfh then I'd walk the property with an architect. He/she will be able to tell you if everything was done to code and what changes need to be made. You can get this done for $3,500 (plans included). The unfortunate part is that even if they rehabbed to code in the 90's, a lot has changed since. That work would only be grandfathered in as legal if they pulled permits at that time.