Homeowner Living in Non-Conforming Unit?

[Lindsay Wilcox]

This might be a pretty unique question, but since I know there are several people who started their RE journeys buying a MF house and living in one of the units, I'm hoping there might be someone who can shed some light on my question.

Background: I own a triplex with legal non-conforming zoning (zoned for duplexes) that I bought with FHA financing in September 2013. I am currently living in one of the three units and have since I purchased the home. The house was originally a 4-plex with a basement unit until Indianapolis passed egress window laws. The basement does not have conforming egress windows, and was decomissioned as a 4th unit and then mostly un-finished.

My question(s): If I were to re-finish the basement, could I live in it? I understand I can't rent it out to other people because it doesn't have conforming egress windows, but if I lived in it, that would free up the totally legal unit I'm living in right now for a third tenant! Would it cause any kinds of problems, say, when I went to sell it? Would any of those problems go away if, instead of a full kitchen, for example, I just put in a mini-fridge and a microwave? Could that make it a "bonus space" rather than a 4th unit if I sell it in the future? It needs some work, but not enough to deter me if I could potentially make $500-$600 more per month off my current unit!

Does anyone know where I would start to research these questions on my own? I'd like to learn how to figure things out on my own instead of always having to hire an attorney.

[Bill S.]

Personally, I won't live in basement space without an egress window. They are in the code for a reason. All the money in the world does you no good in a pine box.