No it does not make the entire premises illegal and you are not entitled to recover already paid rent. If the premises are deemed illegal it means that the landlord will not be entitled to collect any further rent. It also means that the landlord can evict you to restore the premises to its legal use. As to the electric meter you may have a case for theft of electric service or for apportionment of the electric usage.
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I concur with Mr. Chertock's answer.
New York law does not presently provide a tenant with a right to recover any past rent previously voluntarily paid by a tenant to an owner where the building either lacks a proper certificate of occupancy and in New York City where the owner converted a legal two family into an illegal multiple dwelling.
If the building is an illegal multiple dwelling, that is a three-unit building (two pre-existing legal apartments and one new illegal apartment) the landlord is not allowed to maintain a nonpayment proceeding in New York Housing Court.
That is so, because the illegal multiple dwelling is now also an unregistered multiple dwelling.
A landlord of an unregistered multiple dwelling cannot truthfully plead within the verified petition a proper and required statement relating to the status of the building as being either a multiple dwelling and also being properly registered or the other alternative that the building is not a multiple dwelling. Even when the third unit is illegal the addition makes the building a multiple dwelling.
Read more at:
And read more at:
And read the law "breaking case" where the appellate court that has the right to review Brooklyn Housing Court cases decided that the prohibition against the owner using the Housing Court to evict a tenant where the landlord created an illegal three unit building (an illegal multiple dwelling or a de-facto multiple dwelling) applies only when the landlord sues for unpaid rent.
You would be helped if the city inspected the building and reported violations of the Housing Maintenance Code for failure to register the building as a multiple dwelling with the New York City Office of Code Enforcement and by the New York City Department of Buildings for an illegal alteration and a failure to obtain a certificate of occupancy.
Your landlord may have committed a crime involving theft of service. You may need to be supported in this accusation by the local electrical utility. You may also lodge a complaint against the owner at the New York State Public Service Commission.
You should take this advice to heart as proving this sort of technical defense is not as simple as saying it is so and consider that you will benefit from the legal skills of an experienced tenant attorney.
The answer provided to you is in the nature of general information. The general proposition being that you should try to avoid a bad outcome if you can.