Buying Property with Illegal Apartment & Tenant

[Christian Butler]

Hi all, 

New to BP, residing in Long Island, NY. I'm a homeowner but not currently investing, and my wife and I are thinking about buying a nearby property that would be our primary residence. The goal would be to also rent out an onsite external apartment which is currently on the property. The problem: it's registered as a garage and doesn't have a legal CO, yet has a long-time tenant residing there currently.

Indications are that the tenant pays, but we know they're paying well below market value, even if that's true. We've pretty much taken the stance with the listing agent that we're not interested in buying it with an illegal tenant, and that we'd need either a legal CO & agreement of rent increase within 6 months OR that the tenant leave before closing to move forward. That said, this property has been on the market for more than 2 months, so I get the impression nobody is interested in dealing with this situation. My thought is that the sellers (currently estate managers as owners have passed) would be motivated to move quickly if we take the tenant problem off their hands.

Now, this probably raises lots of red flags, potentially even prompts some laughter at what a terrible it is, which is why I'm here asking! Anyone familiar with the area, current (i.e. Covid-era) NYS eviction regulations for illegal tenants, or have any related experiences/thoughts that could help sway our decision?

Thanks so much!

Christian