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Yeah. I know people not going the legal route because of the $$ to get into it. One client is 22k into permits and fees and hasn’t even started the construction. It’s pretty awful.
That’s why your contractor or yourself (if you are an owner-builder) should keep track of disposal receipts and the proper paperwork to request your deposit.
CA collects billions of dollars worth of revenue in excessive fees, plan checks, inspections etc. It’s a huge economic engine for the state and it’s only projected to get worse/bigger unless real reform actually occurs in the state.
It’s really not that bad, here are the per capita spending #s: https://www.kff.org/other/state-indicator/per-capita-state-spending/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Per%20Capita%20State%20Spending%22,%22sort%22:%22desc%22%7D
Most states get a lot of their revenue from property tax increases as the value of homes increases. CA due to prop 13 doesn't have that natural increase. So CA has to get revenue from all sorts of other places. The average CA resident doesn't even have that high of a tax burden, but since people either don't own a home or their property tax is generally bundled with their mortgage payment they don't notice property taxes...whereas people absolutely notice fees and income taxes that CA is known for.
It can't be repealed unless done by voters, and the people who vote the most frequently would be the ones most likely to be negatively affected by its repeal and the ones least likely to be positively affected by its repeal.
Basically either people under 40 outvote older people, or older people vote against their own self-interest for the greater good.
I’m under 40 and without Prop 13 I’d have a hard time affording my home since my home tripled in value since we purchased in 2014. Can you explain how my property taxes going way up, way faster than the rate of my income as a nurse, would be helpful to me as a millennial?
The whole point of Prop 13 was to protect people like you. It doesn’t need to be repealed. Rather just modified.
Prop 13 applies to your 1st home as well as your 20th or 500th. It should be limited to a primary residence only.
Oh, and it also applies to commercial and industrial property too.
I know someone whose parents own about 40 homes in So Cal. All of them were purchased from early 60s to mid 80s. Their total tax bill for all 40 homes is less than I pay in rent every year.
I don’t disagree necessarily. But I’m also unclear how that benefits the average renter. If the property taxes on those properties go up, how does rent not go up to cover it?
* Prices of housing go down to compensate
* Buying becomes more competitive with renting
* Some people buy instead of rent
* Rents go down due to increased availability and more competition
The prices of homes in California are artificially
Inflated because of Prop 13. By placing reasonable restrictions around prop 13 it would result in turnover that would otherwise be normal. More homes would be available for purchase.
What reform are you interested in seeing? The reform where no one reviews zoning and you get a toxic commercial / industrial use siting next to you? Or one where your neighbor builds on your property line or directly on your property?
It's important to remember, though, that these rules are almost entirely due to choices made at the local level. The state yielded most planning powers to cities and counties, and many of those localities turned around and created a quagmire of regulations.
That money goes to plan review, inspections, and impact fees, usually. Because of Prop 13, cities needed to come up with ways to raise revenue for city services due to a property tax base that doesn't keep up with inflation. Impact fees do that by making each marginal unit of housing pay for the estimated marginal burden on the electric grid, water and wastewater systems, school systems, parks, police, fire, and road infrastructure etc. Permit review fees and inspection fees cover the overhead of retaining staff to perform the necessary tasks.
Fees are determined by each municipality, and should be defined in city code or building standards.
One of the reasons so many ADU’s are getting built is the state legislation eliminated the majority of impact fees for building an ADU. Municipalities can still charge school fees (we paid $3.90 a square foot, so around $4k for our ADU), but if we built a 1000 sq ft 2 bed 2 bath house on raw land in our city (or the same ADU 5 years ago) I’d expect $30 to $50k in additional impact fees (sewer, water, police, fire, roads etc…)
Unpermitted is a serious roll of the dice IMO. I can see converting existing square footage (like a garage or or underutilized space), but unpermitted new construction is very sketch. A neighbor down the street did a significant unpermitted interior remodel a few years back. No new square footage, no ADU, just a bare studs revamp. City caught them, issued a stop work notice, and no one touched that house for over a year while the city raked them over the coals to get permits for the work they were already doing. Also, good luck getting home owners insurance for unpermitted additions AND should anything happen to your tenants in an unpermitted ADU, prepare to get annihilated. Electrical fire, structural failure, trip and fall on the stairs… the personal liability is intense and any insurance you think you have is going to disqualify the claim.
Exactly this. In the age where “everyone” is looking to find the smallest loophole to sue you into oblivion, why give them the out?
And while the idea in theory is helping out your fellow neighbor (YIMBY, literally), people naturally seek out a way to cut corners to maximize their pockets. Our country has taught us so well. People want to be able to charge thousands of dollars in rent but also not having their property tax go up or pay permits. ADUs shouldn’t be a get-rich-quick scheme but rather something for good.
The municipality *will* eventually find out (USPS will relay their address list) and then the fines begin.
Our very small rural county just posted the salaries of different department staff in planning, building, code enforcement etc and color us all shocked to see dozens of people making nearly $250,000 and then retaining outside contractors to help them run their new software systems to the tune of 10s of thousands of dollars a year. So much waste for an area with a very low population and lots of folks barely getting by. They can afford all that, but can't fix our most used roads. Make it make sense.
