New to Real Estate · Los Angeles, CA · Member since 2020 · 9 posts · 1 vote
Hello BP commmunity! My family and I live in NELA (Highland Park/Eagle Rock) and have an illegal ADU in our backyard (studio, approx 400SQFT, bathroom, no kitchen). We don't now exactly when it was built but it's probably in the last 20 years.
We've been using it for when friends/family visit, but as we look to move out in the next couple of years, we're considering renting out our main house and also converting the guest house into a legal ADU. So far we've had two quotes on the conversion. Both told us we need to demolish the current dwelling and start from scratch to be legal. Both quotes to do so were in the $300K range, and said it would take about a year.
Has anyone out there been in this predicament? It seems if we want to make this legal, we need to start from the beginning, which is kind of a shame because the structure is livable, so just wanted to see if we have any other options. I believe the previous owner rented it out becaus we still get mail for the tenants... Thank you!
I too agree with Joel, do NOT call the city and have them come out!!! I too am a GC and developer and I also specialize in ADU's. I have done many deals in NELA for both clients and my own portfolio. Garages are not "livable space" either yet we convert them all the time and it does save some money since you have some walls, roof, etc.
Best bet for you is to have an experienced contractor familiar with ADU builds/conversions come out to look at your site. Within 15-30 mins of a site visit, I can assess and deliver pertinent info for potential options and then costs after that.
I will repeat, do not call the city, but do look up permit records from LADBS. I will also state that the advice given by another above about renting it out the way it is and "who cares" is not good advice. If you rent it out the way it is (non legal and non habitable) and someone gets injured or dies, your insurance carrier is likely not going to cover you since you were negligent by renting what you knew was not legal or safe. Is that risk worth it to you? It would not be to me!
It seems if we want to make this legal, we need to start from the beginning, which is kind of a shame because the structure is livable, so just wanted to see if we have any other options.
It may be 'livable in your eyes, but it most likely does not meet current code standards. Starting with the slab/foundation, and including electrical and framing....not to mention how they are going to add the plumbing and drains. You can keep getting bids but you are likely to hear the same thing if the first 2 agreed.
If spending that kind of $$ makes the numbers work for you, it's a good idea.....
Hello BP commmunity! My family and I live in NELA (Highland Park/Eagle Rock) and have an illegal ADU in our backyard (studio, approx 400SQFT, bathroom, no kitchen). We don't now exactly when it was built but it's probably in the last 20 years.
We've been using it for when friends/family visit, but as we look to move out in the next couple of years, we're considering renting out our main house and also converting the guest house into a legal ADU. So far we've had two quotes on the conversion. Both told us we need to demolish the current dwelling and start from scratch to be legal. Both quotes to do so were in the $300K range, and said it would take about a year.
Has anyone out there been in this predicament? It seems if we want to make this legal, we need to start from the beginning, which is kind of a shame because the structure is livable, so just wanted to see if we have any other options. I believe the previous owner rented it out becaus we still get mail for the tenants... Thank you!
Check out CA SB13 (search for”five”) as a means to buy some time. It basically allows you to address only health and safety items in the near term. I have not used this, but been told by Senator Wienkowski that the intent of this part of the bill is to be for non permitted living units. Note if it is not safe, it should not be rented as a livable unit.
Consult a local ADU expert that is not a developer for guidance on if SB13 can be of any benefit in your circumstance.
I had clients convert a Recreation Room into an ADU and it cost almost as much as if they had started from scratch. The issue is there are certain guidelines to make the unit "habitable" to sleep in.
I'm not a contractor and I cannot make any guarantees, but one risk you could consider is calling the City and have them come out and tell you what you need to do to get it permitted. There is major risk to this because once the City finds out, you are on the hook for the outcome. Conversely, if they see a helpless homeowner just trying to make things right, the inspector might be more lenient on you.
Have you looked back into the permit history for the property to see if any point this was legally converted into living space? City of LA has all the permit history online so that's an easy place to start.
If there's no permit history, I would just consider it as bonus space and would not take on the liability of renting it out.
If you have the room, your best bet would be to build a detached ADU next to this bonus space as building new is cheaper than converting / retrofitting.
