Personal Liability / Insurance

2 Replies

Hello Everyone,

I’m hoping someone can help answer a question for me.  I own a single family residence in NY that is being used as a rental property.  The second level of the house was previously occupied by a family member.  If I were to rent out the second level, but the house is not permitted as a multi-family or mother daughter,  could I be personally liable if there was a fire?  Would home owners insurance refuse to pay any claims because of this?  Thank you in advance for any assistance in this area.

Sincerely,

Ed

Don't know where you are in NY, but here in NYC there's been issues with illegal conversions, in particular attics and basements. Issues were proper egresses, and attics and basements requires at least two, but it still won't make it legal. In fact the authorities are seriously thinking about bringing manslaughter charges if someone gets killed in fires in illegal units.

The issue here is getting zoning variances, I bought one with an illegally converted basement and the authorities demanded it be taken down. It's a 2 family zone, with the illegally converted unit I got three, and the authorities and local groups both oppose granting variances. All such variances require a public hearing and all neighbors within 200 feet are notified. The local homeowners association would pack these meetings with members shouting no.

In a single family zone, getting a variance to 2 are even harder, at least where I am. Besides the legal issue, there remains the issue of whether it can be converted, structurally and architecturally, such as egresses, ceiling heights, and floor beam sizes. I had local architects doing a walkthrough for $150 to see if it's even feasible. If yes, you need expeditors to handle the zoning part though some architects handle that aspect as well.

Updated over 2 years ago

As to the insurance question, ask an insurance agent. I owned rentals with prosperities with illegal conversions that passed insurance inspections. They can tell you where insurance companies currently stand.

Originally posted by @Edward Gunnip :

Hello Everyone,

I’m hoping someone can help answer a question for me.  I own a single family residence in NY that is being used as a rental property.  The second level of the house was previously occupied by a family member.  If I were to rent out the second level, but the house is not permitted as a multi-family or mother daughter,  could I be personally liable if there was a fire?  Would home owners insurance refuse to pay any claims because of this?  Thank you in advance for any assistance in this area.

Sincerely,

Ed

Ed, it is possible you could run into problems if there is a claim.  All insurance policies have a Misrepresentation clause, stating if you "Misrepresent" the Rental, Business, Property, etc, as something other than it is, they can deny to pay claims.  

I would at least try and get the policy changed to a 2 unit rental.

Good luck with it.