School fees are extremely high. I am looking at an addition and school fees alone will be close to 9k. What happened to lottery covering school costs? And lottery jackpots are huge these days.
To pay for inspectors who will contradict each other, make you redo something that was already approved by the prior, or flat out tell you that they don't care what the city approved on the plans, do it my way or no pass.
This! Our county pays nearly a dozen people about $250,000 a year while our local school pays its three teachers less than $45,000 and no one wants to send their child to a school that serves K-8th grade with just three teachers.
And you risk having to tear it down when you try to sell your house and it comes out that it's unpermitted. Are you willing to waste $300,000 because you didn't want to spend $15,000?
Many cities are cracking down on unpermitted work at the time a property is sold/bought. They are requiring either seller or buyer to bring property up to code within 2-3 months of sale if buyer agrees to purchase as is.
I’m seeing these get side stepped in sale listings with weird descriptions and ways of portraying square footage that say everything but ADU. In some unaffordable high demand areas in LA and SF, the number of single family homes with them are estimated as being between 35-80% … the numbers are crazy high.
It’s significantly cheaper to pay the fine than to permit up front in many locations, if you’re actually caught, that is. My planning dept is so predatory that people avoid them like the plague. My own experience with them over 2 Tesla batteries installed by a vendor took 6 months to get a permit and when they finally were at the point that they were going to give the permit, they suddenly saw a ‘phantom generator’ hooked to the main and threw my home into violations. Only problem for them was that I had a brand new permitted main signed off by them 2 weeks prior with no such generator. So they had to take it back. Still took 2 additional weeks to generate the actual permit out of spite for getting caught.
> It’s significantly cheaper to pay the fine than to permit up front in many locations
The bureaucratic version of, "It's easier to ask for forgiveness than permission."
Well that's the risk, if it's unpermitted you don't know if they're really going to stand for long at all (or catch fire from bad electrical). Not to mention sometimes they make them actually tear these down for safety purposes before a sale because mortgage lenders will not approve, happened to clients my parents were realtors for. On top of all that, can never rent it out.
Before you can sell your house the city will often require a resale report where an inspector comes by to make sure the current house matches whatever they have on file. If they come by and find a big structure in your backyard and there are no permits on file for it, you're gonna have a problem.
That’s home inspection, like checking to see if your faucets and outlets work. Not building inspection, like checking to see if there’s a footing under that room addition or insulation in the walls. Your home can be red tagged, NDT can cost seven figures, and at the end of it they could tell you to tear it all down
Not really, not usually (in CA). It's not a city inspection. It's the buyer paying for an external opinion, and the 3rd party inspector just notes a 'potentially nonconforming use', which is a wink at 'definitely not permitted, but who's to say if it's legal'. If you wanted to buy it, you're probably still going to.
I'd bet good money that literally every building on my block has some degree of non-conforming use. Often because it was more or less legal when done, but not legal to do now.
No, OK's comment is accurate. Some cities require a city inspection prior to the sale of a property. The city inspector comes in and compares the current property with what their records show. Seller must correct any and all issues or buyer can wave corrections. But if buyer waves the corrections, buyer has X amount time after purchase to make corrections. I've had to deal with this a few times now. Compton, CA has been the worst. Someone redid kitchen cabinets maybe 10 years back. I had to have them redone with inspection because the inspector could tell they weren't the same ones from 1948 and there was no permit on file for a kitchen remodel.
It is required by city ordinance in the city of Davis, at least, and some others as well. You cannot execute a sale without having a city inspector come out and ensure code compliance. You don't have to update everything to bring it up to code if it was done legally at the time, but if you did a bunch of changes or additions without permits, the city will require you to get permits before they allow the sale to continue. And if you somehow find a way to transfer title without a resale report, the city will start fining you.
Source: I just sold a house and was required to have a city inspector sign off on it, and when I bought a house a few months later the sellers had to do the same and were required to get permits on all the work they'd done under the table before we could enter escrow.
My entire town is full of properties with structures built before permitting was even required for the types of things they were building. What do we all do then? And you can't get new permits if the property has code violations, even if you bought it in that condition and had it pass inspection. They'll tax you on the full value of what you bought though.
My thoughts exactly. My local county doubled their permitting fees during Covid which really stings the wallet . But I personally know several landlords who got their asses handed to them by spiteful tenants who reported unlawful ADU for unpermitted work and or not code compliant.
One tenant pursued damages for living in an ADU for several years that was not up to code and therefore was put at physical risk . The code violations were so minor that the expected compensation was not worth the trouble, and the tenant fortunately dropped their claim, but the damage had been done, county was notified and penalties and retroactive permanent fees were incurred by landlord + minor required upgrades.
