I have never done this just thinking out loudNo legal advice.

I think there is value in ADU as long as it is legally done and can be legally rented.On the sale side a benefit can always be an in law suite.

In case someone has been successful please share the methodology that is legally approved.thanks,Ananth

Owner ended up settling with the tenant, but then we had to threaten to sue our own client to get them to pay our legal fees.- Owner must sign a Hold Harmless to indemnify us against any potential tenant lawsuits relating to the work their contractor is doing.--- Another lawsuit resulted from owner's contractor taking down basement handrail to get supplies down the steps, then they didn't put it back and tenant fell down the stairs.- We also negotiate a reasonable completion date, depending on the Scope Of Work (SOW). --- Who gets all the phone calls and wastes time calming a tenant down because the owner's contractor doesn't show up as scheduled after they took time off from work or a 3 day job takes 3 weeks?

In that case, you’d typically need to file a legal challenge, which could involve going to court and showing that the restriction is unnecessary or unreasonable.The best advice I can give would be to consult a real estate attorney to understand your specific situation and options.

You can provide more details, but there is no legal requirement to do so.

And, the longer you wait to act, the longer the squatter stays - and even gains some legal protections to stay while your waiting on a slow court system to act on an eviction. 

If you need financial help, ask under the "Finance, Tax, and Legal" forum.

As long as we would be legally allowed to proceed with this plan, then the question remains, as you point out, what is the tax burden for the partial 1031 exchange.

The disclosure must include:1. that this is an equitable interest2. if wholesalers does not have legal title and may NOT be able to transfer title