Renting half of my house, with an non permitted kitchen?


#1

I am buying a 2 stories SFR in a R1 zone in LA. It’s a “faux” duplex and the price does reflect that fact. 2Bd/1Ba upstairs 2Bd/2Ba downstairs. Each floor has it’s separate entrance, and living spaces (including kitchen).Visibly former owners have used it as 2 separate units. Utilities are common though. Previous owners had obtained permit for all the structure and the bathrooms, (sqft tax/MLS/real are all matching) but I don’t see any permit for the 2nd kitchen while checking at the city. Also the seller does warn “Buyer to check permits”, as usual. Property got fully remodeled before the sale. General inspection came very good except for electricity panel which has not been updated that I will update (got discount for it). I intend to live in the upper unit and rent downstairs.
my question:
What is my risk if I rent the lower unit? What if , in the lease agreement, I disclose the fact that the kitchen might not be permitted to avoid future issues with the tenant?
I’d appreciate any insight. Thanks.


#2

any idea? any one ?
Would love to hear from landlords who have units which are not fully permitted or those in similar situations of faux duplex. Thanks


#3

Kevin, Have you really thought this thing out.

Kitchen fires are amongst the highest causes of home fires.

What are your plans if you have a kitchen fire in the non=permitted kitchen?

Living above it, are you willing to risk your life for a few dollars in rental income?

I witnessed a home fire and can tell you it takes VERY LITTLE time for the entire structure to become COMPLETELY engulfed. The occupants BARELY made it out safely. How do I know, I BEAT on the door and got them out.

Question then becomes one of would your insrauance cover you if they found out in the investigation of the fire that it was not permitted.

Personally I would investigate all avenues of getting it permitted and if not possible, pass on the deal and move on.


#4

I am having the insurance inspector to check it out. If the insurance insures the property I am fine.


#5

Don’t worry about it

Kevin, I agree with you. If it’s OK with insurance, I’ll go ahead with it.

I owned a number of legal 2 family/3 family units thru the years in New York City with extra kitchens. It all depends on the housing codes of the municipality and how they deal with it.

In the beginning, I was nervous about owning such units. Then I learned that practically all legal 2 families I looked at has an extra illegal unit built into it. Then, during a mayoral run some 20 years ago, the mayor was asked what he’s going to do with all these illegal units. His answer: “Yeh, I enforce it and what are we going to do with over a hundred thousand homeless people?”

I found the problem has to do with nosy neighbors and what you do when code inspectors show up. I learned they don’t go out of their way to find you and when they show up, unless they have a court order, you don’t have to let them in. And they don’t go out of the way for a court order.

I had a illegal 3rd kitchen on one floor in my 2 family home. Some years ago, a neighbor complained about another neighbor down the street. They went to the house, no one was home. But the code inspector walked down the block and notice I have 3 mailboxes. So he rang my doorbell, my wife was dumb enough to let him in, and he wrote us up for an illegal rental.

What did I do? I hired local expert on housing codes, and have the code violations corrected. The violation was the apartment, mostly an illegal bedroom, was not in the building plan, besides the illegal kitchen.

So we submitted revised plan drawings for the finished basement that has a one room office, and an entertainment bar. I changed the kitchen sink to a smaller bar sink, and took out the gas range. There was an illegal gas hookup for the gas range which we now designate as a washer dryer hookup.

The cost of modifying the building plan, modifying the kitchen to a bar ran $6,000. About $4,500 of the cost was paperwork. This compares to $6,000 ripping everything out, and another $10,000 to install another illegal unit.

My lesson from all of this? Don’t worry too much if such units are common in the area. Be nice to the neighbors. Don’t have 3 mailboxes for a 2 family home. Don’t let code inspectors barge in.

Oh, one more thing. The city housing department has me down as a legal 2 family house. The city finance department has me down as a legal three. I was fighting it for a while. Now I’m thinking, I got the best of both worlds. I’m legal and yet, I could tell a buyer when I sell, they got it down as a 3 family.


#6

many thanks Frank.

I loved your post since this is exactly what I was looking for: I was looking for the experience of someone who has gone through this.
Ok so you helped me evaluating the risk from the city. Got it. Now what about the risk from the tenants? Since they can/will possibly learn that the unit is not an independent unit, down the road, how did you protect yourself there? I plan to include a language in the lease.
What has been your experience there?


#7

Frank, His house in in CALIFORNIA, much different from rest of the U S A.

He got good advice about that n another web site.

CA is very strict on code and TOUGH on violations.

I owned apartment building there.


#8

Bill, that’s why I qualify my answer with “It all depends on the housing codes of the municipality and how they deal with it.” In NYC and neighboring counties, its more a political issue than anything else. In CA, I’m sure it depends on the locality as well.

In my area, the political issue has to do with zoning and the homeowners association wants to keep the area zoned for 1 or 2 family. So getting an approval for a third rental unit is out of the question. That’s why it’s ironic that the city finance department still has me down as a 3 family, in a 2 family zone, despite it being officially a legal 2 by housing.

Pressures against up-zoning is great, from traffic, to parking in the streets, to added students to overcrowded schools, and pressure on other city services. On the other side, added residents add to the tax base, and they patronize local businesses.

In Long Island, NY, counties to the east of me, some towns are starting to legalize added kitchens for mother daughter units, in one family zones, especially when elderly parents move in. That solves the social issue of where to house the elderly. The advantage here is these folks don’t have kids overcrowding the schools, or owns multiple cars clogging the streets.

As to the issue of legal issues with tenants when problems arise with renting an illegal unit, depends on how common it is in your area. Have a weasel clause that the lease can be terminated due to code violations when and if found, and compensate them with a months rent if it happens. Around here, most people are aware of illegal units, and not having your own meter is a tip-off. Also, I provide a one year lease when they start off, and let it continue month to month after. Tenants rarely press for a renewal.

A suggestion given on another website of converting it to a free standing kitchen may also be workable.


#9

Frank, I agree with your posts. However, in this original post he says “What if I TELL the tenant them kitchen is ILLEGAL”, opening himself to all sorts of problems.

I have never been one to ask for problems.