ADU permit or not; financial implications

Member since 2023 · 7 posts · 3 votes

Hi all,
I'm almost in escrow with this single family home in LA with an un-permitted large ADU with a Certificate of occupancy. An architect told me that even though ADUs should not be bigger than 50% of the main house, I should be able to permit this one with SB09 if I pay a fee (about $8k according to my agent). Given there is a decent fee, I'm also considering the option of not getting the ADU permitted and just rent it as is for "roommates". I'm trying to weigh my options, and could use help to decide the best path forward.

With permit, benefits are 1) get depreciation and other tax write off benefits since it's a permitted investment purpose ADU, 2) probably better for resell value, 3) have a separate address and don't have to bother sorting out mails for our legal tenant, etc.

without permit; benefits are 1) no hassle to get the permit, 2) no permit fees, 3) no tax on rental income (as it is more like a “roommate”)

Has anyone gone through a similar situation before? Please let me know what’s the best option, or if I’m missing anything. Please let me know the financial implications.

Thanks!
Saika

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Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

I agree get the permit but …

@Bruce Woodruff & @Jonathan Greene likely are unaware the state legislation keeps passing laws to protect safe, unpermitted units. Initially SB13 provided protection for 5 years for unpermitted units that pre-date the ordinance. The pre-date was to discourage further unpermitted units be added to the inventory. But of course there were unpermitted units added after SB13 and the state wants to be sure that local jurisdictions do not remove safe unpermitted units so ab2533 extends the unpermitted unit time limits that were in sb13. It certainly sets an interesting precedent as it means if you add a safe unpermitted unit today, it may be protected in the near future so that safe units are not removed from the market. They’re done for a while actually most of college is done for a while. Lotta people have finals before Christmas and.

However, get the permit. I suspect it will add more than $8k of value. In addition, you will not be relying on the legislature to continue to protect safe unpermitted units. I do fear your cost may be higher than you predict and may result in a property tax increase.

good luck

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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
1y
Everything in your without permit benefits are either lazy, cheap, or cheating which doesn't usually go over well later. Did you find out how they got a certificate of occupancy when the unit itself was not permitted? Something seems off there. I would not close on the home if the extra income property was not valid. What happens to your value if you close, choose not to get it permitted, and then the city says you can't do it and you lose the income?
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
1y
Based on my experience, it is always better to get a permit. Let's look at your 'no permit benefits'

1) Getting a permit could be a huge hassle, or it might not. I'd go ask the city, see what they say. You need to know, sometimes it is impossible to bring an existing structure up to permit status. This could haunt you later...

2) Yes it could be expensive, but it costs to be legal. You will gain the rewards down the road.

3) You 'should' claim rental uncome from any source. A roommate is just another renter. You don't get to keep that income tax free...

If you have to lie and cheat to get the property to work for you, I would just pass on it...you're starting off on a bad foot and will just lose the money you save later...

And like @Jonathan Greene said - how did they get a COO without a permit? That is usually impossible. Have you asked the City to verify this, or are you just taking the word of Realtors? While you're talking to the City, ask about any 'open permits', this property sounds pretty fishy.
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
1y
I agree get the permit but …

@Bruce Woodruff & @Jonathan Greene likely are unaware the state legislation keeps passing laws to protect safe, unpermitted units. Initially SB13 provided protection for 5 years for unpermitted units that pre-date the ordinance. The pre-date was to discourage further unpermitted units be added to the inventory. But of course there were unpermitted units added after SB13 and the state wants to be sure that local jurisdictions do not remove safe unpermitted units so ab2533 extends the unpermitted unit time limits that were in sb13. It certainly sets an interesting precedent as it means if you add a safe unpermitted unit today, it may be protected in the near future so that safe units are not removed from the market. They’re done for a while actually most of college is done for a while. Lotta people have finals before Christmas and.
However, get the permit. I suspect it will add more than $8k of value. In addition, you will not be relying on the legislature to continue to protect safe unpermitted units. I do fear your cost may be higher than you predict and may result in a property tax increase.

