-Also, we absolutely pitched in to help with legal fees, $50k like you mentioned.

This extra road frontage now also qualifies my property to be able to be legally converted into a triplex from a duplex.

Hey Santosh,As of right now you're extremely exposed regarding insurance and I'm going to assume legally as well.If the home isn't registered as a legal multi-family with the town that's something you'll have to correct ASAP and make sure the home is up to code.Insurance wise as soon as they find out what you're doing they'll cancel you as the risk has changed from a single family owner occupied home to a multi family owner occupied home.

Legal Implications & Ramifications : As an example; the iconic PCH homes in Malibu and many in the upper foothills might not permitted to build back, certainly not to the same extent or materials.

Whatever is closest to "Legal". 

I recommend legal advice from an attorney.

One question that you may not want to post here for legal reasons, is how much are you paying your PMC?

This is assuming the way you notified the tenants of the new rent was considered legal notice in your market. 

@Kash Tacke legally, you would need architect drawings to get approval from Detroit Zoning Board.

If you need financial help, ask under the "Finance, Tax, and Legal" forum.