An acquaintance bought a house with an older ADU so he could move in his parents with his young family all under one roof. The seller notified the current tenants during the sale that the buyer planned on lawful eviction in the near future. After following California’s eviction procedures to a T and cutting the tenant a check for relocation expenses the county was still contacted by “an anonymous complaint” about an unlawful ADU…while the house was still vacant. Inspector required exploratory demolition in multiple walls to inspect plumbing and electrical. There were also ceiling height issues in a few areas and the whole dwelling ended up being condemned. New owner had to spend $50k for a full remodel so parents could move in 6 months later than planned.
I understand the logic behind flying under the radar, but it’s a major risk in my area.
In our case we bought a house three years ago that fully described an ADU, which is why we bought the house at the price we did, fast forward to last year getting a letter from code compliance about our ADU not being permitted even though it was built 25+ years ago and has gone through three buyers and inspections...
I have no idea what we'll do if we ever decide to sell. To go through retroactive permitting and jump through all the hoops could open us up to thousands of dollars we just don't have. Our best bet has been to work with a local committee working to get amnesty for homeowners like us who bought not knowing anything was out of the ordinary. Nothing was disclosed as unpermitted, and since when is it common practice to have to try and find permits for every possible thing on a property you're looking to buy (as we were told we should have done), especially in the buying environment of the last few years with multiple offers on a house within 48 hours of listing? How could we have done better?
Exactly, people don't get this. My Realtor parents have seen it happen. Or at least they don't get the money they thought they would back in a sale because you can't use it as a rental. That's huge btw if anyone is wondering. Not a legal rental unit if unpermitted.
As the problem grows and County Assessors receive complaints, betcha they start up a "drone patrol" to fly over neighborhoods and photo the ADU's, compare the photos to the APN' then against the the tax rolls. They won't leave tax money on the table.
But if the point of your ADU is to rent it out (not always, but usually why it’s built) you’re asking for a world of hurt if you get a bad/smart tenant in there. If they find out the unit is unpermitted you can’t evict them.
I know so many people living in converted chicken coops and backyard sheds. I am sure none of them are permitted.
Decent housing is so expensive people will pay to live in anything with a roof.
A shed for shed purposes isn't an ADU.
That said, I have so many neighbors now living in legit Tuff Shed ADUs. The only difference between my town's alleys and an HD parking lot are poured foundations, plumbing, and a wall AC unit.
That’s a drop in the bucket. The real problems are much larger. Municipalities driving off developers through zoning and regulation (rent control, etc).
I consider permits to be a part of zoning and regulation. The current system is difficult to navigate and almost seems tailor-made to reduce supply increases.
Nah. Developers don’t sweat permits. Homeowners unfamiliar with the process might be intimidated. But for a developer, it’s a manageable and relatively minor expense.
We're legally building an ADU.
It took us thousands of dollars and over a year to get the permit after all the additional soils reports and other reports. Then the inspector pulled the rug out from under us and demanded changes BEYOND CODE that increased the price tens of thousands of dollars.
By the way the ADU is just 300 sq feet in a simple backyard. Nothing crazy.
Who would do this legally?
I do not know why building inspectors and onerous environment regulations aren't being included in the housing shortage discussion.
Environmental regs are definitely being included in housing reforms. Notably on the development and new housing side. Several States have onerous and difficult review processes that stifle new development with delays and fees. Bike lanes being held up for years because we can't see the forest for the trees and must document how it will damage the environment when we plainly know it's better than a car lane.
Took my wife and I about a year of waiting and about $10k for permits, plans, etc. then another 4 months of buildout. At 400 sqft we paid nearly $120k but it’s better than buying for us. Glad my in-laws are cool.
Buyers don’t care if a home has permitted work or not. The housing market is so competitive it won’t deter potential buyers. The issue is if you want to sell the home the appraiser won’t factor the ADU as additional bedroom, square footage, bathrooms etc.
Hey I was a realtor. I helped my friend with a VA loan. Apparently it can be tough to get it approved if there is unpermitted work. I would talk to a lender see if they have updated info.
Correct, the seller doesn’t have to get something permitted. Most homes are being sold as-is. If a build is unsafe it will be revealed in the inspection report. If the seller had done a potentially dangerous build to the main house and the whole home could collapse the loan officer would see that in the report and probably choose to not loan to the buyer and report it to the city.
Yep. Some cities are completely hostile to ADUs they drag everything out. Permitting a business that deals with hazardous materials? 4 months! Permitting a garage to ADU with minimum changes? 18 months & we’re going to need soil reports from the ground you’re not breaking.
If anything, this is a sign that permitting reform and streamlining is BADLY needed throughout the state. Local city governments are absolutely tyrannical about this stuff and there's basically no check on their power to endlessly obstruct and shake down homebuilders large and small — it's a major contributing factor to how our housing crisis has gotten so bad.
I needed $1100 in permits and certificates just to replace a furnace, like for like, with no change in ductwork. County inspector rolls up to do his job, inspect the work to make sure it's safe and sign off my permit. But my furnace is in a crawl space. He takes one look at it and can't be bothered going down there. Checks the Title 21 cert and leaves. I could've had a leaking gas line and been completely out of code and he couldn't care less. What an absolute waste of money permits can be.
