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Updated about 9 years ago on . Most recent reply

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Jack B.
  • Rental Property Investor
  • Seattle, WA
1,046
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House with unpermitted MIL basement apartment, risk?

Jack B.
  • Rental Property Investor
  • Seattle, WA
Posted

I'm under contract for a house that has an unpermitted finished basement and garage conversion to bedroom and bath. The basement has a separate entry, and although it all looks like it is done by a pro, it is unpermitted. The thought that keeps crossing my mind is that, if he could get a permit before selling, why wouldn't he? He is leaving 50-75K of money on the table with the unpermitted conversion.

Since I plan on occupying the house as my primary residence and renting out the basement, the issue of insurance and liability comes into play. I have no protection from my insurance company, if my tenant gets injured down there.

I am scheduled to have my home inspector look at it Thursday, and he is a former house builder, but he will not be able to tell if all of it is up to code I'm sure. Also, I spoke with the city permit office, and they have Already Built Construction Permits, however, there is no telling if they will permit it or not, without them coming out to look at it. Which could result in being told to undo it, which costs money, though is unlikely from what I've read.

I've seen a lot of realtors online mention that this is actually really common. Still, there is risk, no? Originally I thought it was enough of an opportunity that I'd at least get it inspected, but now I'm wondering if even that is just a waste of money/time.

Most Popular Reply

User Stats

1,888
Posts
1,046
Votes
Jack B.
  • Rental Property Investor
  • Seattle, WA
1,046
Votes |
1,888
Posts
Jack B.
  • Rental Property Investor
  • Seattle, WA
Replied

@Matt R.

Thanks, yeah I figure it will help someone else out down the road to post the results. I suspected something was off. I get not having an up to code ADU to keep property taxes low when keeping the property, but when you are selling, why not get the permits and get the extra money from the extra sf?

How lucky I was to visit the place on a rainy day (not hard this time of year in Seattle!) and find the tub full of green water that turned out to be sewer water! Wasn't like that the first time I visited it. Luckily my inspector flagged a bunch of other problems as well so even if the sewer issue was not as evident on the visit I still would have walked. The sewer issue made it a decision that I am beyond certain was right.

@Michaela G.

So how does that work in, "The ATL"? When you live in the house it can't be considered grandfathered, but if you rent it out it can? Except if you don't rent it out for a year then it's not exempt again? Ever? Or just until you rent it out again? 

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