Illegal basement apartments?

[Edward OConor]

As most of you have noticed, lenders are increasingly requiring the removal of the basement kitchen even for refi's.

We all know that for the most part basement apartments are illegal. My ? is what about the rest of the basement finish? What about the bath/plumbing (gas/water lines), partition walls, cabinets and electric wiring.

I understand that we are not the "building permit police", however, I get nervous when the lender asks to comment on if the subject is "now legal for the zoning" after the stove has been removed.

When the lender requests "removal of kitchen" re-inspection, what do you expect to see (or not see) at the time of the inspection?

If the C/O indicates that the basement is a "cellar" and the basement is finished (e.g family room), is this "legal"? Does this mean that the basement is supposed to be unfinished? Do we need to require the entire finish to be removed to the concrete walls and floors?

I would like to dump this on someone else (like a city building inspector) but I am not sure how to word the comment. What kind of paperwork would be acceptable to indicate that the property is currently "legal"?

 

[Kevin Mc]

Section 34 will give you as definitive answer as you will get.

http://www.tenant.net/Other_Laws/HMC/hmc003.txt

 

[Mike Kennedy]

Ed - on L.I. or in NYC?

 

[Claude From NY]

When the lender requests "removal of kitchen" re-inspection, what do you expect to see (or not see) at the time of the inspection?

In the majority of cases, the lender's concerns with basement kitchens are fire and safety issues.

The offending kitchen component (i.e. range/oven) must be removed completely. Gas and water lines must capped.

I get nervous when the lender asks to comment on if the subject is "now legal for the zoning" after the stove has been removed.

It seems that you reported an "illegal" kitchen. Now they want to know that with the stove removed, is the "ill" from illegal also gone?

 

[Abester]

In my market, many people have 2nd kitchens in the basement just for entertaining or as a place for the teens to go. For a lender to require removal here would be nuts, and I'd tell 'em so.

 

[KenRossman]

What may or may not be legal can vary considerably between different jurisdictions. You essentially need to do your due diligence and find out what is specifically allowed and/or required in the jurisdiction that regulates your subject, report what you observe accurately and make a determination whether the use is legal, illegal or legal non-conforming. What to do about it from that point is the underwriters problem. The attached correspondence (see part two) is dated but I believe still represents Fannie Mae's position/requirements on illegal apartments. I also don't want to mislead anyone - I was an SRA and IFA when the questions were posed, but have long since dropped my membership in the AI and NAIFA.

 

[Mike Kennedy]

I believe still represents Fannie Mae's position/requirements on illegal apartments.


it does.

 

[Edward OConor]

Thanks all.

I think that I may have confused the question.

Would the city of NY require permits for the interior of the basement to be finished?

Does the city require a permit/inspection to install walls and ceilings in the basement?

Does the city require a permit/inspection to install a bathroom in the basement?

Does the city require a permit/inspection to install electricity in the basement?

Is the stove just the tip of the legal iceberg? I don't want to mislead the lender by saying that the property is "legal" when the bathroom and electrical and basement finished walls are not? I will try to contact the city building dept tomorrow.

 

[Mike Kennedy]

Ed - typically two separate issues in most markets.

1. finished basement

2. additional apartment/kitchen

3. "cellar" typically UNFINISHED storage & utility.

 

[Claude From NY]

Ed - typically two separate issues in most markets.

1. finished basement

2. additional apartment/kitchen

3. "cellar" typically UNFINISHED storage & utility.

That's right. I think you will find that NYC makes a clear distinction between basements and cellars. Some basement apartments may be legal in NYC but a cellar can never be legally occupied.