good luck

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Bruce Lynn
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
1y
You can only play games for so long.
Chances are your next door neighbor is an IRS agent and turns you in when your tenants blocks their drive or some other random event disturbing your IRS neighbor.
ADU catches fire and your insurance won't cover you, because it was an illegal and unpermitted structure.
The city inspector told the last guy not to build or rent it, and is now pissed and wants to make an example of you and just red tags the whole property and no one can occupy for the next 1-2-3 years while you wait for a hearing.
Then when you get the hearing, "staff" recommends you tear the whole structure down, and if you still want an ADU, you can apply for a permit and rebuild it.
Your tenant quits paying rent and won't move out and you can't evict them, because there is no valid lease and they're just your "roommate".
Probably a dozen other bad things can happen to you when you do stuff like this. Maybe you like the risk, but good and great investors don't try stuff like you suggest.
2 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
1y
Quote from @Bruce Lynn:

You can only play games for so long.
Chances are your next door neighbor is an IRS agent and turns you in when your tenants blocks their drive or some other random event disturbing your IRS neighbor.
ADU catches fire and your insurance won't cover you, because it was an illegal and unpermitted structure.
The city inspector told the last guy not to build or rent it, and is now pissed and wants to make an example of you and just red tags the whole property and no one can occupy for the next 1-2-3 years while you wait for a hearing.
Then when you get the hearing, "staff" recommends you tear the whole structure down, and if you still want an ADU, you can apply for a permit and rebuild it.
Your tenant quits paying rent and won't move out and you can't evict them, because there is no valid lease and they're just your "roommate".
Probably a dozen other bad things can happen to you when you do stuff like this. Maybe you like the risk, but good and great investors don't try stuff like you suggest.
In CA none of those should happen because the state legislature has passed regulations (sb13 & ab2533) protecting safe unpermitted units. A jurisdiction cannot tear down or take off market a safe unpermitted unit for at least 5 years. You can get some insurance on unpermitted units, a lower coverage amount than for a permitted unit and will have difficulty rebuilding it as a permitted unit at the covered amount (which makes sense because its value is less than a permitted unit). Because the legislature has passed protections for unpermitted units, a tenant should not be able to make any claim if it is a safe unpermitted unit.

i agree with your sentiment on getting the ADU permitted, but not for the reasons you stated. There is an area in San Diego (city Heights) where almost every property has an unpermitted unit. The city has chosen not to address the issue for decades, long before sb13 & ab2533, because they did not want to remove safe units from the market (at least not in city heights). I think it is very unlikely if at any time soon that the state allows a jurisdiction to require the removal of safe unpermitted units (it likely would mean the end of the housing crisis).
A legal ADU is worth more and will be easier to get rebuilt if destroyed. The laws allow it. The cost stated is so low compared to property value. It is an easy decision to get it permitted.
1 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
1y
Quote from @Bruce Lynn:

You can only play games for so long.
Chances are your next door neighbor is an IRS agent and turns you in when your tenants blocks their drive or some other random event disturbing your IRS neighbor.
ADU catches fire and your insurance won't cover you, because it was an illegal and unpermitted structure.
The city inspector told the last guy not to build or rent it, and is now pissed and wants to make an example of you and just red tags the whole property and no one can occupy for the next 1-2-3 years while you wait for a hearing.
Then when you get the hearing, "staff" recommends you tear the whole structure down, and if you still want an ADU, you can apply for a permit and rebuild it.
Your tenant quits paying rent and won't move out and you can't evict them, because there is no valid lease and they're just your "roommate".
Probably a dozen other bad things can happen to you when you do stuff like this. Maybe you like the risk, but good and great investors don't try stuff like you suggest.

Although @Dan H. states some good new legal points, the reality of this is closer (IMO) to what @Bruce Lynn is projecting. I have experienced some of these very circumstances, and in California. You really do never know who is living next door...or driving down the street after having a fight with their wife, or....well you get the point.
Read this again - "You can only play games for so long"
1 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
1y
Quote from @Bruce Woodruff:

Quote from @Bruce Lynn:

You can only play games for so long.
Chances are your next door neighbor is an IRS agent and turns you in when your tenants blocks their drive or some other random event disturbing your IRS neighbor.
ADU catches fire and your insurance won't cover you, because it was an illegal and unpermitted structure.
The city inspector told the last guy not to build or rent it, and is now pissed and wants to make an example of you and just red tags the whole property and no one can occupy for the next 1-2-3 years while you wait for a hearing.
Then when you get the hearing, "staff" recommends you tear the whole structure down, and if you still want an ADU, you can apply for a permit and rebuild it.
Your tenant quits paying rent and won't move out and you can't evict them, because there is no valid lease and they're just your "roommate".
Probably a dozen other bad things can happen to you when you do stuff like this. Maybe you like the risk, but good and great investors don't try stuff like you suggest.

