REO with a 2nd unit with permit issues

[Steve V]

I'm looking at a REO home in Sacramento with a detached garage that has been converted to an additional living area. Bank/Agent said that it is unknown if it was permited and the square footage is not to be considered.

My feeling is that it was not built with permits. I am looking to buy and hold as a rental. I am using family cash with the goal of refinancing in 6mo to a conventional loan.

My questions are how to find out for sure if it was a permited and if not is this type of structure allowable for the area? How hard would it be to make it legal? If I left it unpermited and had it appraised in 6mo what issues would I run into? Or should I just convert it back to a garage?