I don't know the specific challenges of your lot, but those bids sound about 100k over what I'm paying for my ADU builds in LA county but there might be a LA city premium since most trades are having to drive in from the valley or the IE. There's endless demand so these premium bids are becoming the norm now. The good part is the expected HP rents can easily justify even these premium build prices so if you calculate your returns I bet they are favorable even at a 300k build price.
In LA it helps to go to LADBS and request the records, not everything is online. You can sometimes get permits that you can't get ay other way. I've had to do that a couple of times.
Thanks everyone for the ideas. We'll look into permit history/records and consider calling the City. Will be back if I find anything interesting to share!
Late sight on this, I’m a NELA neighbor and GC in LA. Quick to emphasize, Do Not request any city inspection of any kind, you will be asking LA code enforcement to formally cite and digitally document the violation and then put you on a timeline to correct the violation (typically up to 2 years, but I have previous clients that found ways to drag out to 4 years with extensions etc). “Correction” means remove or legally permit the structure. That registered code enforcement violation will be punitively binding to you or the next owner, and will have to be disclosed upon any sale of the property if not rectified. ‘As-Is’ is acceptable position to be in, statement for future buyer “to satisfy themselves research into potential un-permitted yadayada”
Do Not request any city inspection of any kind, you will be asking LA code enforcement to formally cite and digitally document the violation and then put you on a timeline to correct the violation (typically up to 2 years, but I have previous clients that found ways to drag out to 4 years with extensions etc). “Correction” means remove or legally permit the structure. That registered code enforcement violation will be punitively binding to you or the next owner, and will have to be disclosed upon any sale of the property if not rectified.
Joel is correct. Once the City sees the illegal structure they are required to tag it. Depends on the mood of the inspector on any given day, but it is a big risk.
Why do you want to make it legal? Shoot, just fix it up real nice and rent it out and when you go to sell it, it's only a problem IF the new buyer doesn't want it. If they don't want it, then just pay the penalty which is going to be prolly $20,000 at the MOST, which is a lot less than $300,000. All the illegal units I have sold on properties the new buyer was happy to get it. They were going to rent it out too and did not care whether it was illegal or not. Before all the goodie too shoes with a lot of money run in here and talk about a tenant getting injured or suing you for renting an illgeal structure, even if they KNOW it's illegal you can settle with them and it'll be a lot less than $300,000. Yes all of this is a risk, but sometimes people take risks. If you got it like that and the numbers work out, Then go for it. If not, pay the possible fine with you have to sell and call it a day. Just my 2 cents.
I too agree with Joel, do NOT call the city and have them come out!!! I too am a GC and developer and I also specialize in ADU's. I have done many deals in NELA for both clients and my own portfolio. Garages are not "livable space" either yet we convert them all the time and it does save some money since you have some walls, roof, etc.
Best bet for you is to have an experienced contractor familiar with ADU builds/conversions come out to look at your site. Within 15-30 mins of a site visit, I can assess and deliver pertinent info for potential options and then costs after that.
I will repeat, do not call the city, but do look up permit records from LADBS. I will also state that the advice given by another above about renting it out the way it is and "who cares" is not good advice. If you rent it out the way it is (non legal and non habitable) and someone gets injured or dies, your insurance carrier is likely not going to cover you since you were negligent by renting what you knew was not legal or safe. Is that risk worth it to you? It would not be to me!
I am curious if anyone has used the 5 year illegal unit grace period granted by SB13 and know what is required. I would think, seeing that health and safety still must be addressed, that it would require a city inspection. How else would anyone know that an unpermitted unit was safe? If they do require an inspection, I fear what @Will Barnard, @Bruce Woodruff, and @Joel Forsythe warn about. How do you know that the city is not going to find a long list of health related items and require them all to be addressed or the addition removed?
I think many of these ADU rules are not fully thought out when written. I question if the 5 year grace period on illegal units was fully thought out before being included in SB13.
I agree with @Will Barnard about the "take the chance" approach. The liability is way too high, especially here in LA. I had a client who had an ADU tenant and started asking for the Certificate of Occupancy when one little thing went wrong.