A Class 1 illegal conversion summons in New York City accrues $1,000 per day until the condition is certified as corrected, up to a maximum allowable penalty of $45,000. The Department of Buildings can also post a vacate order that empties the units the same week — ending the rental income that paid for the conversion in the first place.
Most owners misread the exposure in the same way. They see the scheduled fine on the summons — $2,400 for a Class 1 illegal conversion — and assume that number is the whole bill. The scheduled fine is only the opening figure. The daily penalty, the default penalty for missing the OATH hearing, and the lost rent from a vacate order are where the real money goes.
An illegal conversion in New York City is any dwelling unit created or occupied beyond what the building’s Certificate of Occupancy authorizes. The NYC Department of Buildings classifies illegal conversions as immediately hazardous violations carrying daily penalties of $1,000, a maximum allowable penalty of $45,000, and the risk of a vacate order that removes every tenant.
At a Glance
- Daily penalties on a Class 1 illegal conversion run $1,000 per day until correction is certified with DOB.
- The maximum allowable penalty is $45,000, per the NYC Department of Buildings OATH summons guidance.
- The scheduled penalty for a one- or two-family altered to four or more families under Admin Code §28-210.1 is $2,400, with a $12,000 default penalty.
- Miss the OATH hearing and default penalties run up to $25,000 depending on the violation class.
- Where three or more units above the legal count exist, Local Law 94 of 2017 sets a $15,000 minimum and makes each excess unit a separate chargeable offense.
- Closing the violation requires a Certificate of Correction filed with DOB — physical repair alone does not clear the record.
- A cellar (more than half below curb level) generally cannot be legalized as a dwelling unit at any cost.
What counts as an illegal conversion in NYC?
An illegal conversion is any living space created in an existing New York City building without Department of Buildings approval for that use or that unit count. Every legal building in the city has a Certificate of Occupancy stating how many dwelling units the building is approved for and what each space may be used for.
A building approved as a two-family dwelling is a two-family dwelling. Renting the finished cellar makes it a three-family dwelling — and unless the Certificate of Occupancy was amended to say so, that third unit is illegal the day the tenant moves in.
The recurring configurations:
- Cellar and basement apartments. The single largest category. A cellar — more than half its height below curb level — generally cannot be legally converted to living space at all, regardless of finish quality. A basement may be convertible with proper ceiling height, egress, light, ventilation, and DOB approval.
- Subdividing a legal apartment. Splitting one unit into two, or carving a two-bedroom into three rentable rooms, without amending the Certificate of Occupancy.
- Attic conversions. Finishing an attic into a bedroom without the required headroom, egress, or filing.
- Unauthorized single room occupancy. Renting individual rooms with shared facilities in a building not approved for SRO use.
- Garage and accessory-structure conversions. Turning a garage or rear structure into habitable space.
Almost none of these start as fraud. They start as a homeowner finishing a basement to help cover the mortgage, or a buyer purchasing a building already configured this way and inheriting the problem without knowing it. The enforcement machinery does not distinguish between the two.
How much is the penalty for an illegal conversion in NYC?
Illegal conversion penalties come from three separate places — the DOB penalty schedule, the daily accrual, and the Administrative Code minimum for large conversions. Reading only one of them is what produces the surprise.
| Penalty | Amount | What triggers it |
|---|---|---|
| Scheduled penalty — Class 1, §28-210.1 | $2,400 | One- or two-family residence altered for occupancy by four or more families |
| Scheduled penalty — Class 2, §28-210.1 | $1,200 | Residence occupied by more than the legally approved number of families |
| Default penalty — Class 1, §28-210.1 | $12,000 | Failing to appear at the scheduled OATH hearing |
| Default penalty ceiling | up to $25,000 | Not curing, stipulating, paying, or attending — amount varies by violation |
| Daily penalty | $1,000 per day | A Class 1 illegal conversion left uncorrected and uncertified |
| Statutory minimum — three or more excess units | $15,000 | Illegal conversion of three or more dwelling units above the legal count |
| Maximum allowable penalty | $45,000 | The DOB ceiling on illegal conversion penalties including daily accrual |
The NYC Department of Buildings states the rule plainly in its OATH summons guidance: Class 1 summonses issued for illegal conversions are subject to additional daily penalties of $1,000 per day, and the maximum allowable penalty is $45,000. That $45,000 is a ceiling, not a starting point — and the only thing that stops the meter is certifying correction.