Although @Dan H. states some good new legal points, the reality of this is closer (IMO) to what @Bruce Lynn is projecting. I have experienced some of these very circumstances, and in California. You really do never know who is living next door...or driving down the street after having a fight with their wife, or....well you get the point.
Read this again - "You can only play games for so long"

With the laws that the CA legislation has passed, you could piss off a city inspector and there is nothing they can do about a safe unpermitted unit. HCD has no bite, but they would send a cease and desist letter to any entity that is trying to remove a safe unpemitted unit as their mandate is the protection of the various housing mandates from over zealous local jurisdictions. Therefore, you as the property owner would have a state entity assisting in any battle over a safe unpermitted unit.
I do not consider it as a game when the state laws protect safe unpermitted units and with ab2533 (that goes into effect Jan 1), the legislation has demonstrated that they desires these protections to continue.
The reason to get the permit is not because something bad is likely to result from a safe umpermitted unit. The reason to get the permit is it is a smart investment in terms of the value added, appreciation, etc. Who would not want a legal, permitted unit for $8k or anywhere close to that (i believe the $8k is likely optimistic)? Cheap hands off legal ADU garage conversions in coastal So Cal start at ~$120k (if all goes well). Once it is legal, it appreciates at full value. It is a simple value add.

Get the permit and enjoy an easy value add (assuming it is close to $8k).

good luck
0 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
1y
Quote from @Dan H.:

Possibly/probably....but I think the point we are all making is - why take chances on losing time and money and stressing yourself out? By the time an Inspector shuts down a project, and the homeowner goes to court/city/judge/whatever.....there is wasted time and money.
As we all agree, just get a permit (if it is required) and do things right. :-)
1 Reply
Max Ferguson
Real Estate Broker · Denver/Castle Pines/Colorado Springs, CO · Member since 2021 · 248 posts · 136 votes
1y
Just want to say thanks to everyone in this thread.

Considering buying a property with (what seems to be) a well put together yet unpermitted ADU. I've called regional and asked around, for Colorado, they may have to take off all drywall to check the electrical was run correctly. That was the worst of what I heard. There are various other items that may come up such as: Proper firewall suppression, adequate entrances/exits for fire safety, stair safety, size of kitchen appliances, etc... for my specific example.

The house is definitely on discount because of it, almost worth it to go through the trouble if the number makes sense.

Good luck and let us know what you figure out!
1 Reply
Landon Mizuguchi
Member since 2023 · 103 posts · 19 votes
1y
Based on what you said I think it would be a good idea to get one.
0 Reply
Bruce Lynn
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
1y
Quote from @Bruce Woodruff:

Quote from @Dan H.:

Possibly/probably....but I think the point we are all making is - why take chances on losing time and money and stressing yourself out? By the time an Inspector shuts down a project, and the homeowner goes to court/city/judge/whatever.....there is wasted time and money.
As we all agree, just get a permit (if it is required) and do things right. :-)

Even if you win the war, loosing the battle can easily wipe out all your profits and more.

