Rented illegal unit in Chicago advice

[Jia Liu]

Hello guys,

My friend has a house in Chicago. She bought a single-family home with an additional unit in the basement that is not an official/permitted unit.

The house was already rented to Section 8 tenants (both units) when she bought the property, and it went through yearly city CHA inspections. Given the strict requirements of the city for the safety of the property, she assume the extra unit is built up to code, but she never checked it with the city engineer. Of course, I told her she made a mistake buying the property like that. Now she wants to make it right.

If she starts the legal conversion process with the city while the tenant is still there, I can imagine it would be quite a painful process, because the city would force her to evict the tenant immediately and the tenant could complain and file a lawsuit. It would be better if she moves the tenant out without breaking any lease agreement first.

Do you know some reliable engineer who she can contact and make sure the building is up to code before actually starting the legal conversion process? Of course, this solution would be only temporary. She would start the conversion process after the tenant is moved out.

In case something happens to the tenant while being inside the unit, will the insurance cover the costs if the unit is at least up to code, though not legal?

Will making sure the unit is up to code assure that if something happens to the tenant, she won’t be facing serious legal issues?

She wants to sell the property again but buyers are scared to buy an illegal unit, for valid reasons.

If anyone can suggest how to best proceed in this situation, let me know. I myself don’t have any experience with this.

Thanks in advance for your help.

[Samuel Pavlovcik]

@Jia Liu the previouslt mentioned comments and recommendations by @Mark Ainley and @John Warren are definitely valid. These situations do happen quite frequently in the City of Chicago, but unfortunately you can be pretty limited on options. Depending on the Zoning Designation for the lot; it is likely that it would only be permitted for Single-Family use. That being said, the only way to "Legalize" the basement unit would be to pursue a Zoning Variation; or if it happens to be located within one if the new ADU Pilot Areas, that could provide an opportunity as well. Additionally, whether you decide to pursue making this a legal unit, or part of a "Finished basement" for the residence; since the work was previously done without a building permit, the City can make you expose all plumbing/electrical/mechanical work to ensure it is up to code; or they can even make you rip everything out and start from scratch! Regardless, you will need to obtain a building permit, use Licensed contractors, and some work will need to be done to the basement, in addition to just removing the stove... There are other concerns as well which could arise as "Big ticket items" like the Electrical service/panel, ceiling height concerns, natural light and ventilation requirements, etc. so a more detailed review would definitely be necessary to provide more clarity as to what the best options may be to move forward.