Failed interior insurance inspection due to illegal unit and vacancy

[Marie Eisley]

Hello BP, I purchased a legal 2-fam house in the Bronx (built in 1899) with an illegal attic unit that's a finished apartment with plans to househack and live in that unit and rent out the others. Right after closing 2 months ago, I went straight into renovations and didn't schedule an inspection til afterwards. Unfortunately, the house was vacant after reno since I haven't gotten tenants in yet nor have I moved in (was planning on it) and I failed interior insurance inspection due to a vacant house and illegal unit. The insurance apparently won't consider reinstating as per my insurance broker. 

How can I ensure I pass my next inspection? What is the proper way to decommission the illegal unit and is this absolutely necessary? Would I have to temporarily move to one of the legal units? Would future insurances I inquire always see a history of a failed inspection? For reference, the illegal attic unit has a gas stove, 1st floor has a gas stove, and I JUST converted the 2nd floor unit to fully electric and capped the gas line. The illegal unit is accessed at the top of a shared staircase as the 3rd floor. It has its own door and looks like its own independent apartment.

I'd appreciate any advice and help I can get. Current insurance is going to lapse next week.

[Davendra Bhagwandin]

Hi Mary 
 As a broker in The Bronx and a licensed expeditor who's work on resolving municipal violations for investors this is the advice I would give.

On passing your next inspection and proper way to decommissioning the illegal unit:
It depends on the exact nature of the violating condition, what exactly was seen & recorded. 
Was this determination made solely from the inspection?                                                                                                                                         Also if the violating conditions/violations are on record regarding the illegal unit and which entities have issued them.
When dealing with a gas line in NYC a licensed plumber is needed to ensure the work is done to code.

Is it necessary to decommission?
Yes if the insurance turned you down for an illegal unit and that has been documented.
Being found in violation of occupancy/use and an illegal unit can result in multiple violations from DOB, ECB and HPD all stemming from the same underlying violating condition. 

Would future insurances I inquire always see a history of a failed inspection?
To my knowledge no. It is not like car insurance where it follows you if you were to change insurance companies. Though fixing the violation of course would put you in the right.

All in all it is a fixable but tedious issue

If you'd like some help in coming up with a gameplan/ navigating the process feel free to reach out to me.