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Real Estate Investing Forums | Real Estate Investing | Rehabbing, Landlording Forum (Moderators: $Cash$, Bluemoon06, kdhastedt, Mdhaas) | Topic: Renting half of my house, with a non permitted kitchen?
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kevin777
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« on: November 18, 2016, 11:24:47 AM »

Hello everyone!
I am buying a 2 stories SFR in a R1 zone in LA. It's a "faux" duplex and the price does reflect that fact. 2Bd/1Ba upstairs 2Bd/2Ba downstairs. Each floor has it's separate entrance, and living spaces (including kitchen).Visibly former owners have used it as 2 separate units. Utilities are common though. Previous owners had obtained permit for all the structure and the bathrooms, (sqft tax/MLS/real are all matching) but I don't see any permit for the 2nd kitchen while checking at the city. Also the seller does warn "Buyer to check permits", as usual. Property got fully remodeled before the sale. General inspection came very good except for electricity panel which has not been updated that I will update (got discount for it). I intend to live in the upper unit and rent downstairs.
my question:
What is my risk if I rent the lower unit? What if , in the lease agreement, I disclose the fact that the kitchen might not be permitted to avoid future issues with the tenant?
Any additional insight is welcome.
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kevin777
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« Reply #1 on: November 19, 2016, 03:27:48 PM »

any idea? any one ?
Would love to hear from landlords who have units which are not fully permitted or those in similar situations of faux duplex. Thanks
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javipa
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« Reply #2 on: November 19, 2016, 07:59:22 PM »

What does "LA" mean exactly?  Are you talking "Los Angeles" or "Louisiana?"

Many municipalities have been open to permitting casitas, and mother-in-law quarters on an existing R1 zoned property.

But it depends a LOT on the political climate.

Los Angeles has been more lenient, especially with the increased numbers of Hispanics, who traditionally include several generations of family members in one household.

That said, you have to assume you're buying a single family, where the city can force you to remove the kitchen.  You could probably continue renting out the space, and haul in a free standing kitchen.  Think 'wet' BBQ set-up.  And since this area is where you plan to live, this is less of an issue.

Meantime, once you start farting around with the electrical panels, this will require permits that your electrician must secure from the city.  And once that happens, red flags start flying about the nature of the electrical upgrade, not to mention that the electrical inspector will have to see the scope of the work.  This could have the entire house electrical being examined, not to mention removing all the electrical outlet covers, along with the light fixtures.  Depending on how much wiring is being upgraded, if any.

I think if you want electrical work done, you need the permits approved as a condition of closing escrow.  You don't want surprises after you own the house.

This includes approving the kitchen installation. 

Otherwise, you should say away from the Frankenstein house of remodels.  Just saying.

Only buy what's permitted, and then discount the price by whatever potential costs there would be in returning the house to a legally habitable condition.  Right now, the extra unit is not legally permitted for habitation, since an illegal kitchen was installed.  This house could be condemned as a result of the 'Mickey Mouse' efforts to skirt the law.

FWIW
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Gold River
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« Reply #3 on: November 19, 2016, 11:45:53 PM »

Hi,

    And if you make those upgrades requiring a permit in California you could be forced to hardwire smoke alarms and are subject to "Title 24" which is the LED lighting requirement for kitchens and baths which I went through on one of my California rentals two years ago! Have to really watch what your doing in California.

If this is Louisiana it will be a little easier as there is no upgrade requirements for grandfathered existing issues and no LED lighting requirement!

Good Luck,

                 GR
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RR116
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« Reply #4 on: November 20, 2016, 12:17:55 PM »

Would not add anything to the lease. In no case would it help and just give tenant an out of the lease.

When you do the electrical upgrade you will have to wait and see if the inspector will see or say anything about the second kitchen.

Sounds like you are gambling on this deal.
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kevin777
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« Reply #5 on: November 20, 2016, 10:07:30 PM »

Thanks everyone, for the feedback.
@javipa It's in a city within the Los Angeles County. You wrote: "you have to assume you're buying a single family, where the city can force you to remove the kitchen. " Yeah this is what I should be ready to. I think the probability of getting there is really low though, but if it happens I don't have a loss.
@Gold River. Yes you can't sell a house in CA without smoke alarms. The house does both monoxide detectors and smoke alarms.
@RR16 The tenant can't get out of the lease if they have signed that they had knowledge of all this. What maybe hard is to find tenants, that yes, but the fact it is in the lease, means they knew it, so they can't blame me for not knowing this. Right?
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Gold River
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« Reply #6 on: November 21, 2016, 04:26:20 AM »

Hi,

    Kevin what I said was because your pulling a permit you could be forced depending on scope to "Hard Wire" smoke and carbon monoxide detectors!
In other words "Grandfathering" may expire and the permit take precedence depending on the amount of work!

Hard wire means installing a cut in box in every room and pulling 14/2 with ground into every box so the house no longer depends on batteries for smoke or carbon monoxide detectors to work.

Any residential, commercial and industrial permit pulled in California now requires compliance to "Title 24" which requires the replacement of all lighting in your kitchen and baths to LED lighting! This is fixture and all, you can no longer screw in an LED bulb, you must completely replace every light fixture with an actual LED fixture that can not be removed or replace with a standard bulb.

Can lights, pendulums, hanging fixture, bar light, ceiling fixture, under / over counter, sconces all must be installed with a motion switch going on / going off automatically! This may include the kitchen eating area (Dining area) if it is in the same room!

And if your permit requires work in an existing panel box or replacement upgrade of that panel box you could be required to install "Arc Fault" breakers to protect certain circuits!

Kevin I am a licensed class A / B General Contractor in California and have almost 40 years in the industry!

Good luck,


                 GR
« Last Edit: November 21, 2016, 04:47:55 AM by Gold River » Report to moderator   Logged
RR116
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« Reply #7 on: November 24, 2016, 01:00:53 PM »

Thanks everyone, for the feedback.

@RR16 The tenant can't get out of the lease if they have signed that they had knowledge of all this. What maybe hard is to find tenants, that yes, but the fact it is in the lease, means they knew it, so they can't blame me for not knowing this. Right?

Wrong. A Judge would not allow any clause in a lease to be valid if it covers something illegal to begin with. And of course if a tenant rents with a kitchen in place they would be allowed to expect it to stay.
Again anything you be in your lease would not offer you any protection. Would just notify the tenant that they now have some ammunition for an easy way to get out of lease.
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Estrogen Hostage
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« Reply #8 on: December 22, 2016, 12:01:42 PM »

 Lots of us are going to know any of the particulars of this unless they do business in your county. That said, if you are the one living in the illegal unit I don't see a great deal of risk here.
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tatertot
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« Reply #9 on: January 26, 2017, 10:30:15 AM »

If that is in Los Angeles, is it under rent control?  If so, you have to pay relocation money to a tenant in an illegal apartment and it is not a small figure.
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Real Estate Investing Forums | Real Estate Investing | Rehabbing, Landlording Forum (Moderators: $Cash$, Bluemoon06, kdhastedt, Mdhaas) | Topic: Renting half of my house, with a non permitted kitchen?
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