Legal division between an ADU vs a roommate situation?

[Reese C.]

Hello BP,

I am looking at purchasing a property that would be perfect for a house hacking situation. The property has a walk-out basement with a room, living room-like area and a space for a kitchen/kitchenette. It would only need minor renovations to make the space ready to rent. However, I am not sure that if this space is converted, it would be considered an Accessory Dwelling Units (ADU), which the city prohibits.

I am trying to understand from a legal standpoint, where does a roommate scenario end and an ADU scenario begin? Is it based off of features (like having a fully functional kitchen and separate entrance), the share of utilities, intent, or all/none of the above?

Thanks!

[Mark Hogan]

In the Bay Area a lot of people rent out spaces like that as a house share/ roommate situation. An ADU would need a separate address and would legally be recognized as a separate unit by the assessor. The person renting that space from you wouldn't have a standard apartment lease, you'd want to create a sublet agreement that explains how utilities are split etc. The space may not be legal if all the work (kitchen etc) we're not done with permits.

I don't know the exact law in Colorado so you'd want to talk to someone local since there are definitely gray areas here.