Tens of thousands of houses in Queens, Brooklyn and the Bronx have an apartment downstairs that the city does not know about, or knows about and has cited. A kitchen, a bathroom, a separate door, often a tenant who has been there for years. The rent paid the mortgage. Now the house has to be sold, and the apartment that was the best thing about owning it becomes the thing that stops the sale.
Here is what the city actually says, what happens the moment a buyer with a mortgage gets involved, and the three realistic ways out.
Basement or cellar: the city draws the line at the curb
New York City uses two words and they are not interchangeable. A basement has at least half its height above curb level. A cellar has more than half below. A basement can sometimes be a legal apartment if it meets the light, air, ceiling height, egress and fire separation rules and the certificate of occupancy is amended to include it. A cellar almost never can, no matter how good the finish is.
Most of the units people call basement apartments in Queens are cellars by this definition. The 1930s and 1950s brick houses in Middle Village, Forest Hills, Jamaica and across the borough were built with the lower level mostly underground, and the kitchen went in decades later. The rule did not change. The use did.
What the paperwork says the house is
The certificate of occupancy is the document that matters. It says how many families the house is for and what each floor is allowed to be. Houses built before 1938 may have no certificate at all, in which case the city relies on the last recorded use. If the certificate says one family and there is a second kitchen below grade, the house is being used in a way the certificate does not allow, and every professional in the sale will see it.
The property tax class, the insurance policy and the mortgage on the house were all written for what the certificate says. That is why the problem spreads beyond the Department of Buildings once a sale starts.
What happens when a buyer with a mortgage shows up
This is the part that surprises sellers, because nothing happened for twenty years and then everything happens in three weeks.
- The appraiser walks the lower level, photographs the kitchen, and writes it up. The appraisal counts the house as what the certificate says it is. The rent from the apartment is not counted as income, so the buyer qualifies for less.
- The lender reads the appraisal and, very often, conditions the loan on the kitchen being removed or the unit being documented as legal. The second one is usually impossible. The first one means a demolition before closing.
- The buyer’s attorney compares the certificate of occupancy to what is on site, asks for a Department of Buildings search, and finds any open violation, complaint or vacate order. Anything open becomes a closing condition.
- The insurer for the new buyer may decline to write a policy on a house with an unpermitted unit, or write one that excludes it.
Any one of those ends a financed deal. Two of them together end it in the fourth week, after the seller has been in contract, stopped showing the house, and sometimes gone into contract on the next one.
Violations, vacate orders and the fines
A complaint to 311, a neighbor, a fire department visit or a routine inspection can put the unit on the record. The Department of Buildings issues a violation for the illegal occupancy. If inspectors find the unit dangerous, a vacate order follows, which means the tenant has to leave and the unit has to be restored. Fines for an illegal conversion run into the thousands and repeat if the condition is not corrected. The violation attaches to the property and shows up in every title search until it is cleared.
After Hurricane Ida in September 2021, when eleven people died in flooded basement apartments across the city, most of them in Queens, enforcement got more serious and buyers’ attorneys got more careful. A unit below grade with one way out is now the first thing a careful buyer asks about. We wrote separately about selling a house with open violations in NYC, and the same process applies here.
Can you legalize it instead?
Sometimes, and it is worth a phone call to an expediter before you decide. A true basement, more than half above the curb, with seven foot ceilings, proper windows, two ways out and the right fire separation can be added to the certificate of occupancy through the Department of Buildings. It takes an architect, plans, permits, construction and a final inspection, and in practice it runs many months and tens of thousands of dollars.
A cellar is a different story. The state passed a law in 2024 allowing the city to create a legalization path for existing basement and cellar units in a limited list of community districts, and the Department of Housing Preservation and Development runs that program. Most of Queens is not on the list, and the units that qualify still have to meet the safety rules. If someone tells you a cellar apartment can be made legal quickly, ask them which program and which community district.
If there is a tenant down there
An illegal apartment does not make the tenant illegal. A person living in the unit has the same protection against being locked out as any other tenant in New York, and removing them means a Housing Court case, which in Queens takes most of a year. At the same time, courts have refused to let owners collect unpaid rent on an unlawful unit. So the owner can neither collect nor remove, and the sale waits. Our guide to selling a rental with tenants in New York covers the court process in more detail.
Your three options
1. Restore it, then list
Remove the kitchen, cap the gas and water lines, take out the stove and the second lock, clear any open violations, and list the house as what the certificate says it is. This is the cleanest path if the tenant has already left, the violations are minor, and you have the time and the money to do the work first. Budget for the demolition, the expediter, the certificate of correction, and two to four months.
2. List as is and disclose
New York sellers now complete a Property Condition Disclosure Statement, and the certificate of occupancy question is on it. You can list the house with the unit in place, disclose it, and hope for a cash buyer or a buyer whose lender does not look closely. Some do close. Many do not, and each one that fails costs you a month and the showings you turned away while in contract.
3. Sell to a cash buyer who prices the unit as what it is
A cash buyer has no appraiser, no lender and no loan conditions. We buy the house as its legal units, we price the lower level as a cellar or a basement rather than as an apartment, the tenant stays or goes on terms worked out with you, and the open violations and the vacate order transfer to us and get cleared after closing. The offer is written out with the math on one page, and the closing date is yours to pick. Two to three weeks is typical.
Which option is right depends on the tenant, the violations and your deadline. A house in good shape with the unit already emptied should probably be restored and listed. A house with a tenant in Housing Court, a vacate order, and heirs in three states is the second kind, and that is the call we take every week across Queens and Brooklyn.
A short checklist before you do anything
- Pull the certificate of occupancy from the Department of Buildings website and read what it says the house is.
- Search the address for open violations, complaints and vacate orders on the same site.
- Measure how much of the lower level is above the curb. More than half, it is a basement. Less, it is a cellar.
- Find out whether the tenant, if any, has a lease, how long they have been there, and what they actually pay.
- Decide whether you have the time and the money to restore the house before selling, or whether the sale has to happen as it stands.
This is general information, not legal advice. The rules on basement and cellar occupancy, legalization and tenant removal in New York City change, and the details depend on the house and the community district. Talk to a New York real estate attorney or a licensed expediter about your situation.
If you own a house with an apartment downstairs in Middle Village, Jamaica, Forest Hills or anywhere else in Queens or Brooklyn and you want a written number on it as it stands, call us at (516) 964-7222 or send the address through the form below. No obligation and no pressure.
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