Rajesh;... and Hi Debontheweb, hope you are doing well this year.
Rajesh, Deb has hit it on the head. Contrary to what one agent has said, a single family occupying two or more units of a multi-family dwelling will NOT change it's legal status in the eyes of the ISD.
If you are a buyer, have your agent verify occupancy (number of units) with the Building Department. Appraisers are also expected to do so as part of their due diligence in writing up an appraisal. It is not uncommon for a property to be known to the tax office as a 2 or 3-family dwelling, when in fact the building department or ISD knows it as a single or 2-family. If a previous owner, with all good intentions, applied to have the number of units revised, for example converting a single family into a two family but never completes the process, the true status remains unchanged. The owner might have gone so far as to pull some permits, added a second or third kitchen and baths. But what gives it away, is that there are one two few electric meters. Hello, can you say SINGLE family. If ISD says single family, it's a single family even if it has been taxed as a two family for decades.
Word of warning to Listing agents. The ISDâ€™s of numerous cities and towns are keeping an eye on our MLS looking for illegal conversions and in-law apartments. Assuming a dwelling with 3 kitchens and 3 full baths is a 3-family when in fact itâ€™s not, could result in a nasty letter to the seller to remove the offending conversion, and a very costly law suit from your ex-client.
Disclaimer: these are just my own opinions and not to construed as fact. Concerns should be addressed with your city or town's Building Department, office of Inspectional Services. Ask to talk with the chief inspector. They set the rules.