Definition — default judgment
A default judgment is entered when a respondent does not appear at a scheduled OATH hearing and the tribunal decides the case without them. On a Class 1 illegal conversion under §28-210.1, the scheduled $2,400 penalty becomes a $12,000 default — a five-fold increase for missing a calendar date. Defaults can sometimes be vacated, but that requires a motion, a valid reason for the absence, and months of additional process.
What happens when three or more extra units are involved?
Large illegal conversions are penalized under a separate and harsher rule. Local Law 94 of 2017 amended Administrative Code §28-202.1 to set a minimum civil penalty of $15,000 for a violation of §28-210.1 in any building involving the illegal conversion, maintenance, or occupancy of three or more dwelling units above the number legally authorized by the Certificate of Occupancy.
The same provision adds the multiplier that owners miss: each dwelling unit above the legally authorized number constitutes a separate offense, charged separately and punishable by a separate civil penalty. A one-family house operating as a five-family house is not one problem — it is four excess units, each chargeable on its own.
This is also the threshold where DOB enforcement posture changes. Buildings with three or more excess units draw inspection priority, referrals to HPD and FDNY, and a materially higher probability of a vacate order rather than a cure period. Owners in that range should assume the file is active, not dormant.
Why is a vacate order worse than the fine?
A vacate order is a DOB or HPD directive requiring occupants to leave a building or a portion of it, typically within a window of 24 hours to seven days depending on severity. Illegal conversions are one of the primary triggers, and for most owners the vacate order — not the penalty — is the actual financial event.
The moment a vacate order is posted:
- Rental income from the affected units stops entirely and does not resume until the order is lifted.
- Displaced tenants may be entitled to relocation assistance, which the city can bill back to the owner.
- Mortgage, tax, and insurance obligations continue regardless of occupancy.
- The order stays in effect until the condition is corrected, documented, and verified by re-inspection — not when the owner says it is fixed.
Insurance is the quiet exposure. A fire or injury in an illegally converted space gives a carrier a straightforward basis to contest the claim, because the space was never approved for occupancy. Some policies are voidable outright where the building’s actual use materially differs from what was disclosed at binding. That risk exists every day the condition remains, whether or not DOB has ever inspected the building. The same escalation pattern shows up across open DOB violations generally — they compound quietly and surface at the worst moment.
Can a basement or cellar apartment be legalized in NYC?
The answer turns entirely on a measurement, not on how the space looks. New York City distinguishes a basement from a cellar by how much of the space sits below curb level, and that single distinction decides whether legalization is even possible.
| Space | Definition | Legalization outlook |
|---|---|---|
| Basement | Less than half its height below curb level | Possible — requires ceiling height, egress, light, ventilation, fire separation, and zoning density |
| Cellar | More than half its height below curb level | Generally not legalizable as a dwelling unit regardless of finish or expense |
This measurement is the first thing a registered architect checks, and it should be the first thing an owner checks before spending a dollar on a legalization plan. Owners who finish a cellar to a high standard and then seek approval are usually spending money on a unit that cannot exist legally at any budget.
How do you clear an illegal conversion violation?
Clearing an illegal conversion violation has exactly two routes — legalize the space or reverse the conversion. There is no third path where the owner pays the penalty and keeps the unit.
Path 1 — Legalize the space
If the converted space can be brought into compliance with the Building Code and the zoning for the lot, it can be legalized. The sequence:
- Get a professional assessment first. A registered architect or professional engineer evaluates whether legalization is possible before any money is spent. Ceiling height, egress, light and ventilation, fire separation, and zoning density are the make-or-break items.
- File an Alteration application with DOB to amend the Certificate of Occupancy to reflect the actual unit count and use.
- Perform the corrective construction under permit — egress windows, fire-rated separations, ceiling height, mechanical work as required.
- Pass inspections and obtain the amended Certificate of Occupancy.
- File the Certificate of Correction with DOB so the violation closes on the record, and resolve the associated ECB penalty at OATH.
Path 2 — Reverse the conversion
Where legalization is not achievable — and for cellar units it usually is not — the remedy is full physical removal of the illegal construction and restoration to the original compliant condition, followed by a Certificate of Correction filed with DOB. That means removing the kitchen, the added partitions, the separate entrance, whatever established the space as an independent dwelling unit.
Half-measures fail re-inspection, and a failed re-inspection means the $1,000 daily penalty keeps running toward the $45,000 ceiling. The same rule that governs every violation category in this city applies here: fixing the physical condition and closing the violation on the city’s record are two separate jobs. Owners who do the first and skip the second discover the violation is still open years later, usually at a closing.
What should a buyer check before signing?
