Today we bring you the thirteenth of an anonymous weekly column about real estate by one of the most experienced agents in Brooklyn:
This is a topic that causes a lot of unnecessary anguish for buyers and sellers of Brooklyn townhouses. More than any thing else, it is a reason to hire a Brooklyn real estate attorney to represent you. Their years of experience can be a tremendous help.

Let’s say you decide to put your house on the market. You have lived in it for a good many years and you have always had a tenant. Your real estate tax bill says it has been taxed as a two-family house. So it is reasonable to represent that it is a two-family house, right? Not necessarily.

Or, suppose you have an accepted offer on a house which has only one kitchen and has been occupied by one family for years. It seems reasonable to assume that it is a one-family house, right?  Maybe not.

It turns out that a house has more than one classification. The city’s Department of Finance may call a house one thing, and the Department of Buildings may call it another. In the end the buildings department has the last word. Things are simple if there is a Certificate of Occupancy. It will state unequivocally how many families can occupy the house. However, a huge number of houses in Brooklyn have no C of O. Unless permits have been filed for work done since the C of O law went into effect in the 1930’s, a house probably doesn’t have one. Without one, a title search has to be done and one may have to appeal to the DoB to rule on the subject. It is never comforting to be at the mercy of the buildings department.

Why does it matter? If you need the income from a tenant, you better have two-family status or your tenant could challenge you for illegally renting them an apartment. If you take out a mortgage on a house, the bank will insist that the house’s usage matches the C of O, or, if there isn’t one, the DoB’s status. When these don’t match (i.e. it is used as a one family but the buildings department knows it as a three family) your lender is going to reject it as collateral.

Where this really becomes a problem is when a contract is signed and no one has done a search to determine this until the closing is imminent. This happens ALL the time. It causes painful and expensive delays and blows up several deals every year. The obvious solution is for a seller to address this issue before listing the house, but few are willing. I have lost more than one listing by insisting that we establish the house’s status before putting it on the market. Sellers don’t want to engage their attorney before a deal is on the table. But the anguish of a failed deal far outweighs any upfront investment in a buildings department search.

Hopefully, forewarned is forearmed. As a buyer or seller, be careful of this issue. There are nuances to it that only a very experienced Brooklyn real estate attorney can handle. And that attorney is worth every penny.


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