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Attorneys handling a myriad of issues surrounding Accessory Dwelling Units & illegal units
Accessory dwelling units (ADUs), often called in-law suites, backyard cottages, or granny flats, among other terms, are smaller, secondary housing units located on the same property as a primary residence. They can be detached structures, part of the main home (like a converted basement), or attached to the main structure (like a living area over a garage). ADUs are generally used for family members, to generate rental income, or to create additional living space.
With a dearth of affordable housing, public policy now encourages the construction of ADUs. State lawmakers have put away the scalpel and taken a machete to cumbersome regulations that have been barriers that have stopped homeowners from building hybrid structures.
Despite their charm, these pint-sized units can create big liability. Renting out illegal units is fraught with even more risk.
You may be looking to carve out separate living quarters in an underutilized area, like a garage, attic space, lower-level storage space, and the like. Perhaps you are endeavoring to attach a unit to the primary structure or create a separate, stand-alone structure such as a backyard cottage.
With thousands of illegal units in the shadows, you may want to bring unwarranted units into the light of day, but to do so, maddening building codes must be followed to the letter. Whatever your goals, Bornstein Law can assist in navigating a complex set of rules.
Legal issues abound. Let's go over some considerations.
Rent and eviction controls
Tenants who reside in illegal units are still protected by local ordinances. Disgruntled renters can sue the landlord for all manner of causes, including breach of contract, wrongful eviction, retaliation, and fraud.
The Certificate of Occupancy is critical
Without one, it is illegal to rent out the unit or collect rent, even if the unit is in pristine condition. Do you want to maintain the status quo with a tenant renting an illegal unit and hope the relationship doesn’t sour, or bring the unit up to code compliance and get the city’s permission to rent?
When additional living space cannot be converted to an ADU, the owner can enter into a roommate arrangement
If converting habitable, extra living quarters into an ADU proves to be too costly or impractical, all may not be lost. If the owner of the property desires to rent out the space, they can become roommates of the tenant with a big caveat - the space cannot be segregated and, with the exception of bedrooms, it must be clearly spelled out that the person paying rent has unfettered access to common areas like the kitchen and bathroom.
Gobbling up common areas
There may be laws that prohibit common areas like laundry facilities, storage areas, and parking spaces from being converted to an ADU, or entitle tenants to petition the Rent Board for a rent reduction because “housing services” have been reduced.
To legalize a unit, the tenant may have to be temporarily relocated
If upgrading the unit to code compliance requires an upheaval in noise and construction, alternative living arrangements could be made. An attorney could be hired to prepare a tenant buyout agreement to transition the tenant out of the unit, whether permanently or on a temporary basis.
Local governments may march to the beat of their own drum
While California lawmakers have put away the scalpel and taken a machete to local impediments to building an ADU or legalizing a rogue unit, municipalities are adjusting to the new edicts and may have nuances and hybrid programs. In San Francisco, for example, a city program puts no limit on the number of ADUs that could be built in multi-family buildings but requires them to be subject to rent control.
Insurance may not protect you
If a fire or some other tragedy occurs in an unwarranted unit, the owner may not be protected. It is a good practice to be upfront with the insurance carrier about the illegal status of the unit to ensure it is covered, and if not, find a policy that shields you from liability.
Tiny units can become big problems for buyers and sellers
With the emergence of the ADU industry, many living spaces are misrepresented on the MLS. The buyer may not understand that the unit is illegal or fully appreciate the legal repercussions of renting the unwarranted out. Having collected rent for many months or years, the seller of the property can still be sued by disgruntled or displaced tenants.
Doing unauthorized work or using unlicensed contractors
We always advise clients not to be penny-wise and pound-foolish by taking shortcuts during the process. In some cases, we have to retroactively go back to pull permits for work that has been performed without the city's permission.
Pint-sized units can bring colossal liability. Seek proper counsel.
If you are contemplating the construction of an ADU, we can refer you to vetted architectural and planning professionals familiar with building codes.
If you are renting an illegal unit to tenants, be aware that you may have a problem, particularly if there is acrimony in the rental relationship or a Notice of Violation is issued. Buyers should also be aware of any rogue units because they inherit liability.
Topics of interest
Owner/Relative move-in evictions ›
Substantial rehabilitation evictions ›
Defending against tenant lawsuits ›
Reviewing & drafting lease agreements ›