Think about that recent CA AirBnB case where the lady was in the guest house for almost 2 years with no rent? https://ktla.com/news/nationworld/airbnb-nightmare-tenant-leaves-los-angeles-home-after-nearly-600-days/#:~:text=(KTLA)%20%E2%80%93%20Elizabeth%20Hirschhorn%2C,according%20to%20a%20court%20filing.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
1y
My worst story was while I was flipping a house with a converted garage (no permit). The Building Inspector insisted that I prove to him that the garage slab had the proper steel (rebar) size and spacing. So he said I could X-Ray it and jackhammer up a good portion of it. I kept the house for 5 years and finally called and requested the Chief Building Inpector. I made sure the inspection was scheduled for Christmas Eve. He passed me out of pity I think...
Point is - some building inspectors can be all-powerful. Regardless of law or code. I had Inspectors refuse to pass me on any inspection because I had defied them before.
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
1y
Quote from @Bruce Woodruff:
My worst story was while I was flipping a house with a converted garage (no permit). The Building Inspector insisted that I prove to him that the garage slab had the proper steel (rebar) size and spacing. So he said I could X-Ray it and jackhammer up a good portion of it. I kept the house for 5 years and finally called and requested the Chief Building Inpector. I made sure the inspection was scheduled for Christmas Eve. He passed me out of pity I think...
Point is - some building inspectors can be all-powerful. Regardless of law or code. I had Inspectors refuse to pass me on any inspection because I had defied them before.

I recently moved an electrical panel for one unit of a duplex. The Initial inspector stated i needed double ground by the panel so I put in double ground by the panel. The next inspector that came out, asked why I had put the grounding by the panel. I told him it was because the previous inspector told me I needed to. New inspector said that it should not have been required.
I agreed with the second inspector’s interpretation, I do not think I should have had to add grounds by the new panel when there were already double grounds where the drop came in. But it was easier to add the double grounds than it was to argue. So I added the double grounds.
Sometimes you have to pick your battles. However, in the case of safe unpermitted units there is a state sponsored agency (HCD) that is tasked with getting jurisdictions to comply with the various laws regarding providing housing units. HCD would likely squash any jurisdiction’s attempt to remove or limit a safe unit.
It is a good investment to get the unit permitted especially if it is close to the quoted price.

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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
1y
Quote from @Dan H.:

I get it. However, it would be far better for the OP to just get the permit. By the time the cranky Building Inspector shuts down the job to the time the HCD sides with the owner, it could be weeks. Better to avoid the whoe deal, just get a permit folks....! :-)

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Saika Maeda
OP
Member since 2023 · 7 posts · 3 votes
1y
Thank you all for your comments. I will for sure get the ADU permitted. When doing this, what's the best way? Should I go with this architect person to handle it? Or is it better to go directly to the city to get the permit process? Thanks!
0 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
1y
Quote from @Saika Maeda:

Thank you all for your comments. I will for sure get the ADU permitted. When doing this, what's the best way? Should I go with this architect person to handle it? Or is it better to go directly to the city to get the permit process? Thanks!

The ease a jurisdiction is to deal with varies greatly. I had a recent permit take me over a year to get open. The amount of tribal knowledge required was significant. I have had permits in other jurisdictions be quite easy.
My view is I would let someone familiar with the process do it unless you were planning on applying for many permits over time. I equate it to installing a garage door opener. Nothing is that difficult but there are a few things to know. The first install will likely take over twice as long as a garage door opener installer would take. It could be worth learning this if you were planning on installing more garage door openers in the not too distant future. However, for most people they install a garage door opener and do not install the next garage door for many years. They would be better off paying the professional to do it quickly and correctly the few times they will need a garage door opener installed.
Even though i open permits slightly regularly, when i open a permit in a new jurisdiction it typically has some unique quirks that i need to learn. Different submittal process, different scheduling of inspectors, different process with the inspection. It is always something. My last one i requested a call so i could meet him at the site. Never got the call but got a message that i needed signature page and plans at the site (i was going to bring them). I had to reschedule. When re-scheduling the person at the permit office stated they will never call even if it is written requesting a call. This was in contrast to last jurisdiction where they always called whether i requested it or not. Just one of those quirks that if you know you know and if you do not know, you need to reschedule and get the permit resolved later.
Good luck
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Saika Maeda:

Hi all,
I'm almost in escrow with this single family home in LA with an un-permitted large ADU with a Certificate of occupancy. An architect told me that even though ADUs should not be bigger than 50% of the main house, I should be able to permit this one with SB09 if I pay a fee (about $8k according to my agent). Given there is a decent fee, I'm also considering the option of not getting the ADU permitted and just rent it as is for "roommates". I'm trying to weigh my options, and could use help to decide the best path forward.
With permit, benefits are 1) get depreciation and other tax write off benefits since it's a permitted investment purpose ADU, 2) probably better for resell value, 3) have a separate address and don't have to bother sorting out mails for our legal tenant, etc.
without permit; benefits are 1) no hassle to get the permit, 2) no permit fees, 3) no tax on rental income (as it is more like a “roommate”)
Has anyone gone through a similar situation before? Please let me know what’s the best option, or if I’m missing anything. Please let me know the financial implications.
Thanks!
Saika

