Unpermitted Rental Unit ?

Question

I'm currently in a very informal rental agreement on a 1/1 standalone that used to be a guest unit of an adjacent property. The entire property was foreclosed on a few years back, and somehow the two properties were sold separately (I believe there are two other vacant parcels nearby that were also apart of the split). A friend of mine bought this 1/1 from the bank, but got a deal because it wasn't set up for utilities. I'm sure this guest unit was never permitted in the first place. Currently it draws utilities (water/electric) from another neighbor.

Could the bank have sold this guest property if it wasn't permitted?

If I were to buy it, would I be required to bring it up to code in order to rent it out under a more formal contract?

And if not, what are some potential risks involved in renting a property that isn't up to code?

Could the bank have sold this guest property if it wasn't permitted?

If I were to buy it, would I be required to bring it up to code in order to rent it out under a more formal contract?

And if not, what are some potential risks involved in renting a property that isn't up to code?

Account Closed · Answer

The bank, or any seller in CA, can sell land and the improvements on it as-is. Doesn't have to be up to code, doesn't have to be habitable. The buyer then takes on the risk of buying such a property. If it's truly an unpermitted structure, as opposed to a permitted outbuilding converted to a living space, it can be be a costly risk. The county or city can cite property, levy fines and force the owner to demo it. Sometimes you can get a building or conversion permitted after the fact, but it requires inspections and permits and of course it has to be up to code.

"Not set up for utilities" and then pulling power from another property is a big fat fine for everyone involved. So no meter? What about water? Is that coming from a neighboring property too?

If you are considering buying it, you have a lot of research to do.

"Not set up for utilities" and then pulling power from another property is a big fat fine for everyone involved.  So no meter? What about water? Is that coming from a neighboring property too?

If you are considering buying it, you have a lot of research to do.

Account Closed · Answer

@Jeffrey Brumagin If you want to send me the address I can see which recorded docs I can pull from my data provider.  The issues at hand probably  have very little to do with recorded docs though.  The bank most likely sold with title insurance, so the lots and any easements, etc are likely fine.  The structure building permit would be in the street file in the county building dept, attached to the APN on which it sits.  If the structure was originally something else, like a garage or outbuilding, and then was later converted to a guest house, there would additional permits for that in the file.

The 1/2 street number thing happens all the time when an additional street address is needed.  It doesn't indicate much of anything in the way of lot splits.  If the bank was able to sell four separate parcels after foreclosing (house, guesthouse and two vacant lots), it is most likely that the lots have been separate for a long time.  It is not unusual for separate lots to be bought, financed and sold together.

IMO, your number one concern if you are considering buying should be zoning use of the lot and permits for the existing structure.

Steve B. · Answer

To legally rent it out as a living space it must be up to local code applicable for living spaces.  Also consider it's separate mailing/street address, which may require the lot it sits on to be re-partitioned.

You can't legally rent it out as a living space if it isn't up to that code.  However you can most likely rent it out as a workshop/garage/artspace etc then give the tenants a non-written wink and a nod as to how they can use it.  However consider that a dissatisfied/vengeful tenant can turn you into the city at any time for a code violation.  Depending on provable intent, or expectation of reasonable use, you may or may not be fined for this. You may or may not have have an activist or more passive code enforcement in your city.

Another alternative is to advertise it as one house with one ancillary building with an ambiguous written description.  Then the tenant can decide what use that cant put it to non-permitted, non-designated,  ADU or mother-in-law unit with no separate mailing or street address.  If they end up subleasing it to their friends/family as a living unit that may go a long way to increasing the propertys rent while reducing your potential liability.

If you end up wanting to sell the property that may be an issue if the guest house has a lot of non-permitted work done connecting the utilities

Unpermitted Rental Unit ?

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