LA City - Experience with unpermitted rental unit inside an existing home?

Question

Hi All, I’m a first time owner in NE Los Angeles trying to understand the real-world risks, costs, and process of turning part of an existing home into a separate rental unit. I’m especially interested in hearing from owners (or your friends) who have done something similar, whether they initially did the work without permits or went through the process of legalizing it afterward.

My situation:

RSO, zoned RD3, with two existing dwelling units on the property. The space I’m considering separating is part of the existing single-family home. The current ambition is to rent the unit out as short/mid-term. The home’s original foundation and footprint are legal, and the bathroom in the area was previously permitted. The main changes would be adding a kitchen that was not permitted and partitioning off the space to create a separate apartment that could be rented independently.

I’m trying to understand what this looks like in practice, particularly in Los Angeles.

A few questions for anyone who has been through this:

• Has anyone done this?
• What happened when you tried to legalize it?
• How much did it cost? I’d love to understand range of numbers for plans, permits, inspections, corrections, and construction.

Has anyone done this?

What happened when you tried to legalize it?

How much did it cost? I’d love to understand range of numbers for plans, permits, inspections, corrections, and construction.

I’m not looking to cut corners on safety and I'd love to build it to code so that in the event I decide to permit retroactively. I’m trying to understand what the financial and regulatory risks actually look like for converting an existing space.

Dan H. · Answer

NOT A LAWYER,

My market is San Diego which implies my understanding of CA RE laws is good (ditto San Diego), but not good on Los Angeles. Here are some of my thoughts:

• sb13 safe unit protection and subsequent extensions would protect the safe unpermitted unit if it was used as an LTR. Not sure, but lean towards it not applying to STRs.
• With the safe unit protections of SB13 and subsequent extensions, I would not exert much money or effort to permit an existing safe unit that is already protected.
• In San Diego, STRs have a permit. The STR regulations are currently being updated. The update explicitly includes a requirement that the unit be a legal occupiable unit. No treehouses, RVs, or unpermitted units. Assuming this part of the proposed update gets approved (a virtual certainty), in San Diego you cannot STR unpermitted units. Note MTRs do not need a permit, this could be an option.
• I question if the OTAs would catch or allow an unpermitted unit to be listed. Without OTAs, there is zero chance you can have a financially successful STR. Maybe with time having a successful STR, you could get enough bookings via direct booking to be financially viable but 1) that would require significant effort 2) it would not happen for a new STR.

sb13 safe unit protection and subsequent extensions would protect the safe unpermitted unit if it was used as an LTR. Not sure, but lean towards it not applying to STRs.

With the safe unit protections of SB13 and subsequent extensions, I would not exert much money or effort to permit an existing safe unit that is already protected.

In San Diego, STRs have a permit. The STR regulations are currently being updated. The update explicitly includes a requirement that the unit be a legal occupiable unit. No treehouses, RVs, or unpermitted units. Assuming this part of the proposed update gets approved (a virtual certainty), in San Diego you cannot STR unpermitted units. Note MTRs do not need a permit, this could be an option.

I question if the OTAs would catch or allow an unpermitted unit to be listed. Without OTAs, there is zero chance you can have a financially successful STR. Maybe with time having a successful STR, you could get enough bookings via direct booking to be financially viable but 1) that would require significant effort 2) it would not happen for a new STR.

I would start by trying to determine if the sb13 safe unit protections and extensions apply to STRs. If it does, then I would evaluate whether local ordinances and the OTAs would allow an STR of an unpermiited unit. I would not proceed without knowing the answer to these questions.

Recognize, even if the STR would currently be allowed, rules can change and this presents a risk.

Good luck

Jimmy Samaha · Answer

I'm in NYC, not LA, so double check the local details, but I see this a lot here and the pattern is pretty similar. The kitchen is the piece that turns a room into a separate unit in the city's eyes. Once there's a cooking setup and its own entrance, it's a dwelling unit, and with two units already on an RD3 lot the first question is whether zoning even allows another one. If it doesn't, building it to code won't make it legal later.

The bigger risk with an RSO property is that a tenant in an unpermitted unit can still have rights. If the city finds it, you can end up owing relocation money and possibly refunding rent, and that can cost way more than doing it right from the start.

Before spending anything, I'd pay an architect or a permit expediter a few hundred to pull the records and tell you whether it can be done legally as an ADU or a junior ADU inside the existing house. LA has been pretty friendly to ADUs lately. Also check the short term rental rules before you count on that income, because LA's home sharing rules are tight and RSO units are generally excluded.

Leo Stein · Answer

Welcome to the forum. Since the kitchen and partition are the unpermitted pieces, I'd call the city's building department (or a local permit expediter) before doing any work and ask how they treat adding a unit to an RSO property. Also ask your insurance agent how an unpermitted kitchen affects coverage. General info only.

LA City - Experience with unpermitted rental unit inside an existing home?

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