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July 6, 2009
Mislead by seller
Are their any repercussions besides decreasing the offer amount on a property in which the seller lied about the number of families (it's a two NOT a three) This property is set up as a three, the seller deeded it as a three, pays taxes as a three... My lack of experience let me believe the owner, and the 3 family status that is shown on Acris and Department of Finance. I only found out when the contract went to my lawyer as a two family. Still would like to buy the house but this changes things considerably. Please advise
Comments
what did your lawyer say?
Posted by: aishling at July 6, 2009 10:27 AM
I received this note from my lawyer upon receipt of the contract:
PLEASE NOTE: Seller’s attorney has sent over a correction: While the contract states the premises are a legal 3-Family & tax classification as a 3-family, the Certificate of Occupancy on file with the DOB is for a 2-FAMILY ONLY.
Posted by: noseas at July 6, 2009 10:39 AM
If DOF has it as a three, in what way is it a two? Does DOB show it as a two?
Also, assuming you haven't signed yet, how are you hurt? Can't imagine there is any action for you to take that would benefit you; it is onloy whether you think there was improepr conduct you want to report. Given that it's a 3 for tax purposes, it is going to be hard to show that there was anything dishonest here, even if there was. But if you think seller and realtor were dishonest, decide whether you need to kick the tires harder, just deal, or move on. Just decide whether you want to go forward and at what price.
Posted by: slopefarm at July 6, 2009 10:39 AM
DOF bases taxation on owner declaration, not on DOB records. If one reviews Property Profile Overview on DOB BIS, you will see this note (just above the section recording complaints, violations, building records): "Department of Finance Building Classification: ("x") Please Note: The Department of Finance's building classification information shows a building's tax status, which may not be the same as the legal use of the structure. To determine the legal use of a structure, research the records of the Department of Buildings."
Posted by: vinca at July 6, 2009 11:14 AM
This fact might actually might help you. If you can get it as a two family you will get a better mortgage rate than a three, because it's considered less of an "investment" property. You might get the benefits of a three fam (more income) without the increased mortgage and insurance rates. Since your place is functioning as a 3 fam, you wouldn't have to change the C of O to convert it to a 2 Family. So you might have the best of both worlds. Also, the taxes might be higher on a three fam. (I own a three family.) But, I'm no expert...
Posted by: hoffster at July 6, 2009 2:20 PM
Perhaps you were counting on rental income from a three family and now that you know it's a legal two family, you will have less rental income?
Your lawyer should advise you on this. I had the same issue come up with an offer I made, was sold as a 3 family but found out Dept of Buildings had it as a two family. The issues my lawyer brought up were that the third apt would be an illegal apt and that I would not be able to use housing court to evict a bad tenant and if anything else bad happened, my insurance company might not pay. This is something you should discuss with the lawyer, I am not one.
Posted by: DecaturSt at July 7, 2009 12:46 PM
Reprice proportionally to reduction in rental income or no deal. I wouldn't be buying anyway, if I were you, unless it's the deal of the century for a 3 fam.
***Bid half off peak comps***
Posted by: Brownstones Half Off at July 7, 2009 4:41 PM
I would get it reduced by the amount of the cost that it would require you to update the legal C of O to a 3 family, if you want it as a three family for rental/investment purposes. My wild guess is that it could cost you anywhere from 20-50K, or more, easily, and months of time.
Posted by: theklahy at July 7, 2009 5:56 PM
If you are getting a mortgage, the lender may require you to tear out the third (illegal) kitchen before close.
Posted by: mopar at July 7, 2009 7:58 PM
Actually, my little birds tell me that this is something that doesn't have to be a big deal.
Mostly, though, this is something to discuss with a lawyer.
If you want to make updating the C of O a term of closing, you can do that, if that is what you need. If you want to make bringing the building into compliance with the C of O a term of closing, you can do that.
But, you should also disabuse yourself of the notion that you were "lied" to. The Building and Finance records both are public record. You could have looked up both.
Posted by: serpentor at July 8, 2009 10:46 AM
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