They have many names: “converted garage,” “illegal unit,” “bootleg unit,” or “unpermitted unit,” but they’re all the same. There are many units in the City of Los Angeles and surrounding cities that are not actually permitted by the local government authority. In particular, the unit does not have a certificate of occupancy which means that they cannot be lawfully rented out for living purposes.
There is a lot of information available to homeowners and potential homeowners to determine whether or not a property is “legal.” These include the Los Angeles County Assessor’s website and various city websites that may show building permits.
Real Estate Disclosures
Under California law, a seller of real estate must disclose all material and known facts about a property. If a seller knows there is an unpermitted unit, he must disclose these facts. Although the seller may not need to disclose the legal ramifications of such facts, once you are aware that a property has an unpermitted unit, you have the notice to do your due diligence.
In any part of California, the local code enforcement office can require a homeowner to tear down a unpermitted unit. Further, a code enforcement officer can require that you as the landlord remove tenants that live in an unpermitted unit. The only method to remove such tenants would be through the unlawful detainer process.
The City of Los Angeles has a framework and several other consequences for renting unpermitted units which are highlighted below.
City of Los Angeles
If you are considering purchasing a home with an unpermitted unit, there can be severe consequences for renting it out. Under the Los Angeles Rent Stabilization, a tenant is not required to pay rent for a unit that does not have a certificate of occupancy. Further, a tenant is allowed to recover all rent paid to a landlord, plus treble damages (up to three times the amount paid in rent) and attorneys’ fees. Carter v. Cohen (2010) 188 Cal. App. 4th 1038. This can occur even if you did not realize that you, as the landlord, did not have a certificate of occupancy or did not realize you were supposed to have one.
If a landlord receives a Notice to Comply to tear down an unpermitted unit that has tenants, the landlord will be required to pay relocation to the tenants. It is important to note that the Los Angeles Housing and Community Investment Department may find that a single family home that has an unpermitted unit actually falls within the Los Angeles Rent Stabilization Ordinance.
These issues are important for all homeowners to understand and for those looking to purchase a property where there is an unpermitted unit. If you have any questions, please contact Anthony at 818-839-5220.