Legalizing a non-conforming in Chicago ADU Zone

[Noah Lomax]

Hi Folks,

Just days before closing on a multi-unit in west Wicker Park we learned the city had revoked the permit for the garden unit of our building. After sorting out that headache, we went through with purchasing the property as a 3-unit with a non-conforming garden unit. The building is in the ADU zone, so now we are beginning that process.

It does look like everything in the unit was done to code, so I expect minimal work would be needed. But it looks like the city still requires me to work with GC and architect to apply for the permit. I have a great GC who is willing to go through the process, but it's new for both of us. Does anyone have experience applying for a permit to legalize an already-existing unit under Chicago's new ordinance? The seller agreed to an escrow account to get the re-permitting completed but I have a time window in which I must use it. 

[Tom Shallcross]

Yes - there is an initial intake application, and then you will need to pay for full architectural plans and submit these plans to obtain your permit. Once the permit is approved, you go through the full plans/permit inspection process. 

Although you may check the box on some obvious items like ceiling height and two forms of egress, you may not be out of the woods. The city will have rough and final inspections for electric, HVAC, construction, and plumbing which may lead to additional work. Given your property will be 4-units, the city will request 5 electric boxes, one for each unit and then the common area.  Depending on your current bathroom count, you may be required to update the water service line which can be a 20-30k hit depending on if the main line is on your side of the street or you need to cross the street and pave it. 

@Samuel Pavlovcik is a self-cert architect that I've worked with in the ADU zone and can help you get started.

[Jonathan Klemm]

@Noah Lomax - Congrats on the new purchase.  Great area in Wicker Park.

The Chicago ADU process is surprisingly straightforward. We wrote a blog article about it that helps outline the process and some good connections. Here is the blog: https://www.qualitybuilders.co...

My only questions would be if you need plans and permits, will the city require you to have a rough inspection (i.,e what is behind the walls)?  Definitely a question for @Prashanth Mahakali or @Samuel Pavlovcik

[Bob Floss II]

@Noah Lomax If the permit expired, doesn't the seller already have architectural plans you can use?

[William Costello]

@Noah Lomax congratulations on the closing, Wicker Park is a great area in Chicago

[Eudith Vacio]

Hey @Noah Lomax, I know you posted a couple of months ago on here. It looks like you are making progress on your multi-family purchase and hope you can figure things out. Sounds like there are great resources out there to help you manage the ADU and hopefully get permits pulled and approved.

Best of luck!

[Noah Lomax]

Hi Folks,

Sorry for going silent. I was a little overwhelmed with a few personal items for a minute there (all good things!).

@Tom Shallcross Thank you for the information. That's exactly how I understood the process. It appears that electric, HVAC, construction, and plumbing all look good so far. We do have 5 electic boxes. The water service line is good question. I'll have that looked at. I will reach out to Samuel on the topic. Thank you!

@Jonathan Klemm you are always so helpful! I actually had read your blog article previously. As I understand it, for existing work the city requires a rough inspection where they will cut open a section of the wall. If that's done to code, they will assume it all is. If that's not, they will assume it all is not. So... there's a gamble here for sure. For this reason I was able to talk the seller into a $10k escrow for us to use for part of the process. 

@Bob Floss II Unfortunately the work was done before this seller purchased it. It was legal four when he bought it based on the paperwork we saw. The permit was revoked at some period under his ownership.

Thanks for the kind words, @William Costello and @Eudith Vacio ! I'm trying hard to change those stars!

Noah

@Eudith Vacioundefined

[Jonathan Klemm]

@Noah Lomax - Thank you brother!   That will be great if you just have to expose some small areas.....Let's just hope it was done right.  Will say some prayers for you lol

[Noah Lomax]

A very late update on this post! It was a massive headache to go through the permitting process as it was designed for things that weren't built. So the requirements for plans to be written as if they don't exist coupled with asking contractors, electricians, and plumbers to sign on and give their license number for a project that likely won't bring any business ended up in months of chasing and asking. That said, we have our application in finally. In the end, the cash flow is there without this unit being legalized. However, getting it legalized should be a huge benefit when we go to re-sell one day! I'll keep you posted.

[Sean Harper]

Noah, thanks for the update here, I'm following along closely! We're in the process of buying a 2-unit building in North Center with a finished attic unit and looking to go through the permitting process on it eventually so I'm very curious to your experience. 

[Reed Meyer]

Hold off on legalizing the non-conforming unit until you are exploring a sale or refinancing. If you legalize it now the only result will be an increased assessed value and Real Estate Taxes.

[Seb Ko]

Quote from @Noah Lomax:

A very late update on this post! It was a massive headache to go through the permitting process as it was designed for things that weren't built. So the requirements for plans to be written as if they don't exist coupled with asking contractors, electricians, and plumbers to sign on and give their license number for a project that likely won't bring any business ended up in months of chasing and asking. That said, we have our application in finally. In the end, the cash flow is there without this unit being legalized. However, getting it legalized should be a huge benefit when we go to re-sell one day! I'll keep you posted.

 Hi Noah, any further update to this? Did you end up finalizing and getting it legal?

[Seb Ko]

Quote from @Reed Meyer:

Hold off on legalizing the non-conforming unit until you are exploring a sale or refinancing. If you legalize it now the only result will be an increased assessed value and Real Estate Taxes.

 Hi Reed, isn't the risk always on the insurance side? Where they would not cover a claim if there is an illegal unit?

[John Mocker]

Noah,

I would suggest a conversation with your Insurance Agent.  The questions/topics I would discuss:

1. How is the current building limit (Replacement Cost) determined?  Is it based on a 3 unit or 4 unit? 

2. How will the Insurance company pay out a total loss?  Will it be for a 3 unit or 4 unit?  Would the payout change once you have the unit legalized.

3. Will the Insurance company cover the lost earnings in that unit before it is Legalized?

4. Will there be any problems from a Liability Standpoint if there is an injury in the unit before it is legalized?