How to Legalize a Basement Apartment in NYC Under Local Law 126
Chris Koss, AIA|Published June 18, 2026|Last updated June 24, 2026
Under Local Law 126, NYC homeowners in 15 community districts can legalize existing basement apartments without displacing tenants. Here is how the ATR process works and what the 10-year compliance timeline looks like.
A step-by-step breakdown of NYC's Local Law 126 pilot process, published by Joseph Ranola on May 22, 2026. ranolarealestate.com.
New York City has roughly 100,000 illegal basement apartments. For decades, the only path to making one legal required a full gut renovation, which most small homeowners could not afford and which usually meant displacing a tenant for years. That changed in December 2024 when the city passed Local Laws 126 and 127 as part of the City of Yes for Housing Opportunity initiative. Local Law 126 is the one homeowners with existing basement tenants care about: it creates a 10-year path to bring a pre-existing unit up to code while the tenant stays put and you work toward a certificate of occupancy without a single-year gut-and-vacate.
Who qualifies for the Local Law 126 pilot
Three things need to be true. First, the basement or cellar apartment must have been occupied before April 20, 2024. This is a legalization program for existing units, not a shortcut for new construction. Second, the property must be located in one of 15 eligible community districts: Bronx districts 9, 10, 11, and 12; Brooklyn districts 4, 10, 11, and 17 (Bushwick, Bay Ridge, Bensonhurst, and East Flatbush); Manhattan districts 3, 4, 9, 10, 11, and 12; and Queens district 2 (Long Island City, Sunnyside, and Woodside). Staten Island is not included in the current pilot. Third, the property cannot be in a FEMA-designated flood zone. Properties in Special Flood Hazard Areas, coastal zones, and mapped rainfall-risk zones are excluded.
If your property is not in one of those 15 districts, Local Law 127 and Appendix U of the NYC Building Code still apply to you citywide. Any owner of a one- or two-family home can build a new legal basement apartment, attic conversion, or backyard cottage as long as the project meets the building code requirements from the start and goes through the standard DOB permitting process.
The ATR application: what it takes and what it buys you
If your property qualifies, the process starts with filing an Authorization for Temporary Residence (ATR) through the Department of Buildings' DOB NOW: Build portal. The application window opened September 30, 2025, and runs through April 20, 2029.
To get accepted, the unit must already have basic safety features at the time you file: working smoke alarms and carbon monoxide detectors, a central heating system, adequate egress, and proper separation between the apartment and any boiler equipment. These are the floor, not the ceiling. Once you are in the program, your tenant legally remains in place and you face no penalty for the unit being occupied while you work through the compliance milestones.
The 10-year compliance timeline. The biggest milestone is an automatic sprinkler system, which must be installed within two years of ATR approval. After that, additional milestones cover electrical upgrades, plumbing, and structural modifications on a rolling schedule. The full 10 years ends with a certificate of occupancy that permanently adds the unit to the city's housing stock as a legal ancillary dwelling unit.
Tenant rights inside the pilot
If you are a tenant currently living in an eligible basement unit, here is what Local Law 126 gives you. Tenants who occupied the unit as of April 20, 2024, have a statutory right of first return after any renovation work requires a temporary vacate. The landlord must give at least 60 days' written notice before completing the work, specify the return date, and provide a written lease that locks in the initial rent at return. Document your occupancy date now. If your landlord applies for an ATR, verify that this right-of-return language appears in whatever agreement you are asked to sign.
The Plus One ADU grant: up to $125,000
New York State's Plus One ADU program, administered through HCR and local program partners, offers grants of up to $125,000 to eligible homeowners who want to legalize or construct an accessory dwelling unit. The money covers design, permitting, architectural and survey fees, and construction costs. To qualify, you generally need to be a low or moderate income owner-occupant of a one-family home. Applications go through local program administrators by neighborhood.
One note on numbers: the $395,000 figure cited in the city's March 2026 "ADU for You" launch covers the maximum combined support (city plus state) for the full Plus One ADU financing program applied to new ADU construction. The $125,000 is the grant ceiling for homeowners specifically seeking to legalize an existing basement unit. Both draw from the same Plus One ADU umbrella, but the amount available depends on which program track you qualify for.
If you are already evaluating a basement project with A-du or just starting to map out whether your unit qualifies, A-du's services marketplace connects NYC homeowners with licensed architects and contractors who can review your community district, flood-zone status, and current safety conditions before you commit to an application.