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October 26, 2008
Questions: Changing C of O from 1-fam to 2-fam
I've read thru all the forum threads on C of O's - while all were interesting and informative, no one else's situation was exactly like mine. I am purchasing a legal 1-family home in Brooklyn that is "set up as a 2" (and was advertised as such by the broker). I intend to live in the home with my partner. We can afford the mortgage, but in order to pay for renovations over the next few years, thought we could file for a change in C of O to a 2-family and rent out the top floor. The home was built before 1938, so there is no C of O on record; the bank is fine with this and has approved the mortgage. Here's my questions: 1) Does not having a C of O make things more complicated or easier in terms of changing from a 1- to a 2-family; 2) How much might such a switch cost from a city filing and legal fee standpoint? And, finally; 3) if my annual taxes are currently $1,800 how might I expect them to go up?
By the way, during the title search, a citation was discovered where an illegal tenant complained to the city about lack of heat. Now, the seller's attorney has to get the city to come and cap off the gas on the second floor and then a city inspector has to come and approve it all. Might this cause problems down the line?
Many thanks!
Comments
As far as financing, you will either have to purchase it as a 1 family and then make the changes to a 2 family afterwards. Or you can finance the renovation costs and finance as a 2 family with a 203k. You will need to talk to an expediter about the changes. Yes, anything on title can certainly cause headaches in the future. You should make sure these are things that can be fixed or removed. sunny_hong@countrywide.com
Posted by: shong1 at October 26, 2008 9:19 PM
If your lender is OK with the usage (as you already claim) then financing won't be an issue. Most lenders have problems with this but not all. I know specificaly Bank of America really doesnt care about c of o's. The issue you will have is that you can not legally rent out a unit without a c of o and if you get reported the DOB will slap you with a violation. More importantly you may have issues getting the tenant out of the property.
It still amazes me the agents clearly list properties that have illegal use. I just don't get it.
Posted by: Adam Dahill at October 27, 2008 12:54 PM
What Adam says above is absolutely right about renting without a properly established C of O, if the city understands this building as a 1 family.
I am assuming the title search would have come up with C of O records if they existed, but normally you can't assume there're no C of O just on the building's age. And almost every building in the city has an I-Card at Dept of Housing which will act as the legal status record if there is no C of O. If you email me with your property address I could send you a link to your I-Card.
In terms of costs, a new C of O would cost you in the range of $10k to $15k for the filing. That's assuming there's nothing unusual required to legalize the uses being proposed. In other words if you had an illegal condition like a kitchen lacking a vent or window, you couldn't obtain a C of O until this was remedied somehow. So C of O changes can possibly require construction depending on the specific situation.
Posted by: Smokychimp at October 27, 2008 3:51 PM
getting a tenant out of an illegal apartment will most likely cost you more than the 10-15k for he c of o. Take my advice and make sure you do it by the book. You may get away with it for a while but is it worth the risk?
Posted by: Adam Dahill at October 27, 2008 5:14 PM
Thanks for all the information and advice. Very helpful! We are going through with the purchase as a 1-family - hopefully closing next week. I didn't know filing for a 2-family would be so pricey, so perhaps we won't pursue this.
Posted by: Queenie at October 28, 2008 8:38 AM
Thanks for all the information and advice. Very helpful! We are going through with the purchase as a 1-family - hopefully closing next week. I didn't know filing for a 2-family would be so pricey, so perhaps we won't pursue this.
Posted by: Queenie at October 28, 2008 8:38 AM
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