Buying Auction House With An Illegal Apartment

[Boris Peyzner]

Good evening all,

I have a very tricky question and despite hours of research I cannot seem to find the "answer."  I won an auction for a multi-family property in East Orange, NJ.   It is a 2-family house and the basement is currently rented out. The basement "apartment" is an "illegal apartment."  No way to make it legal.  My intent is to immediately evict this person occupying the unit.  However, I am concerned about the penalties that may be imposed against me.

The law in NJ requires that the owner pay up to six times the amount of rent that was charged an occupant of an illegal apartment BUT ONLY IF the town cites the owner of the houses which then stems the eviction proceeding.  The law is silent as to if the owner just decided to evict the person.   Because I am going to purchase this property, the town will come out to inspect it before it issues a CO.  At that time, the town will likely cite the "illegal apartment" as a violation.  

In this case, I am not the owner and I am stepping into **** but with clean hands and therefore trying to rectify a wrong.  

The law has a cut out that says that if the house is foreclosed on the party that forecloses on the house is not in trouble for having the illegal apartment. While this last part does not directly apply to me it seems that an argument can be made that the law clearly does not seek to punish the innocent party but only the one that seeks to benefit by renting an "illegal" apartment.

Does anyone have direct experience and/or knowledge re: this issue.   I have about 18 hours left before I need to blow this deal up.  Help is needed....