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We’re buying a townhouse that has no Certificate of Occupancy on file (grandfathered from before 1938), and essentially no legal designation with the Department of Buildings. It has been used as a 3-family and is taxed as a 3-family. It has no fire escape or sprinkler system as would be required if it were a legal 3-family. We plan to live in it as a 1-family, but want to keep our options open for it to be a 2-family. Our bank is insisting on appraising it as a 3-family because it has been used as such, even though we removed the third kitchen, and because it is taxed as such. The difference in our mortgage interest rate between a 3-family and a 2-family is about a half a percent, which adds up. We’ve heard we can file for a Letter of No Objection from the Department of Buildings. Has anyone done this? Can anyone shed light or offer advice regarding legal use, legal status, tax status, etc.? We’ve heard that 3-family houses are more valuable for resale, but we intend to live in the house for a long time, and it seems that 3-family status will require $30,000 or so in sprinkler/fire escape/self-closing fire door upgrades. Any input would be much appreciated. Thanks!