I have an issue with a property that I own in Brooklyn that just came to light when I decided to sell. I purchased the house as a TWO family, as was stated in the contract, but now finding out that I can't get a Letter of No Objection (LNO) for a TWO family. My attorney basically screwed up during the purchase and never requested a LNO for me back then and since the house was build prior to 1938 a C of O is not required. I am now forced to sell the house as a single family, which is setup as a TWO, but this will certainly yield a lower price since a TWO family would be worth more in my area. Additionally, I don't want to go through the process of obtaining permits and applying for a new C of O since the the work that was done prior to converting it to a TWO family was most likely not done legally (eg. no permits were pulled) and certain work would have to be changed with the new building code. What would you do if you were in my shoes?
Sell it as is but pull out the Kitchen.
The basic problem is that a Buyer won't be able to get a Mortgage with an illegal apt. It may show up during the Buyer's Inspection and for the Buyer's Appraisal as a two family but the Buyer's Title Records will show it with it's current single family CofO.
Is it taxed as a two family? I am assuming that it is not because the Buildings dept turned down the request for a letter of no objection, correct?
You can talk to a Broker who can list your property and have them advise potential Buyers of the problem.
If the Buyer wants to continue, the Mortgage Bank will ask you to pull out the extra kitchen, assuming you have 2 kitchens. Pulling out the kitchen just basically mean take out the Stove and capping the Gas for it.
It's actually quite common in NYC and I have been to open houses where there was an obvious illegal extra apt. I remember one open house where the Listing Broker was an Attorney she brought her affiliated Mortgage Representative with her.
I confirmed with the Mortgage Rep. that during the Buying Process, all that was necessary was to remove the Stove in the illegal unit.
Of course if there were any other violations, they will have to be corrected and then inspected by the various NYC departments such as HPD, Buildings, ECB, etc. to clear them before the Closing.
Just call several Real Estate Brokerages and talk to the Broker. I'm sure this won't be a problem. You will need to give full disclosure and be willing to pull out the kitchen.
Any Brokerage will do a Comparative Marketing Analysis (CMA) and will advise you on how they will compare your property. I'm even sure some may list it as a 2 Family and let Buyers know before they put in a Bid. Some may even list it as a single Family but have some language regarding possible rental unit. There are all kinds of Ads I have seen listed.... especially phrases like "English Basement," which is pretty illegal in NYC.
I have been a RE Investor for 20 years in NYC and I have seen Brokers list everything, legal or illegal. When I became a Broker, I spoke with many other friends who are much more experienced on the Sales side and they basically call Brooklyn the Wild Wild West of Real Estate!
I also want to mention that I am a Newly Licensed Broker in NYC. While I am giving you my opinion, just verify all the information thoroughly. My opinion here should NOT be considered as if I were representing you.
The property is actually currently taxed as a single family and on HPD shows up as 1 "A unit apartment". However on the Building Dept the building classification of the property is "Miscellaneous Two Family (B9)". I have a realtor friend and he says that a TWO family will basically be 100-200K more in value which I'm losing because my attorney at the time of the purchase didn't do the proper due diligence of obtaining the Letter of No Objection.
I would try to legalize it if we were you. It may end up being a very simple thing to do. You should get an architect to advise you on what it would entail. You stand to lose 100-200k! Unless you are in a big rush to sell, why wouldn’t you spend a little time and money to save 100-200k?
Btw, dob hired many more staff lately so processing times are much faster than they used to be. I don’t do this type of work but if you need a referral for an architect who does pm me.
Hi Howard. I'm not sure you are correct that the Certificate of Occupancy is classified as "Miscellaneous Two Family (B9)".
See Snapshot here:
Note on the DOB website, one of my properties is classified as "B3-2 Family Dwelling."
HOWEVER, read what it says to the LEFT. "Department of Finance Building Classification:" The "B3" is a FINANCE Classification, not a DOB Classification. The only way to know what your Building is legally set up to be is to look at the Certificate of Occupancy (CofO). There is a link I circled above in the image where you can click on it and it will take you to the Certificate of Occupancy area. You will find something similar to this snap shot:
Note that mine says "NO COs ISSUED OR NO IMAGE AVAILABLE". If you see this, that doesn't mean there is NO CofO.... it just means if there is a CofO, you can go to the Buildings Dept at 142 Joralemon Street in Brooklyn and try to get the Certificate of Occupancy. There may not be any there, but if there is, they will have it in their records. Then you will know what the actual DOB Classification is versus the Dept of Finance Classification.
Mala is advising you correct as well. Eventually, you can take the information you discover to an Architect. But before that, DOB has a "Owners Night" every Tuesday from 4 pm to about 8 pm.
Get all the correct information and take it there and you can have your questions answered directly by the DOB.
The DOB can advise you first and you may not need an Architect involved. They may be able to advise you as to the Letter of No Objection (LNO). A good Expediter may be able to solve this problem as well.
So, before you go to the Architect, I would first do some leg work and find out everything correctly.
OR, you can just hire an Architect. The problem here is that you are completely in the dark on how it all works. I like to be somewhat hands on myself.
@Howard C Hey Howard! Very interested in how this worked out for you. I am in a similar situation with a home I am almost in contract with. Should I make sure my lawyer requests an LNO? Did you end up selling your property as a 1 family or a 2?