3 Family to 2 Family C of O Conversion
I am in contract to buy a 3 family brownstone. I would like to convert the house into a 2 family with 1 owner unit and 1 rental unit. Assuming we use an expeditor and an architect who knows what they are doing, how long does it take to get the paperwork approved to change…
I am in contract to buy a 3 family brownstone. I would like to convert the house into a 2 family with 1 owner unit and 1 rental unit.
Assuming we use an expeditor and an architect who knows what they are doing, how long does it take to get the paperwork approved to change the certificate of occupancy?
I am thinking of asking the current owner to submit the paperwork to the building dept for the conversion with the goal of getting the process moving asap. Also, we would get a better mortgage rate at closing if the house were a 2 family. I would of course prepare the paperwork and pay all fees, etc. The house is currently occupied by only one tenant (the other two moved out).
Any thoughts?
I’ve been kind of curious about this. We have a three family building that we use as a one family. I’ve never been able to get a straight answer on whether we’re getting ourselves into trouble by combining electric meters, removing fire doors, etc. I believe that in principle the taxes should be lower assuming the property’s been assessed in the last 30 years or so when you down-zone but I’d be curious to hear from someone more knowledgeable.
Thanks all – This is very helpful. I hadn’t thought about the flexibility of 3 family vs. 2 famiily. However, I am hearing that financing for a 3 family is, in some cases, a full point higher that for a 2 family. I guess I’ll have to shop around. Hopefully rates keep going down. Thanks again. If any other readers have input I would appreciate that as well.
Dude, don’t change the C of O. I’m not a lawyer (well, I am, but not that kind) but I understand that you can have two units in a three-units building, but you can’t have three units in a two-unit building.
So if you have a 3-unit, 3-story house, you can combine the top two and rent out the bottom one. later, if your family grows and/or you have more money, you can take over the bottom unit and combine it all into a single dwelling. After that, once the kids go to college and you don’t need the space, you can turn a floor back into a rental. All without changing the C of O.
Also, if I’m not mistaken, changing the C of O will trigger a change in preoperty taxes, which will likely go up even if you’re going to have fewer units. So it’s just not worth it to do, under almost any circumstances.
I would never bother getting a c of o changed when you have a 3 unit c of o. You never know if down the road you might want to rent out another unit. And there really is no reason to change it. The DoB only cares if you are adding an illegal apartment, not if you are underutilizing your property. So I wouldn’t bother at all!
Wow, thanks, had no idea. Currently looking to buy a two-family and agents are trying to convince us a three-family is the same thing.
It’s still OK to have the building delivered vacant at close, right? Lenders don’t have an issue with that, do they, assuming the buyers can carry the mortgage by themselves?
Thank you – This is very helpful
hey,
it used to be that there were some lenders who didint require to see the c/o and if the property was used as a two family even though its c/o says three family you would still get the better rates, of course its always good to have everything legal.
today for example chase will nto allow to close on a property that is being “underused” even though its should not pose a problem but chase has an issue on “undersue”, all banks have an issue of “overuse” which means using it for more then the legal amount says it can be used.
but there are lenders that will ahve no problems with this, but if you start anything with the buildings dept. no lender will close these days with an open permit on title so be careful what process you start now.
if you want shoot me an email and we can discuss this more, benjamin.levin@wellsfargo.com
thanks