Buying or Selling a Two-Family Home in North Jersey: Financing, Lead-Safe Rules and Town Certificates
Two-family homes are one of the most common questions I get from buyers in Bloomfield, Lyndhurst, Jersey City and Montclair. Living in one unit and renting the other can help with the monthly cost, but there are a few rules that don't apply to a single-family home. Here's what to know before you buy or sell one.
Financing: owner-occupied vs. investment
If you plan to live in one of the units, many loan programs treat a two-family home as owner-occupied. FHA loans, for example, can be used for properties with one to four units when the buyer lives in one of them (financing is available to a qualified buyer). Lenders may also count part of the expected rent toward your qualifying income. If you won't live there, it's an investment purchase, which usually means a larger down payment and a different rate. Talk to a lender early, because these details change what you can offer.
New Jersey's lead-safe certificate for rentals
New Jersey's lead-safe law (P.L. 2021, c.182) requires rental units in homes built before 1978 to be inspected for lead-based paint hazards. A few things buyers and sellers should know:
It's tied to the rental, not the sale. Selling the home doesn't trigger the inspection, but if you'll be renting a unit, you need to be in compliance. Sellers of a rental property must also give the buyer a copy of the state's lead rules (N.J.A.C. 5:28A), any lead-safe certificates and the state's guidance document, "Lead-Based Paint in Rental Dwellings," during the sale.
Timing: under the current law, a lead-safe certificate is valid for two years, and inspections are due at tenant turnover or every three years, whichever comes first.
Who inspects: your town or a state-certified lead evaluation contractor, depending on the municipality.
Some properties are exempt, including homes built in 1978 or later, homes certified lead-free and seasonal rentals.
As a buyer, ask the seller for the current lead-safe certificate. As a seller, having it ready makes your two-family easier to sell to buyers who plan to keep the tenant.
Town certificates still apply
Every town also has its own resale inspection, and the fee is often higher for a two-family. In West Orange, the CCO is $275 for two units compared with $200 for one. Bloomfield's Certificate of Transfer of Property Title also costs more for larger properties. Jersey City and Montclair have their own rental rules as well, including rent control in Montclair. My town guides break it down:
Buying a home with a tenant in place
If a unit is occupied, ask for the lease, the rent amount, the security deposit and the current lead-safe certificate before you make an offer. In New Jersey, a sale doesn't automatically end a tenancy, so you should understand the lease terms and your options before you commit. Talk to a real estate attorney about the specifics.
Thinking about buying or selling a two-family in North Jersey? Call or text me at 201-575-5013 (cell) or call my Weichert office at 973-746-1515 (office), and I'll walk you through the numbers and the paperwork.
This post is general information, not legal or tax advice. Rules change, so confirm with your town, your lender and your attorney.
Weichert, Realtors® | Irma Brainard, Sales Associate
