I dont know the area , But it looks to me like a non conforming use .  

Is the property a conforming use as a duplex?

Well, it's currently a medical office bldg but I'm looking at building agency-conforming multifamily residential there. 

Since I've been in the Conforming loan world my whole life, financing 15 units is a new brain exercise for me.  

If your worth $10 million +, not going to manage the properties or have any handling of the day to day operations and don't mind the extra expense of financing for an LLC, then  a LLC might be good for you.If your not worth Millions, are going to manage yourself and want the low rates, longer term of conforming mortgages, for get the LLC, get the umbrella policy as mentioned by othersI think a lot of people get hung up on wanting to get into a business structure to sound important, for the average investor is makes absolutely no sense,,obviously there are exceptions

The lower level bedrooms are non-conforming, and we make note of that in the broker remarks.We received an offer of $209k yesterday, and we will likely go under contract this evening with that same buyer.

Call the city to find out if its legal, non conforming (grandfathered / most likely) or illegal , and get the permits from them, they can email them to you.

City Housing Dept. has been surprisingly responsive to confirm it’s a legal 2 family home but shying away from answering: what it would take to convert or if we would be able to rent separately as a non-conforming propertyAs a 2 family home, we can get close to expected rental income of 3 family (~$100-$200 less), assuming future tenants would be willing to live on floors 2 and 3 when there are a similarly sized 4-5 bedroom single family homes in the areaOne of the requirements for a 3 family (and I think the main hurdle we’d need to overcome) is the need for 3 off-street parking spaces.

Since they share the common walk, a split would not conform to set-back rules.

Recently I purchased a multi-family property only to find out that it was non-conforming and vacant for over 1 year requiring it to be returned to a single family home.