The Risks of Leasing An Illegal Unit

One type of buyout situation that comes across my desk is the “illegal” unit. The garage conversion or guest house that has no permits but was rented out. Many times the illegal status of the unit doesn’t become an issue until an owner is trying to sell or move back to the property.?

To start, I do not advise anyone to rent out an illegal garage conversion, addition, or guest house. Even if the tenant is a family member, friend, or friend of a friend that is down on their luck- Don’t do it! When it comes time to get the tenant out they will likely put up a fight and have a set of expensive demands. Don't expect the tenant to be grateful for a place to live when they don’t qualify for an apartment or the below market rent they have been paying all these years. People get used to being subsidized and if asked to leave they are very likely to be opportunistic and punitive, putting a landlord through the financial ringer.?

Many landlords try to approach the tenant without any information or understanding of the law. When the tenant and landlord don’t see eye to eye many landlords then think to give tenants a piece of their mind. That will only exasperate the situation. It is understandable to be a property owner very frustrated by the situation and demands being made by the tenant. However, the goal is to reach a resolution and sometimes as the property owner you can’t see the matter objectively and hold a calm temper when dealing directly with the tenant. I’m often approached by the landlord to work out a deal because the landlord knows or finds out the hard way that they are a bit out of their depth.?

While landlords may have some options to get tenants out of these illegal units, they are often expensive and very time consuming. If you have an illegal unit that is vacant keep it vacant until you legalize it and get a certificate of occupancy. If you already have a tenant in place and want to get the unit back be sure to reach out to an attorney before approaching the tenant. Tackling the situation on your own without any informed guidance may get you off to a bad start or in hot water.?