While a permit is a hassle, what happens if there was a fire, it burned down, someone got killed and the fire department was not even aware the unpermitted structure existed. Insurance not covering it would be the least of your problems.
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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
1y
@Saika Maeda Permitting the ADU allows you to claim depreciation, operating expenses, and other tax deductions, potentially reducing your taxable rental income. Rental income would be reported on Schedule E, and these write-offs could offset other income if you qualify as a real estate professional. Without a permit, the rental income might not need to be reported, but this approach risks legal issues, loss of tax benefits, and complications during audits or resale. Permitting also secures compliance and avoids fines, which can be significant in LA.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
1y
Quote from @Saika Maeda:

Thank you all for your comments. I will for sure get the ADU permitted. When doing this, what's the best way? Should I go with this architect person to handle it? Or is it better to go directly to the city to get the permit process? Thanks!

In my experience, the General Contractor usually acquires the permit(s). In many jurisdictions where I primarily worked (San Diego County) the only people that could apply for a major permit were the GC, the Architect, or the Homeowner. (Except of course for a simple permit like a water heater, where a Licensed Plumber could get one.)
0 Reply
Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
1y
If anyone is giving you advice to not permit it and you intend to rent it out, then you need to fire them. Your agent, your architect, whoever.
If you rent that out without a true Certificate of Occupancy, a tenant can sue you for ALL of their rent money back.
Also double check on the ADU size restriction. They loosen the guidelines last year and made it much easier to get ADUs permitted.
The other major risk by not permitting is if you decide to get it permitted later on, it is likely going to be more expensive. Building codes change and labor and materials go up. When I bought my place, at first you could tie the sewer line to the main house. That cost would have been around $3K. By the time I closed, building codes changed and it required an independent line. That cost $7K. Keep in mind this is 2018-2019 prices.
You are also opening yourself to major liability. How do you know if the electrical was done correctly? Plumbing? The benefit of a permit and inspections is to have an independent party verify work.
1 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
1y
Quote from @Rick Albert:

If anyone is giving you advice to not permit it and you intend to rent it out, then you need to fire them. Your agent, your architect, whoever.
If you rent that out without a true Certificate of Occupancy, a tenant can sue you for ALL of their rent money back.
Also double check on the ADU size restriction. They loosen the guidelines last year and made it much easier to get ADUs permitted.
The other major risk by not permitting is if you decide to get it permitted later on, it is likely going to be more expensive. Building codes change and labor and materials go up. When I bought my place, at first you could tie the sewer line to the main house. That cost would have been around $3K. By the time I closed, building codes changed and it required an independent line. That cost $7K. Keep in mind this is 2018-2019 prices.
You are also opening yourself to major liability. How do you know if the electrical was done correctly? Plumbing? The benefit of a permit and inspections is to have an independent party verify work.
>If you rent that out without a true Certificate of Occupancy, a tenant can sue you for ALL of their rent money back.

show me any law/regulation that states this. I refer to Sb13 and ab2533 as proof that the state legislature wants safe unpermitted units to be occupied. The implications is these units have the same protections for 5 years as permitted units. I have heard senator weinkowski speak on the protection of sb13 on what he referred to as bootlegged units (his term for unpermitted units). He is crystal clear that the state law does not allow a jurisdiction to restrict safe unpermitted units (even if they want to). If sb13 was not clear enough, the legislature passed ab2533 to extend the protections. I challenge you to find anything that overrides the protections on unpermitted units conveyed by these state regulations. There should be nothing seeing state law has precedence on local laws.

the state wants safe units, regardless if they are permitted, to be used to provide housing. Any law that tries to do otherwise conflicts with sb13 and ab2533 (unless the unpermitted units was created post dates of protection by those laws).

i agree he should get it permitted especially if close to the price quoted, but issues due to unpermitted units that are protected be sb13 and/or ab2533 present minimal risk and if it does happen get HCD to assist in any issues.

