Bad News After Closing

[Myesha Kendrix]

Hi there! I’m new to investing and hope someone on here can help me out. I recently purchased a property in California last month. I thought I was purchasing a multi-family home with 2 units and a semi finished basement that I would later renovate into another unit. During the due diligence period I checked with the County/City for violations, etc. I did find a few violations regarding vegetation etc., but nothing to stop me from moving forward. I found that the property was once 4 separate units but recently renovated and is now 2 units with a semi finished basement.

Potential Problem: I closed a few weeks ago and today I visited the City to determine what I would need to make the basement a legal unit. I found out the home is zoned Low Density and is considered a single family home and NOT multi-family or even a Duplex. Also, the second unit is considered an Accessory Dwelling Unit or ADU and I cannot re-zone this property or have the basement as a 3rd unit. I can only add a limited number of sq. Ft. to each existing unit.

According to the City, this home was never zoned as multi-fam because the 4 units were in place prior to the City actually having a building department. Therefore the City allowed these units to exist as long as they remained filled with tenants or no changes were made to them. They were considered “non-conforming.”

All my paperwork states this property is multi-family. The only good news I can think of is my insurance and taxes may decrease however I did buy this property with the intention of having 3 separate units.

Question: Is there anything I can do?