The hall and stairway are shared by all as well as the basement. 

One for a stairway, one for a bathroom, and the third (shed dormer) to increase ceiling height for the rest of the open living space upstairs.

I planned on renting the 2 floors (I live in first floor) for $900 each and putting a stairway connecting the basement to the first floor apartment to make it a 4 bed which would rent for about $1500 a month making my total rent income $2400 a month.

I planned on renting the 2 floors (I live in first floor) for $900 each and putting a stairway connecting the basement to the first floor apartment to make it a 4 bed which would rent for about $1500 a month making my total rent income $2400 a month.

My fiancé noticed on the virtual tour that there was a huge attic with a stairway that wasn't listed anywhere in the literature.

The code for stairway headroom s 6'8.

.-$100 per hole and $50 for paint to repair two quarter sized holes on the stairway for removing a gate we have never even seen on the property or knew existed (he is telling us we caused the holes by removing this gate) if anything, we wanted a gate for the dog and would have never removed it. but we seriously never knew of this gate ever existing, never mind removed it.-$350 for removal and disposal of broken toilet, remove and disposal of oil and clean up materials, and storage of items (trash left out for trash pick up day on the CURBSIDE that "interfered with his storage at the property")Basically, we have done nothing since receiving the letter on August 12.

That stairway is still broken.  

The problem is that it is zoned still as a single family, so we are not yet putting a separate kitchen in the basement (while all the communications are ready), and want to try to market it as 5br/2bath house first.Another option is to put a door between floors in the stairway and rent out both units separately, short term.

Cold winters with north side parking lots and sidewalks that didn't thaw until April, lots of stairways and 115 years old so out of code all over the place.