Renting an accessory dwelling unit

7 Replies

I recently purchased a SF home with an ADU. One owner used it as an in law suite and another as an office. It is fully functional with a full bathroom and kitchen and over 700 square feet of living space.

I've been told by the sellers agent and a neighbor that has lived on the street for 30 years that it is not permitted by the town to be used as  a multi family and is highly unlikely that they would ever approve it for that use. 

My question is does anyone have experience with renting out "illegal" units? What are the consequences? How do they prove that it's a rental? What if you rent to a friend and they pay you cash. Wouldn't it just appear as if you have a guest? How do they prove that you are renting? 

Thank you for any insights. New to this and want to do a house hack but also concerned because I don't want to cause any trouble. 

Hi @Katie Stroman - folks all across the country do this. The way I might approach is: similar to renting a room in your house. You wouldn't ask the city to rent out a room in your house. Now some cities do put restrictions on the number of unrelated individuals living under one roof - but these tend to be old hold over laws that were written to stop boarding houses. 

Where you could run into an issue is if a neighbor complains to the city. And the city has a law or ordinance that says you cannot live full time in an ADU. Or cannot rent an ADU.

Another option would be to look at renting it on airbnb. Again I don't know your local regulations, but you might be able to make more using it as a short term rental and have folks be there less than a long term tenant would be.

ADUs are often legal. Check your field card. 

The difference between an ADU and a multi family is that the main house of the ADU is owner occupied. In a true multi, the homeowner may not live there at all nor are the required to be.

If you are occupying the dwelling, you are fine to rent out the ADU (thus the term vs in-law) to an unrelated party.

Much of what is being said here is not true.

ADUs are regulated very differently at the local level.

You may have a legal duplex, a legal ADU, or an illegal unit.

You need to go to the city or county and pull all the building records they have. Cross reference that with the square footage and building sizes on the property. Find out of what you are looking at can be built again legally. Find out what the applicable local regulations are.

In many places an ADU cannot be rented. In others it can be rented but not advertised. In some places the owner must live on the property. In others there is no requirement. In Portland there is a developer that bought two homes, built two ADUs, created a condominium and sold all four to separate buyers. In California the ADU is legally subordinate to the SFR and the city can pull your COO if you demolish the main home to build a new one.

There is no substitute for local knowledge.

@Katie Stroman Seth is correct go down to the Building and safety and ask for you properties records. If the unit is Illegal you are responsible for it now. 

Here is what will happen If the person you are renting out to calls Housing, they will want to know how long has the tenant been in the "ADU" and how much they pay on the monthly. You will be asked to pay back that money and take out the kitchen and shower.

If the city stops by and sees you have that ADU they will leave a note requesting a visual inspection and you will be asked to take out the kitchen and shower from the place and remove anyone living in the Unit. and Housing might get involved...

Also Guest cant stay in a place longer than 27 days in a Guest home. 

Now in California is more feasible than ever to build an ADU, With a few companies that offer the 5 steps in-house ( Design, Expedite, Construction, Finance, and Property management) why not do it right from the beginning...

Thanks for your response! The ADU is already in place from a previous owner and the town already has it on record. I have been told that it can not be rented out but I did read in the code for the zoning specifically for accessory dwelling units that I could have an employee, caretaker for watchmen live there. The rules are so strange to me.

Rent it out to a tenant that won’t rat on you.

I doubt your local city Gestapo will come by and harass you but it is way more likely in some areas than others. I would ask around your area if other people renting garage apartments and similar structures are being harassed.

@Katie Stroman First off, you might want to check with your city planning department and find out if ADU's are allowed. In CA the state is encouraging the cities to begin allowing more ADU's as a way to help bring affordable housing on to the market quickly. Each city and county have their own criteria and process for doing so.

Also ADU's can come in different forms, they can be attached to a main dwelling, detached, etc. and in CA they cannot exceed 1200 sq. ft.

I'd suggest you educate yourself on the local laws, costs involved, etc. and then make a decision based on actual information. You also want to find out what the penalties are if they aren't allowed and you rent it anyway; and are caught, is it worth the risk?