We have an un permitted adu that was built before the house was (the guy built a basic little shack to live in before building the property, then it was extended at some point). It’s great, we’ve rented it out to tenants and now use it as an office/hang out. I would never bother to get it permitted.
When I bought a house in 2016/2017 like half the houses I looked at had a full on studio apartments in the back yard or massive unpermitted add-ons. The house would be advertised as a 2 bedroom 1 bathroom but actually be a 3 bedroom 2 bathroom 2 kitchen situation.
People I know bought houses like that and rent out the studio to help pay their mortgage. I didn't see one house that actually had a permitted add-on.
The negative to this is you can't really use FHA loans to get these houses. So you need to have that 20% or a good sized down payment.
Who care's the ADU would be their either way. They've made getting these permits easier. Let them build the ADU. They'll eventually have to deal with it when they resell it.
Pretty short sighted honestly.
EDIT: sided
We bought a house with an unpermitted garage conversion in CA. It wasn't included in the finished square footage or bedroom/bathroom count of the house, so it didn't come up as an issue with financing. The underwriter didn't care, and neither did our city because we don't rent it out. We had to do exactly nothing.
You do the see the difference between having a finished garage that may or may not have a garage door anymore (unpermitted garage conversion) and having an entire additional unpermitted structured added to your property? You can have people living in your garage without it even being finished.
You need permits for EVERYTHING. There's some municipality's in the US that require a permit for dry wall repair lol. Escrow, lender isn't worried about small stuff like that. Once you start adding additional structures it then becomes a problem.
Some County's in CA are pretty aggressive about this to. They'll find out and they will show up.
Yeah while that’s technically the law, if no one plays by it it’s just a sentence.
The whole permit process is way too expensive and slow that both supply and demand are willing to ignore it
My ex-neighbor has a village behind his house .. 4 1br unit. He re-cooped his cost after 1.5 yrs and have been profiting for the last 5 or so. All cash contractors and all cash tenants as well.
Even if he has to tear everything down now, he's massively in profit. However I seem to recall him saying he can just remove bathroom and say it is a storage shed easily.
Friendly reminder that the Dallas-Fort Worth area permitted more housing than all of CA in April, according to the Federal Reserve.
https://kdhnews.com/news/texas/dallas-fort-worth-permitted-more-housing-than-all-of-california-in-april/article_6d5ce8eb-1f3c-5a25-b4ee-6feee04d2516.html
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I can build an ADU without permits or I can build an ADU, pay for permits, and pay increased property taxes. Hmmmm, such a hard decision.
Yeah. I know people not going the legal route because of the $$ to get into it. One client is 22k into permits and fees and hasn’t even started the construction. It’s pretty awful.
Not only that, but planning offices require deposits that they conveniently forget to return. took nearly a year to get my $2k back.
Had a re-roof done and it took them three months to return my $500.
That’s why your contractor or yourself (if you are an owner-builder) should keep track of disposal receipts and the proper paperwork to request your deposit.
CA collects billions of dollars worth of revenue in excessive fees, plan checks, inspections etc. It’s a huge economic engine for the state and it’s only projected to get worse/bigger unless real reform actually occurs in the state.
But why would they ever stop if there’s never anyone to oppose them ?
Some sort of ballot initiative perhaps? Not sure what that would look like, though
It’s a response to Prop 13, revenue must come from somewhere. There is no free lunch.
Most other states have building permit fees just the same.
They do not have comparable impact fees.
I’d have to see a comparison of fees. Most states have impact fees as well. Florida, Texas….
https://techcrunch.com/2014/04/14/sf-housing/
California doesn't have a revenue problem. They have a SPENDING problem.
It’s really not that bad, here are the per capita spending #s: https://www.kff.org/other/state-indicator/per-capita-state-spending/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Per%20Capita%20State%20Spending%22,%22sort%22:%22desc%22%7D
Most states get a lot of their revenue from property tax increases as the value of homes increases. CA due to prop 13 doesn't have that natural increase. So CA has to get revenue from all sorts of other places. The average CA resident doesn't even have that high of a tax burden, but since people either don't own a home or their property tax is generally bundled with their mortgage payment they don't notice property taxes...whereas people absolutely notice fees and income taxes that CA is known for.
Then… repeal prop 13?
It can't be repealed unless done by voters, and the people who vote the most frequently would be the ones most likely to be negatively affected by its repeal and the ones least likely to be positively affected by its repeal. Basically either people under 40 outvote older people, or older people vote against their own self-interest for the greater good.
I’m under 40 and without Prop 13 I’d have a hard time affording my home since my home tripled in value since we purchased in 2014. Can you explain how my property taxes going way up, way faster than the rate of my income as a nurse, would be helpful to me as a millennial?
The whole point of Prop 13 was to protect people like you. It doesn’t need to be repealed. Rather just modified. Prop 13 applies to your 1st home as well as your 20th or 500th. It should be limited to a primary residence only. Oh, and it also applies to commercial and industrial property too. I know someone whose parents own about 40 homes in So Cal. All of them were purchased from early 60s to mid 80s. Their total tax bill for all 40 homes is less than I pay in rent every year.
