In most cases, yes - an illegal conversion creates title, insurance, and lender issues that can kill a deal. Buyers' attorneys will flag certificate of occupancy discrepancies, and lenders may refuse to finance. Either cure the violation by restoring the original layout or legalize the conversion through DOB. Disclose it either way to avoid post-sale liability.
From the seller playbook: Certificate of Occupancy Verification and Illegal Conversion Cure Before Sale
This is general information, not legal, tax or accounting advice. Every situation is different. Talk to a licensed attorney, accountant or tax professional before you act.
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