An illegal conversion - like an unpermitted basement apartment or unauthorized commercial-to-residential use - renders the space legally uninhabitable. Lenders will not finance the purchase, title companies may refuse to insure, and buyers' attorneys will flag it during due diligence. Before listing, search the DOB Building Information System, compare the certificate of occupancy to actual use, and either legalize, restore, or price accordingly.
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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