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My wife and I are thinking about buying her parents property that is in the Town of Islip (Ronkonkoma). Comps show that the house is worth maybe 380-390k in it's current condition, and her father offered to sell it to us for 350k. However, I'm a bit hesitant about jumping on this "opportunity." The reason I'm hesitant is because her father finished the upstairs years ago, added a kitchen, bathroom, 2 bedrooms, living room, and also raised the ceilings in the bedrooms where they used to come down on an angle and did it all without a CO. The upstairs is also rented out, as it has been most of the years they lived here. They now live out of state and we help manage the property for them. I asked her father if he'd be willing to get the CO for the upstairs before selling it to us, but he wants no part in that. He just wants to sell it to us without lawyers involved or anything. We also checked with the Town of Islip what the taxes would be for us if we bought it, as her dad gets all sorts of discounts, and the taxes for US would be nearly 14k per year... so, I can only imagine what they'd be if we got the CO and legalized everything. Which I'd really like to do if we bought it.
The other thing I'm unsure of is the Town of Islip's site says in order to apply for a permit for an accessory apartment the area needs to be less than 800 sq ft. The upstairs is greater than 800 sq ft. So, does that mean we'd have to try to make the house a legal two-family? Does anyone have any idea what the costs involved would be to do all of this? Do we need an attorney if we're buying from family? We're really just looking for a house with LEGAL rental income potential to help with the bills. We will also be living in whatever we buy (first time home buyers). Which is why we're interested in buying their house... but I'm not sure if we're just taking on more headaches and costs than this is worth. Any advice?
Are you coming back to LI, "GoodByeLI"?
If you don't want to deal with the headache, skip it
You will need a lawyer if you're getting a loan.
Cash deal doesn't need a lawyer and since this a family deal, it should be easy but one of you need a lawyer to create the contract.
IMHO you wouldn't be buying a can of worms, you'd be buying a potential whole case of them.
In addition to the downsides you've already mentioned, if you went for full legalization (so that you could have a tenant to mitigate the property tax hit, I assume) and inspection found some of the work isn't up to current code, you'd have the expense of that as well. Especially if your FIL did the work himself as a DIY project decades ago.
Would you would be buying it for cash? Because if you are getting a mortgage, there will be eyes looking into the paperwork situation from that end as well. Your homeowners insurance company will have something to say about it as well, in terms of higher premiums if nothing else.
Is it required that you hire a lawyer to buy any home in NY State? No, but I wouldn't recommend doing otherwise. Theoretically, if the purchase is 100% cash (no financing) and you don't care whether or not there are any liens (however far back in time) or other encumbrances on the property, don't need or care about having a survey,and you are willing to do the legwork in order to file/record the deed and pay the NY State transfer tax and file the real property transfer report .... I guess you don't actually need one if you download correct contract of sale forms from someplace like LegalZoom. You'd probably be saving yourself about $1200 or so by taking on that part of the job yourself. Personally I would not recommend it in your case. But if any part of the purchase money is coming from financing, thus involving third parties, get yourself a lawyer.
“We're really just looking for a house with LEGAL rental income potential to help with the bills.”
If you need help with the bills at that price point you won’t have enough funds to bring it up to code and legal.
This won’t be trivial, because I’d bet no matter how well done the additions and renovations were, something will need fixing or redoing. And in the worst case, ripping everything out and starting over with no legal apartment allowed.
OP, you mention that you are first time homebuyers which is usually more than enough of a reality check for most people to handle when it's a "normal" single family home purchase using realtors and attorneys. Normal meaning no issues with COs, permits, and major structural alterations done who-knows-when and in who-knows-what fashion by who-knows-who. (And unless your FIL is a retired contractor, let's face it: DIY renovations are usually the worst.)
Almost all first-timers end up gobsmacked by the unexpected realities of home ownership. I've been to that particular dance five times and can tell you that even in the "best" of situations there are always Unwelcome Unexpecteds. Even a pre-purchase home inspection won't find everything.
Question: If you do not buy your in-laws' house, will they then put it on the market in the normal way instead? Just wondering whose idea the sale was originally. Because it kind of sounds to me as if they are perfectly content to maintain the status quo unless they can do an "easy" sale to you and your wife. They know that any other kind of sale will immediately raise issues/difficulties because of the reasons you have mentioned.
I am confused about the current status of the house. You said there is a tenant living upstairs in the no-CO apartment. Do you and your wife live in the downstairs portion? Or is that normally rented out also but just currently vacant?
If your FIL has specified "no lawyers involved", then that is a red flag IMHO. If he has lived in NY for any length of time, he's well aware that lawyers are typically hired for all real estate transactions. Makes me wonder if there are any liens on the property and/or whether he knows for sure that some or all of the work is/was not up to code.
If your FIL has specified "no lawyers involved", then that is a red flag IMHO. .
I missed this. Good luck to him finding another buyer who will agree not to use an attorney, unless it's someone extremely wealthy who is just going to knock the whole thing down anyway. I'm guessing it's not that kind of area. I can assure you the bank is going to have lawyers who make the bank, appraiser and underwriters do their due diligence. FIL is looking for a sucker.
Everyone is right. 30k discount is nothing. Take off 100k and then possibly worth taking it on. The bigger issue is your FIL. I’d say good bye to LI. If you don’t have the ability to afford a 350k house, you can’t afford to live here.
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