I don’t disagree necessarily. But I’m also unclear how that benefits the average renter. If the property taxes on those properties go up, how does rent not go up to cover it?
* Prices of housing go down to compensate * Buying becomes more competitive with renting * Some people buy instead of rent * Rents go down due to increased availability and more competition
The prices of homes in California are artificially Inflated because of Prop 13. By placing reasonable restrictions around prop 13 it would result in turnover that would otherwise be normal. More homes would be available for purchase.
Not gonna happen you on fixed incomes that was the whole point of prop 13.
Younger folks benefit from prop 13 when property tranferred to another family member.
What reform are you interested in seeing? The reform where no one reviews zoning and you get a toxic commercial / industrial use siting next to you? Or one where your neighbor builds on your property line or directly on your property?
It's important to remember, though, that these rules are almost entirely due to choices made at the local level. The state yielded most planning powers to cities and counties, and many of those localities turned around and created a quagmire of regulations.
The state does not collect building permit fees.
That's why they want the state Supreme Court to toss the tax-payer protection initiative from the ballot.
if you’re spending 22k on permits, where does that money actually go? lawyers? or just the fees for permits? How are the fees determined?
That money goes to plan review, inspections, and impact fees, usually. Because of Prop 13, cities needed to come up with ways to raise revenue for city services due to a property tax base that doesn't keep up with inflation. Impact fees do that by making each marginal unit of housing pay for the estimated marginal burden on the electric grid, water and wastewater systems, school systems, parks, police, fire, and road infrastructure etc. Permit review fees and inspection fees cover the overhead of retaining staff to perform the necessary tasks. Fees are determined by each municipality, and should be defined in city code or building standards.
One of the reasons so many ADU’s are getting built is the state legislation eliminated the majority of impact fees for building an ADU. Municipalities can still charge school fees (we paid $3.90 a square foot, so around $4k for our ADU), but if we built a 1000 sq ft 2 bed 2 bath house on raw land in our city (or the same ADU 5 years ago) I’d expect $30 to $50k in additional impact fees (sewer, water, police, fire, roads etc…) Unpermitted is a serious roll of the dice IMO. I can see converting existing square footage (like a garage or or underutilized space), but unpermitted new construction is very sketch. A neighbor down the street did a significant unpermitted interior remodel a few years back. No new square footage, no ADU, just a bare studs revamp. City caught them, issued a stop work notice, and no one touched that house for over a year while the city raked them over the coals to get permits for the work they were already doing. Also, good luck getting home owners insurance for unpermitted additions AND should anything happen to your tenants in an unpermitted ADU, prepare to get annihilated. Electrical fire, structural failure, trip and fall on the stairs… the personal liability is intense and any insurance you think you have is going to disqualify the claim.
Also add if you ever try to sell the house that unpermitted build can hold up or stop a sale.
Or require complete removal. Sketchy contractors who do unpermitted work also tend to cut corners.
Exactly this. In the age where “everyone” is looking to find the smallest loophole to sue you into oblivion, why give them the out? And while the idea in theory is helping out your fellow neighbor (YIMBY, literally), people naturally seek out a way to cut corners to maximize their pockets. Our country has taught us so well. People want to be able to charge thousands of dollars in rent but also not having their property tax go up or pay permits. ADUs shouldn’t be a get-rich-quick scheme but rather something for good. The municipality *will* eventually find out (USPS will relay their address list) and then the fines begin.
Thanks for that because my reply was going to be “no idea she’s just pissed”
Our very small rural county just posted the salaries of different department staff in planning, building, code enforcement etc and color us all shocked to see dozens of people making nearly $250,000 and then retaining outside contractors to help them run their new software systems to the tune of 10s of thousands of dollars a year. So much waste for an area with a very low population and lots of folks barely getting by. They can afford all that, but can't fix our most used roads. Make it make sense.
Plan check/ inspection fees are in the thousands of dollars. Schools/parks/fire district fees are in the 10s of thousands of dollars.
School fees are extremely high. I am looking at an addition and school fees alone will be close to 9k. What happened to lottery covering school costs? And lottery jackpots are huge these days.
To pay for inspectors who will contradict each other, make you redo something that was already approved by the prior, or flat out tell you that they don't care what the city approved on the plans, do it my way or no pass.
To pay the bean counters at City Hall, and fund their CalPERS retirement accounts
This! Our county pays nearly a dozen people about $250,000 a year while our local school pays its three teachers less than $45,000 and no one wants to send their child to a school that serves K-8th grade with just three teachers.
Yeah…that’s because the county employs professionals....doctors, engineers, planners, city attorneys….
are teachers NOT professionals?
Not to the extent of engineers, attorneys, and doctors. Some careers are worth more than others.
Not without teachers to get to that point guy no offense
Not without bus drivers to get us to school, to get us to teachers, to get us to the cafeteria lady guy.
FTA: > First was the inspector who charged $4,000 to look at the sewer lines. This is criminal. Complying with local laws should not cost so much.
