Legal 2 family in NJ, rented as 3 family. Ramifications?

[Vanessa Francis]

Hi Everyone, Newbie here! I am in the process of buying a legal 2 family house that is already set up as a 3 family over 3 floors in northern NJ. It is a no-brainer to turn it into a 3 family, though the utilities set up is weird and will have to be addressed, but what are the ramifications legally of using and renting it as a 3 family before it is legally designated as such?

[Karen F.]

You can go down to the town hall and pull the file on the property to find out whether it ever was a legal 3 family.  If it was, then it would be very easy to get it back to that status.  What the assessor's online records say, and what the actual hard file says, can be two different things.

If you are the one living in the illegal 3rd flr unit, I don't think that the tenant has as much on you - after all, their unit is legal.  

We bought an illegal three family and converted it back into a legal 2 family.  Turned the 3rd flr kitchen into a laundry room.  Wound up with a first floor unit, plus an enormous 2 story 7 bedroom 2 bath unit, got a huge refugee family with Sec 8 in there with the government paying us a king's ransom for it.  We get about 25% more for it in rent this way than if it had been a legal three family.  You see, it is so difficult to find big units for big families on Sec 8 that the government allowance for units with over 5 bedrooms increases exponentially, rather than linearly.  They'll beat hell out of the unit, but they'll stay there for 20 years, because they'll never find another place big enough for them, that will take them.

If you're not willing to rent it to Sec 8, then what about students?  They will happily live 6 people in a 6 bedroom 2 bath unit, and pay a premium for it, because it's still more privacy than a dorm, and cheaper, too.