Is it illegal to rent a bedroom that isn't on the county records?

Question

I am currently in escrow on my first rental property. I discovered the house I am buying was falsely advertised as a 3-2, county records show it's only a 2-2. One of the "bedrooms" in the basement doesn't have a closet attached, but there is one right next to the bedroom in the hallway, so I think that is the issue. Would it be illegal to advertise and rent the house out as a 3-2? I plan on adding an egress windows to the basement rooms before renting. The basement was finished in the 60s. I would appreciate any insights, thanks!

Anne Rank · Answer

@Peter T. Thanks! Good idea!

Anne Rank · Answer

@Peter Mckernan thanks for the advise, especially about the liability issues. And your right, getting it permitted and assessed as a 3-2 would be great for the value of the property!

Peter Mckernan · Answer

@Anne Rank I would as you add the windows as stated get the house permitted for a 3/2. This increases the value for a future sale without running into the challenge you find yourself in. If you refinance it you are good to go too, and it will appraise for more. All pluses in my book for sure, and yes it takes longer time, more money upfront, but is well worth it.

The downfall if you rent it out like this is that there is higher liability on the homeowner, and this comes into play as an extreme example of a fire on the property. If you lease it out as a 3/2 and not permitted, there is a fire in that room that was added illegally this "could" open you up for liability. Minimize risk and maximize profit/value.

There is a property I just bought, it's a 2/1, and it's big enough to make a 3/1. If rented as a 2/1 the rent would be $1900-$2000, and now changing it to 3/1 this will increase our market rent to $2450. We are getting it permitted, and that will take 6-8 weeks with permits and small construction (just was told the exact timeframe from my contractor yesterday). It's worth it for us to do the work upfront and then benefit later.

Peter Tverdov · Answer

You should call the town (unless this is a rural area I guess the county has oversight) and tell them what you are looking to do.

If they will eventually allow you to make it a 3-2 by you bringing it up to code then I think it's fine to advertise it as that because you're doing things correctly.

If you are trying to rent it illegally without telling the town. Don't do that. Not worth it.

Is it illegal to rent a bedroom that isn't on the county records?

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