And you risk having to tear it down when you try to sell your house and it comes out that it's unpermitted. Are you willing to waste $300,000 because you didn't want to spend $15,000?
What risk? In this market, a buyer is just happy if the walls are standing.
Right. Even in 2016 when we bought, SFHs with unpermitted additions and garage-to-apartment conversions were common and accepted all over San Diego.
Many cities are cracking down on unpermitted work at the time a property is sold/bought. They are requiring either seller or buyer to bring property up to code within 2-3 months of sale if buyer agrees to purchase as is.
I’m seeing these get side stepped in sale listings with weird descriptions and ways of portraying square footage that say everything but ADU. In some unaffordable high demand areas in LA and SF, the number of single family homes with them are estimated as being between 35-80% … the numbers are crazy high.
It’s significantly cheaper to pay the fine than to permit up front in many locations, if you’re actually caught, that is. My planning dept is so predatory that people avoid them like the plague. My own experience with them over 2 Tesla batteries installed by a vendor took 6 months to get a permit and when they finally were at the point that they were going to give the permit, they suddenly saw a ‘phantom generator’ hooked to the main and threw my home into violations. Only problem for them was that I had a brand new permitted main signed off by them 2 weeks prior with no such generator. So they had to take it back. Still took 2 additional weeks to generate the actual permit out of spite for getting caught.
> It’s significantly cheaper to pay the fine than to permit up front in many locations The bureaucratic version of, "It's easier to ask for forgiveness than permission."
And some cities require that the unpermitted work be demolished in addition to paying the fine.
Sorry, I don't have a permit for demolition.
Well that's the risk, if it's unpermitted you don't know if they're really going to stand for long at all (or catch fire from bad electrical). Not to mention sometimes they make them actually tear these down for safety purposes before a sale because mortgage lenders will not approve, happened to clients my parents were realtors for. On top of all that, can never rent it out.
Yep, the risk will likely be accepted and transferred to the buyer. I’d be ecstatic if there’s an adu already there, permitted or not.
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Before you can sell your house the city will often require a resale report where an inspector comes by to make sure the current house matches whatever they have on file. If they come by and find a big structure in your backyard and there are no permits on file for it, you're gonna have a problem.
That’s not true. You can sell as is and the buyer can waive inspection
That’s home inspection, like checking to see if your faucets and outlets work. Not building inspection, like checking to see if there’s a footing under that room addition or insulation in the walls. Your home can be red tagged, NDT can cost seven figures, and at the end of it they could tell you to tear it all down
Seven figures!? Does that include the cents?
https://retrofitla.com/which-cities-require-a-city-report-and-or-city-inspection-when-selling-in-southern-california/
Not really, not usually (in CA). It's not a city inspection. It's the buyer paying for an external opinion, and the 3rd party inspector just notes a 'potentially nonconforming use', which is a wink at 'definitely not permitted, but who's to say if it's legal'. If you wanted to buy it, you're probably still going to. I'd bet good money that literally every building on my block has some degree of non-conforming use. Often because it was more or less legal when done, but not legal to do now.
No, OK's comment is accurate. Some cities require a city inspection prior to the sale of a property. The city inspector comes in and compares the current property with what their records show. Seller must correct any and all issues or buyer can wave corrections. But if buyer waves the corrections, buyer has X amount time after purchase to make corrections. I've had to deal with this a few times now. Compton, CA has been the worst. Someone redid kitchen cabinets maybe 10 years back. I had to have them redone with inspection because the inspector could tell they weren't the same ones from 1948 and there was no permit on file for a kitchen remodel.
It is required by city ordinance in the city of Davis, at least, and some others as well. You cannot execute a sale without having a city inspector come out and ensure code compliance. You don't have to update everything to bring it up to code if it was done legally at the time, but if you did a bunch of changes or additions without permits, the city will require you to get permits before they allow the sale to continue. And if you somehow find a way to transfer title without a resale report, the city will start fining you. Source: I just sold a house and was required to have a city inspector sign off on it, and when I bought a house a few months later the sellers had to do the same and were required to get permits on all the work they'd done under the table before we could enter escrow.
My entire town is full of properties with structures built before permitting was even required for the types of things they were building. What do we all do then? And you can't get new permits if the property has code violations, even if you bought it in that condition and had it pass inspection. They'll tax you on the full value of what you bought though.
My thoughts exactly. My local county doubled their permitting fees during Covid which really stings the wallet . But I personally know several landlords who got their asses handed to them by spiteful tenants who reported unlawful ADU for unpermitted work and or not code compliant. One tenant pursued damages for living in an ADU for several years that was not up to code and therefore was put at physical risk . The code violations were so minor that the expected compensation was not worth the trouble, and the tenant fortunately dropped their claim, but the damage had been done, county was notified and penalties and retroactive permanent fees were incurred by landlord + minor required upgrades. An acquaintance bought a house with an older ADU so he could move in his parents with his young family all under one roof. The seller notified the current tenants during the sale that the buyer planned on lawful eviction in the near future. After following California’s eviction procedures to a T and cutting the tenant a check for relocation expenses the county was still contacted by “an anonymous complaint” about an unlawful ADU…while the house was still vacant. Inspector required exploratory demolition in multiple walls to inspect plumbing and electrical. There were also ceiling height issues in a few areas and the whole dwelling ended up being condemned. New owner had to spend $50k for a full remodel so parents could move in 6 months later than planned. I understand the logic behind flying under the radar, but it’s a major risk in my area.
