Illegal multi unit properties

[Adam Gleve]

I am a realtor in the Pittsburgh area and have been running into a lot of properties that are illegal (no occupancy permit exists) for the current usage such as a single family home being turned into a duplex.   Does anybody run into this frequently?   What happens if you get caught?   How would you get caught?   I have buyers interested in these properties but the property would probably get flagged during the appraisal?   Any help here?

[Brian Sparr]

Hi @Adam Gleve -

I'm an agent in both the San Francisco Bay Area and in the Raleigh metro - we see a lot of this in the Bay Area.  Here are some quick thoughts:

• from an appraisal stand point, you're going to need to remove the stove/oven from the unpermitted kitchen before the appraiser gets there.  If part of the second unit includes unpermitted living space (ie, converted garage or attic), that won't be factored in when selecting comps or making price adjustments.  Also, understand that the appraiser will value it based as a single-family and not a duplex.
• what happens if you get caught? depends on the city, but they might give you the choice of bringing it to code and making it a legit duplex or returning it to its original intent as a single-family.
• how would you get caught? a number of ways:
  • neighbors complain because of inadequate parking
  • you get into a dispute with one of the tenants and they report it
  • you evict a tenant and they sue you because of it
  • etc...
• if you have interested buyers, it's totally ok for them to move forward with the purchase but you're going to want to protect yourself and them.  Make sure this stuff is in writing and they've signed it:
  • zoning - they're getting a SFH and not a duplex
  • (lack of) permits - nothing for a 2nd kitchen or converted living spaces
  • occupancy cert (for single dwelling)
  • directly ask the seller/listing agent about the legality of the 2nd unit
• if your buyer plans on continuing to rent the illegal unit, make sure they are aware of the risks ... this article is geared towards landlords in Oakland, but is worth looking at - find the section for Landlord Liability about half way down.

Good luck!