Illegal conversions transfer with the building. A buyer who purchases a “three-family” that the Certificate of Occupancy describes as a two-family has purchased the violation, the penalty exposure, and the vacate risk along with the property.
The check takes minutes: pull the Certificate of Occupancy, count the legal units, and compare that number to what is physically in the building and what the rent roll claims. Where those three numbers disagree, that gap is the deal’s largest unpriced risk — and lenders increasingly catch the discrepancy during underwriting, which kills the financing rather than the deal quietly. Brokers and title companies can review our real estate compliance guidance for where this surfaces in a transaction.
The Department of Buildings publishes correction procedures for owners who discover a conversion after purchase on its illegal home use page, and the full schedule of scheduled and default amounts appears in the DOB Buildings Penalty Schedule.
Get the Certificate of Occupancy Checked Before the Daily Penalty Runs
The difference between a $2,400 problem and a $45,000 problem is usually time and a missed hearing date. If a violation has been issued, a 311 complaint has been filed against the building, or the Certificate of Occupancy may not match what is physically in the building, the assessment should happen now rather than after a vacate order is posted.
Valerie Samuel and the team at All Boro Expediter handle illegal conversion violations, Certificate of Occupancy amendments, DOB filings, and OATH representation across all five boroughs. Get in touch or review our full services.
Frequently Asked Questions
How much is the fine for an illegal apartment in NYC?
The scheduled penalty for a Class 1 illegal conversion under Administrative Code §28-210.1 — a one- or two-family residence altered for four or more families — is $2,400, with a $12,000 default penalty for failing to appear at OATH. Class 2 illegal conversions carry $1,200 scheduled and $6,000 default. On top of the scheduled amount, Class 1 illegal conversions accrue $1,000 per day until correction is certified, and the NYC Department of Buildings sets the maximum allowable penalty at $45,000.
Is the penalty for an illegal conversion always $15,000?
No. The $15,000 figure is a statutory minimum that applies in a specific circumstance, not a universal baseline. Local Law 94 of 2017 amended Administrative Code §28-202.1 to require a minimum civil penalty of $15,000 where a building involves the illegal conversion, maintenance, or occupancy of three or more dwelling units above the number authorized by the Certificate of Occupancy. Smaller conversions are penalized under the DOB penalty schedule at lower scheduled amounts.
Can a basement apartment be made legal in NYC?
Sometimes. A basement — where less than half the height sits below curb level — may be legalized if it meets Building Code requirements for ceiling height, egress, light, ventilation, and fire separation, and if zoning permits the additional density. A cellar, where more than half the height is below curb level, generally cannot be legally converted to habitable dwelling space regardless of finish. The distinction is measured, not descriptive, and it is the first item a registered architect verifies.
What happens if I ignore an illegal conversion violation?
The $1,000 daily penalty continues to accrue toward the $45,000 maximum, the case defaults at OATH if no one appears, and unpaid judgments become liens against the property that block sale and refinancing. The Department of Buildings can also issue a vacate order removing tenants, and owners of illegally converted cellars and basements may face civil and criminal exposure. An illegal conversion does not age out — the violation stays open until it is corrected and certified.
How does the DOB find out about illegal conversions?
Most commonly through a 311 complaint — from a neighbor, a current or former tenant, or someone who noticed an extra doorbell or a separate entrance. The Department of Buildings also identifies conversions during inspections triggered by unrelated complaints, during permit-related site visits, and through referrals from HPD and FDNY. A complaint about something else entirely will frequently surface the conversion.
Does an illegal conversion affect my insurance?
It can, significantly. Where a fire, flood, or injury occurs in a space never approved for occupancy, a carrier has a direct basis to deny or reduce the claim. Some policies are voidable outright where the building’s actual use materially differs from what was disclosed at binding. This exposure begins the day the space is occupied, regardless of whether the city has ever issued a violation.
How long does it take to legalize a conversion?
Realistically several months, sometimes longer. The sequence runs professional assessment, DOB filing to amend the Certificate of Occupancy, plan review, corrective construction under permit, inspections, issuance of the amended Certificate of Occupancy, then the Certificate of Correction to close the violation. Each stage carries its own queue. Starting the process is what limits the daily penalty accrual — DOB weighs demonstrated good-faith progress.
Can I sell a house with an illegal conversion?
A seller can list the property, but the open violation surfaces in the title search, the Certificate of Occupancy discrepancy surfaces in lender underwriting, and buyers will either demand the issue cured before closing or price the cure plus the risk into their offer. In practice most of these deals either delay while the seller resolves the violation or collapse. Resolving it before listing is almost always cheaper than negotiating it at the closing table.