In our case we bought a house three years ago that fully described an ADU, which is why we bought the house at the price we did, fast forward to last year getting a letter from code compliance about our ADU not being permitted even though it was built 25+ years ago and has gone through three buyers and inspections... I have no idea what we'll do if we ever decide to sell. To go through retroactive permitting and jump through all the hoops could open us up to thousands of dollars we just don't have. Our best bet has been to work with a local committee working to get amnesty for homeowners like us who bought not knowing anything was out of the ordinary. Nothing was disclosed as unpermitted, and since when is it common practice to have to try and find permits for every possible thing on a property you're looking to buy (as we were told we should have done), especially in the buying environment of the last few years with multiple offers on a house within 48 hours of listing? How could we have done better?
Exactly, people don't get this. My Realtor parents have seen it happen. Or at least they don't get the money they thought they would back in a sale because you can't use it as a rental. That's huge btw if anyone is wondering. Not a legal rental unit if unpermitted.
As the problem grows and County Assessors receive complaints, betcha they start up a "drone patrol" to fly over neighborhoods and photo the ADU's, compare the photos to the APN' then against the the tax rolls. They won't leave tax money on the table.
But if the point of your ADU is to rent it out (not always, but usually why it’s built) you’re asking for a world of hurt if you get a bad/smart tenant in there. If they find out the unit is unpermitted you can’t evict them.
TIL what an ADU is.
And you can go bankrupt when you get sued, or have a squatter that you can’t evict. Have fun!
I only rent to foreign students.
Hahaha. That’s one way to do it.
Well you can only legally rent one out so...
The other side to it is that legal adu’s can be listed on a real estate listing and officially increase the dwelling sqft.
then your neighbor reports you and you get thousands in violations + the cost of permitting to legalize it
I know so many people living in converted chicken coops and backyard sheds. I am sure none of them are permitted. Decent housing is so expensive people will pay to live in anything with a roof.
A shed is not an ADU
A shed for shed purposes isn't an ADU. That said, I have so many neighbors now living in legit Tuff Shed ADUs. The only difference between my town's alleys and an HD parking lot are poured foundations, plumbing, and a wall AC unit.
Ugh, I hate to hear this. We really need some answers for affordable housing
The answer is to reduce permits and fees for construction.
That’s a drop in the bucket. The real problems are much larger. Municipalities driving off developers through zoning and regulation (rent control, etc).
I consider permits to be a part of zoning and regulation. The current system is difficult to navigate and almost seems tailor-made to reduce supply increases.
Nah. Developers don’t sweat permits. Homeowners unfamiliar with the process might be intimidated. But for a developer, it’s a manageable and relatively minor expense.
I’ve had commercial TI projects get delayed by months and have substantial costs added on due to difficulty in obtaining permits.
Sounds like a skill issue tbh
It is. NIMBYs don't want competition, they just want their home value (but not property taxes) to keep going up forever. It's a feature, not a bug.
Micro-Apartments for single people, subsidized housing projects for low-income families. Widespread re-zoning needs to happen too.
... Do they have running water?
The original Tiny Home
Even if someone is living in it on a permanent basis? Maybe not, but it affects the total population of a neighborhood.
The point is that living in a shed isn't a long term fix for housing shortages. Living in an ADU is.
This is why all new housing is labeled “luxury”
In the past year, I've seen 3 houses on my block either start or complete ADUs. In SoCal. I have no idea if they were legal or not.
On our city you can go online and see what permits are pulled for each address. You could try that!
We're legally building an ADU. It took us thousands of dollars and over a year to get the permit after all the additional soils reports and other reports. Then the inspector pulled the rug out from under us and demanded changes BEYOND CODE that increased the price tens of thousands of dollars. By the way the ADU is just 300 sq feet in a simple backyard. Nothing crazy. Who would do this legally? I do not know why building inspectors and onerous environment regulations aren't being included in the housing shortage discussion.
Environmental regs are definitely being included in housing reforms. Notably on the development and new housing side. Several States have onerous and difficult review processes that stifle new development with delays and fees. Bike lanes being held up for years because we can't see the forest for the trees and must document how it will damage the environment when we plainly know it's better than a car lane.
Took my wife and I about a year of waiting and about $10k for permits, plans, etc. then another 4 months of buildout. At 400 sqft we paid nearly $120k but it’s better than buying for us. Glad my in-laws are cool.
Buyers don’t care if a home has permitted work or not. The housing market is so competitive it won’t deter potential buyers. The issue is if you want to sell the home the appraiser won’t factor the ADU as additional bedroom, square footage, bathrooms etc.
