Purchasing a fixer-upper multi-family home is one way to make homeownership in the Bronx affordable. Unfortunately, many aspiring homeowners are unaware of the risks involved. They may face both legal and financial liability for the improper repairs or modifications attempted by the previous homeowner.
New York City real property regulations make new owners responsible for not only the condition of the property they own but also code compliance. If a previous owner did work without permits or illegally converted a property into a multi-family home, the new owner might face fines, the loss of their property insurance and an obligation to absorb the costs of demolishing unapproved renovations. In the worst-case scenario, a mortgage lender might even call the loan due, leaving owners scrambling and at risk of losing their down payment and other investments.
What are the warning signs of unpermitted property work?
In cases where prospective buyers suspect an illegal conversion of a property into a multi-unit facility, looking at the overall layout of the property and each unit can be helpful. The presence of a bathroom in between units or a lack of proper egress from bedrooms can be indicative of changes made without adherence to the building code. A lack of separate utility meters is also a red flag of a potentially illegal property conversion.
Unpermitted construction that does not involve conversion can be slightly more challenging to identify. Obviously amateur or shoddy work can be one red flag. Discrepancies in materials can also be a warning sign of unpermitted work.
Concerned buyers can potentially look up the history of the property with the New York City Department of Buildings’ Buildings Information System. Reviewing the current Certificate of Occupancy can help prospective buyers compare the official legal use and layout of the property with the current facilities.
Working with a certified home inspector can help in cases where buyers believe that unpermitted work may have occurred. Especially when the offer made on the property is contingent on the home passing an inspection, buyers can back out of the transaction without risking their earnest money if the inspector discovers unpermitted work or an illegal conversion of the property while assessing the condition of the property.
Title companies and attorneys assisting with the due diligence components of a real estate transaction can also assist by performing municipal searches to find open permits or records of prior violations. Having legal guidance when purchasing a multi-family home is of the utmost importance for buyers in the Bronx. People who have this support during the due diligence stage of home buying can minimize the potential for legal and financial setbacks due to the conduct of the prior owner.