Duplex down into illegal basement unit to combine beds/baths

[Phil Janasac]

My wife and I are in the process of purchasing a multifamily (2-flat) property on the north side of Chicago (with intent to owner occupied/house-hack) . During our second viewing of the property the realtor "gained access" (don't ask!) to a part of the basement that was locked, and lo and behold, we found an extra 2 bedrooms and a full bath, and a kitchen; presumably an illegal apartment. It was quite unexpected, but from what I've read, not unheard of in Chicago. The basement only has 7ft high ceilings (Chicago code says they need to be 7.5ft high), and the property is only zoned RS-3 (SFR or two-flat only), among other things, so we're not going to rent it out separately and risk city violations.

The only entrance to this basement is from the outside, not from inside the first-floor apartment. However, if we duplex down from the first floor unit (which is 2bed 1bath apartment), can we then combine the beds/baths and call it a 4bed 2bath? This is providing we obtain permits to add stairs that conform to code, among other things.

What would be the best way to approach doing this? We would be living in this first floor duplexed-down unit for a few years and then rent it out when we move out. Adding stairs is something we’d like to do regardless because the laundry hook up is in the basement and we don’t want to have to run outside during winter with clothes to do our laundry!

TL;DR – Can I legally duplex down into an illegal basement unit to capture the extra 2 rooms and bathroom in that unit? What sort of headaches should we expect in this process?

Responses and feedback are incredibly appreciated! 

[Matthew Olszak]

@Phil Janasac Please don't do it without a permit. If a building inspector finds you did that, they will make you undo the work (and pull permits to do so). Zoning and codes have changed over the years, so depending on when the alteration was done it may be ok (but that's doubtful). There are a ton of illegal attic and basement units in the city. That doesn't excuse the fact that it's illegal.

I'm not trying to be a prude here as far as following the law. I certainly wouldn't suggest to pull an electrical permit to change an outlet or a plumbing permit to change some cast iron sewer out to pvc. But lets be real here, this is going to cost big money irregardless of pulling the permit, and if you don't you've put all that money at risk of someday being thrown in the dumpster when the city makes you take it out. Case in point is a client of mine who bought his 2 flat in 2001. He had a bad tenant who didn't pay the rent in a basement unit, and after evicting him the ex-tenant called the city. Inspectors came in, and after $4K in fines, he still has to pull permits to remove both the basement and attic units that are fully finished. All it takes is an upset neighbor or tenant to cause huge $ problems.

One thing I'd check concerning the ceiling height is if it truly is that height, and that the floor isn't raised or the ceiling dropped. I've seen more than a few times a 2x10 sistered on to the old 2x6 joists that dropped the ceiling height another 4 inches, and 2x6s  used to raise the floor to be level across while still being able to run piping/hvac below.

If you don't have the cash to do it right, I'd say just leave it as is since either way it'll be a fight with the city if they find out. At least if they do find out you have an illegal unit, you can offer your alteration as a possible solution and claim ignorance, vs blatantly ignoring today's rules to put in something equally illegal.