Let’s face it, Los Angeles is expensive and rents are high. This gives homeowners a strong incentive to ‘illegally’ convert their garage, attic, or a room in their house into a dwelling unit to use as a rental for extra income. If your home is located in a R1 zone, a second dwelling unit is an illegal use of the property. Many homeowners will rent their illegal rental for years with no problems, but it only takes one bad tenant to make your life a living hell and make you want to never rent again!
That is because with Los Angeles Rent Control, there comes a ton of liability to you the owner when renting an illegal rental unit. For apartment building owners in R1.5-R4 zones- illegal rental units are often called ‘non conforming units‘. They work slightly different than for homes so read up on them here.
Dwelling Unit– A group of two or more rooms, one of which is a kitchen, designed for occupancy by one family for living and sleeping purposes.
R1 – “One Family” Zone
Kitchen – Any portion of an accessory building arranged for or conducive to the preparation
or cooking of food, by the inclusion of one or more of the following items shall be considered as
• Natural gas outlet.
• 220 AC electrical outlet.
• Double sink.
• Bar sink exceeding one square foot.
• Hot water line to any bar sink.
• Refrigerator exceeding 10 cubic feet (or a place designed for it).
• Garbage disposal.
• Dishwasher (or space designed for it).
• Any device designed for cooking or heating of food.
• Total counter space exceeding 10 square feet.
The key word in the definition of Dwelling unit is kitchen. The city looks at having an extra kitchen as showing that a second family intends to live on the property. If the property is RD1.5, R2, R3, R4 zones, they allow multiple families to live on one lot. Even in some instances of Residential Estate zoning such as RE20, RE40 while not allowing a kitchen, will allow a Guest House and accessory living quarters building for lots over 20,000 sqft in size. But not on R1 lots. These are residential lots that only allow one family to live on the lot.
Owners who use their illegal unit as a guest house for visiting friends and family don’t have as much to worry about- the worst that can happen is that the Los Angeles building department will demand they remove the kitchen, and you are only out the installation + removal cost of the kitchen + any fines.
For Owners using their illegal rental units to rent to tenants they must be very careful who they rent to, because these units can carry with them huge liability if the Los Angeles housing department finds out.
How does the city find out that you have an illegal rental unit?
-Your Tenant or a neighbor complains
-A building Inspector spots it
There are two enforcement arms of the city- the Building Department, and the Housing Department. You don’t want either to cite you. The worst of the two by far is the Housing Department- they oversee Rent Control and have a patent tenant bias. Everyone who works there is a tenant, and they think all landlords are evil. You may be surprised to find out when you call LAHD with questions, that you will get sent around and around in circles with your questions because the people on the phone don’t know the answers, or you might get a different answers from each person you talk to. Basically as far as they are concerned the tenant is always right.
Building Department Enforcement
If the Building Department cites you they will issue you a notice to comply. You will have 3 choices: Legalize the unit, Demolition it, or revert to previous use. Since we know there is no way to legalize a second dwelling unit in a R1 zone (aside from going for a full blown variance which is practically impossible- but I have seen it successfully accomplished a few times), that option is off the table. If the structure that was converted was permitted when it was built you don’t have to worry about demolition. The Certificate of Occupancy for the structure will show what is the structure’s permitted use. Expect to see something like: Rec Room, Rumpus Room (obs), Play Room (obs), Storage Room, Accessory Living Quarters, Garage, Guest House, Guest Room etc.
None of these permitted uses allow a kitchen. Only dwelling units allow a kitchen. The city will order you to remove the kitchen and return the structure to its permitted use. This can be a real drag if you just spent $15,000 on putting in a brand new kitchen just to turn around and have to rip it all out.
Housing Department Enforcement
As I said earlier, you really don’t want to deal with the Los Angeles Housing Department. If you are in the County of Los Angeles and not the city, there is no rent control so its not really a big deal. If you are in the city of LA, watch out!!
The risk from the housing department is that they make you pay back the tenant all the rent that you collected, plus pay the tenant a relocation fee. In addition to this risk, you will probably have some legal fees when you get a lawyer involved (~$5,000 for a settlement, ~$20,000 for a trail).
Los Angeles Municipal Code: Chapter XV Rent Control excludes single family homes from Rent Control- however it DOES NOT exclude illegal rental units in Single Family Homes.
Look to the Definitions section in the code for the definition of a rental unit:
SEC. 151.02. DEFINITIONS.
Sec 151.09 Evictions
That means that the tenant in your illegal unit has all the protections of rent contrffff the tenant calls LAHD and reports that you are renting to them and its an illegal unit a few things will happen. First the tenant may start sending the rent directly to LAHD instead of you. This will continue until the tenant leaves- it is important to note that the tenant must still keep paying rent, and this rent will be given to you by LAHD once the tenant has left.
The next big obstacle, is if the tenant decides to hire an attorney. You will probably end up having to settle with the tenant for $15,000 – $20,000 to get them out.
Otherwise, under rent control tenants of illegal rent control units are entitled to RELOCATION ASSISTANCE. Legal Reason # 11 for eviction applies to this situation, and relocation assistance is required.
The Tenant is considered Qualified if they are 62 or older, Handicap, or have a minor child under the age of 18. Eligible tenants are everyone else. Relocation is $18,000 for Qualified, and $9,000 for eligible.
As a landlord of an illegal rental unit you can lower your risk by only renting to eligible tenants, and only rent to people who are close friends that you know very well. It has a lot of risks- so I would recommend avoiding it if possible.