0 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
1y
Quote from @Dan H.:

How do they define 'safe'....?
0 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
1y
Quote from @Rick Albert:

The other major risk by not permitting is if you decide to get it permitted later on, it is likely going to be more expensive.
Heck yeah it will. It could even be impossible....Some inspectors will insist that walls be opened to view wiring/framing/plumbing/etc, floors be jackhammered up to show vapor barrier and rebar spacing.
Ask me how I know........
1 Reply
Christopher J Driscoll
Architect & Investor · Los Angeles, CA · Member since 2018 · 24 posts · 10 votes
1y
Hi @Saika Maeda - it seems like you received good advice to legalize the unpermitted unit as the best strategy to move forward with. That will allow you several benefits like adding the square footage to your property, having it appreciate in value as more ADUs are added to the neighborhood, legally rent it out within the city's parameters around long-term, mid-term, and short-term guidelines, and feel good about your investment. Plus the other benefits outlined by the responses in this thread.
AB2533 will certainly help you work with the city (backed by the state) to figure out the "list" of things that may need to be corrected to "legalize" the unit. The language is still in the state bill where a city can deem an unpermitted unit "unsafe" or "substandard" - therefore no tenant can legally live there. Tenants living in unpermitted units puts more risk in your hands too in case of a need to evict, or an accidental fire, etc. I'd suggest researching tenant law in California and the City of LA living in unpermitted units.
An architect can assist you in the initial work to get this submitted to the city for review and approval, and then a GC can pull the permit and work with you and the local inspectors to get this up to code. In the City of LA these unpermitted units typically still end up with a decent amount of construction work to bring it up to current code standards, but if you plan for it, and your budget/proforma allows for it, it can be an acceptable investment. Additionally AB2533 should grant more flexibility courtesy of its language to limit the city "impact fees" - like that $8k number - so that a good chunk of those fees can be waived since the state is now supposed to reimburse the city for those fees in lieu of you paying them.
0 Reply
Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
1y
Quote from @Dan H.:

Quote from @Rick Albert:

If anyone is giving you advice to not permit it and you intend to rent it out, then you need to fire them. Your agent, your architect, whoever.
If you rent that out without a true Certificate of Occupancy, a tenant can sue you for ALL of their rent money back.
Also double check on the ADU size restriction. They loosen the guidelines last year and made it much easier to get ADUs permitted.
The other major risk by not permitting is if you decide to get it permitted later on, it is likely going to be more expensive. Building codes change and labor and materials go up. When I bought my place, at first you could tie the sewer line to the main house. That cost would have been around $3K. By the time I closed, building codes changed and it required an independent line. That cost $7K. Keep in mind this is 2018-2019 prices.
You are also opening yourself to major liability. How do you know if the electrical was done correctly? Plumbing? The benefit of a permit and inspections is to have an independent party verify work.
>If you rent that out without a true Certificate of Occupancy, a tenant can sue you for ALL of their rent money back.

show me any law/regulation that states this. I refer to Sb13 and ab2533 as proof that the state legislature wants safe unpermitted units to be occupied. The implications is these units have the same protections for 5 years as permitted units. I have heard senator weinkowski speak on the protection of sb13 on what he referred to as bootlegged units (his term for unpermitted units). He is crystal clear that the state law does not allow a jurisdiction to restrict safe unpermitted units (even if they want to). If sb13 was not clear enough, the legislature passed ab2533 to extend the protections. I challenge you to find anything that overrides the protections on unpermitted units conveyed by these state regulations. There should be nothing seeing state law has precedence on local laws.

the state wants safe units, regardless if they are permitted, to be used to provide housing. Any law that tries to do otherwise conflicts with sb13 and ab2533 (unless the unpermitted units was created post dates of protection by those laws).

i agree he should get it permitted especially if close to the price quoted, but issues due to unpermitted units that are protected be sb13 and/or ab2533 present minimal risk and if it does happen get HCD to assist in any issues.

I just attended a webinar and the attorney made it very clear that it would. Keep in mind in Los Angeles if something isn't permitted a tenant may make an argument about the unit not being habitable. Then that is a different story.
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