“One ringy-dingy. Two ringy-dingies…”

So, I received a telephone call the other day from two of my favorite clients, let’s call them The Searchings, Desperately and his lovely wife, Really.  Both are long-suffering participants in the house-hunting and purchasing madness merry-go-round. (I told them to call the real estate brokers I know, but n-n-n-n-o-o-o-o. They had it covered. Right. Two years later and they are finally seeing the type of houses they wanted to see two years ago).

Thankfully they found a house with everything the wanted: An easy walk to public transportation, good schools, nearby supermarket, healthy trees, and no empty lots on the entire block.

Just one little itsy-bitsy problem. They think the house listed in city records and the real estate brokers’ (again, they didn’t use any of my real estate professionals) listing as a legal two-family brownstone had a previous life as  a rooming house, or SRO.

What Clues Should We Look For?

Here’s the first tip. As you approach the front door to the house, count the number of doorbells and mailboxes.

Two families in one building don’t each require two doorbells or mailboxes.

Two families, two mailboxes, two doorbells. Total.

Once inside, look for electrical piping running to outlets attached to the wall, and the same for plumbing and gas lines. These are major components of any home, and should be located inside the walls. If they’re not, you’re probably looking at a handyman special which could lead to disastrous results such as fires and explosions.

What Else Should I Look For?

Two family house? There should only be two (2) kitchens. Please laugh in their faces when the current owner tells you the have a kitchen in the basement “for convenience.”

Want convenience? Make reservations or call for take out.

And pay close attention to the number of full versus half bathrooms. Look at the doors and door frames. If there are screw holes, whether open or repaired, (Plastic Wood does wonders with holes), it could indicate the bedrooms were actually rented as rooms or sleeping areas.

Or, they keep a Bengal tiger in the apartment.

Inspect the walls which separate each “room.” Do they appear legitimate, or hollow “Home Depot” specials?

What’s a Home Depot Special?

To make additional rentable “rooms”, i.e., sleeping sections, the owner or even the tenant will go to Home Depot for some sheet rock, 2 x 4’s, nails, and the other materials necessary for building a wall. With each “special”, another rentable space.

Make sure you inspect the floors in each room. Why? Again, look for recently patched holes which could suggest these types of walls were recently removed so the house could sell a bit faster. And without the homeowner having to lower the price when a home inspector like Colin Albert, P. E., the owner of ACES Home Inspections, comes to give the house an ASHI-certified inspection.                                                                                                

There’s Got to Be An Easier Way!

Sure. Just ask the current owner if they’re renting out to more than the legal number of families.

No, seriously. Stop laughing.

Ask them. Let’s see if you get an honest answer.

Come On Now – No One Really Lives Like That, Do They?

Oh, yes they do. A surprise visit to a random apartment in many parts of Brooklyn would surprise the heck out of you. A friend of mine recently went to write a life policy for a gentleman he met while handing out business cards on the street. When he went to the apartment, a two-bedroom apartment, there were 19 men sleeping in sleeping slots attached to the walls!

Lucky dog wrote twelve  (12) life insurance policies in one sitting. Got a bunch of referrals, too.

The legal tenant, in many of these cases, is collecting so much ‘space rent’ they really don’t even have to go to work. One lady had the audacity to tell me she works only to keep her health benefits and accumulated vacation time. And to make an extra mortgage payment each month on her fabulous home in Pennsylvania.

So, What’s the Solution?

Know what you’re buying. You might be forced do a great deal of repairing to make your home “insurance legal.”

Great. What do you mean, “Insurance Legal?”

Simple. A two family is only inhabited by two, (2, duo, deux, more than one, less than three) families. A three family, three. Not four or five.

In my agency, I refuse to insure any property not being used for it’s intended, legal purpose. I am not in the business of “writing claims.” I only write sound risks.

And, just so you know, most insurance companies now inspect every house they insure. Both at the inception of the policy and at renewal.

And yes, I’ve had new clients’ policies rejected when the inspector saw four doorbells, and four mailboxes on the front of a two family house. Don’t forget, for a new policy, the insurance company has the legal right to cancel any new policy within the first 60 days of it’s inception for the property’s failure to meet the company’s underwriting requirements.

And believe me, everything we’ve talked about and more is enough reason for cancellation for cause.

You can’t make this stuff up.

Oh, almost forgot. They’re in contract. They are purchasing the house. And the seller is making major concessions on the price and the amount to be held in escrow. Just in case more problems rear their ugly heads.

A Look Into the Crystal Ball…

Dorothy Adonolfi. Remember her name.

Once income tax preparation season, (Puh-leeeeze keep those W-2′ s coming, folks), is over I will begin a series about the tragic costs of illegal conversions in Brooklyn and its surrounding counties. We’ll look at every aspect of how those “Home Depot Specials” affect us now, will affect our ability to secure insurance in certain communities in the future, as well as the other horrible costs we could face.