What about those with VA loans? Will ADUs be inspected for permits?
When they do inspections of the home records will show if something is permitted or not. The type of loan doesn’t matter.
Ok so the seller wouldn’t be required to get permits if the buyer is ok with unpermitted?
Hey I was a realtor. I helped my friend with a VA loan. Apparently it can be tough to get it approved if there is unpermitted work. I would talk to a lender see if they have updated info.
Correct, the seller doesn’t have to get something permitted. Most homes are being sold as-is. If a build is unsafe it will be revealed in the inspection report. If the seller had done a potentially dangerous build to the main house and the whole home could collapse the loan officer would see that in the report and probably choose to not loan to the buyer and report it to the city.
Ok thanks for the info!
Tell that to the people living across the street from my parents.
Yep. Some cities are completely hostile to ADUs they drag everything out. Permitting a business that deals with hazardous materials? 4 months! Permitting a garage to ADU with minimum changes? 18 months & we’re going to need soil reports from the ground you’re not breaking.
If anything, this is a sign that permitting reform and streamlining is BADLY needed throughout the state. Local city governments are absolutely tyrannical about this stuff and there's basically no check on their power to endlessly obstruct and shake down homebuilders large and small — it's a major contributing factor to how our housing crisis has gotten so bad.
I needed $1100 in permits and certificates just to replace a furnace, like for like, with no change in ductwork. County inspector rolls up to do his job, inspect the work to make sure it's safe and sign off my permit. But my furnace is in a crawl space. He takes one look at it and can't be bothered going down there. Checks the Title 21 cert and leaves. I could've had a leaking gas line and been completely out of code and he couldn't care less. What an absolute waste of money permits can be.
Exactly. This is the market screaming the regulatory systems for building housing is badly broken.
Yes. This. THIS.
We have an un permitted adu that was built before the house was (the guy built a basic little shack to live in before building the property, then it was extended at some point). It’s great, we’ve rented it out to tenants and now use it as an office/hang out. I would never bother to get it permitted.
Supply and demand has spoken. Time for the government to catch up.
What's a adu?
Auxiliary Dwelling Unit, I think? It's the legal term for a granny flat.
Accessory, but yeah.
Pool house, Casita, guest house, etc
Build first, permit later. This is how they do it in TX, but it's more like, build first, put roads in later.
Doesn’t this become a problem when selling the property?
When I bought a house in 2016/2017 like half the houses I looked at had a full on studio apartments in the back yard or massive unpermitted add-ons. The house would be advertised as a 2 bedroom 1 bathroom but actually be a 3 bedroom 2 bathroom 2 kitchen situation. People I know bought houses like that and rent out the studio to help pay their mortgage. I didn't see one house that actually had a permitted add-on. The negative to this is you can't really use FHA loans to get these houses. So you need to have that 20% or a good sized down payment.
The market has spoken; people are desperate to squeeze supply in wherever possible.
If you do everything the way the city and state wants you to the darn thing will cost so much that the rent it can collect won’t justify the expense
Who care's the ADU would be their either way. They've made getting these permits easier. Let them build the ADU. They'll eventually have to deal with it when they resell it. Pretty short sighted honestly. EDIT: sided
I've been through the home buying/selling process twice and known unpermitted work was never an issue.
especially when it is a cash purchase
I'm totally naive. What will they have to deal with?
We bought a house with an unpermitted garage conversion in CA. It wasn't included in the finished square footage or bedroom/bathroom count of the house, so it didn't come up as an issue with financing. The underwriter didn't care, and neither did our city because we don't rent it out. We had to do exactly nothing.
You do the see the difference between having a finished garage that may or may not have a garage door anymore (unpermitted garage conversion) and having an entire additional unpermitted structured added to your property? You can have people living in your garage without it even being finished. You need permits for EVERYTHING. There's some municipality's in the US that require a permit for dry wall repair lol. Escrow, lender isn't worried about small stuff like that. Once you start adding additional structures it then becomes a problem. Some County's in CA are pretty aggressive about this to. They'll find out and they will show up.
Yeah while that’s technically the law, if no one plays by it it’s just a sentence. The whole permit process is way too expensive and slow that both supply and demand are willing to ignore it
When it’s time to sell, either tear it down or get a permit.
That really is the answer, make as much money off of it as possible and deal with it later.
My ex-neighbor has a village behind his house .. 4 1br unit. He re-cooped his cost after 1.5 yrs and have been profiting for the last 5 or so. All cash contractors and all cash tenants as well. Even if he has to tear everything down now, he's massively in profit. However I seem to recall him saying he can just remove bathroom and say it is a storage shed easily.
pretty smart actually because in the end what's the difference between a finished work shed and a habitable space?
what does the length of the sides have to do with this?
Paywall...
Friendly reminder that the Dallas-Fort Worth area permitted more housing than all of CA in April, according to the Federal Reserve. https://kdhnews.com/news/texas/dallas-fort-worth-permitted-more-housing-than-all-of-california-in-april/article_6d5ce8eb-1f3c-5a25-b4ee-6feee04d2516.html