From City Limits:
Nizam Ahmed didn't know his basement unit was illegal back in 2004, when he purchased his two-family apartment building in Ozone Park. "It was nice," recalled Ahmed, a 57-year-old cabdriver. His loan was based on income from three units. Ahmed's family lived in the basement, while he rented the two apartments upstairs. When his second-floor tenant stopped paying rent, he asked her to move, and she reported him to the Buildings Department.
The current system leads to selective enforcement. After city inspectors fined Ahmed $800, he spent another $6,500 on a lawyer. He can't rent the basement unit, and he's now five months behind in his mortgage. He's having trouble getting a loan modification that would help prevent foreclosure. In the meantime, he works double shifts before returning home to his street of two-family homes, many with illegal apartments. "Everybody has a basement rent," he said.
Oh boo hoo. First of all, the pre-purchase inspection and C of O tell you what the home's legal use is. This entire article is written from the perspective of the "poor tenants who can't afford legal apartments" and the "poor landlords who need financial assistance to legalize their units." Here's the reality: The landlords doing this factor in the income from an illegal unit when they are deciding whether or not to buy a house. Then they take out a mortgage that they wouldn't be able to afford without the illegal unit. When they are busted, I feel no sympathy for them.
Illegal apartments bring month-to-month leases, which are usually taken by people who are transient in nature. You'll see new people going in and out of these units all the time and not know who lives on your block anymore. Plus, it diminishes the capacity of the city to provide services that people in the legal units pay for. This brings a block down and is a quality of life issue that goes well beyond "affordable housing." People who invest in one or two-family homes to settle down in have the right to expect that their standard of living will be maintained by their neighbors. But it seems that the ones doing all the illegal stuff are protected by this administration and that is why we see the decline of many formerly wonderful neighborhoods.
Maybe it's time we started reporting illegal conversions to the Dept of Finance and IRS instead of to DOB. Those agencies will be more interested in getting to the bottom of the situation and would be more likely to get landlords to cease and desist renting out illegal units. Hit them where it hurts.
In fact, the DOF suggests you do just that:
Report Tax Evasion and Fraud