Illegal Conversion – 5 Things Buyers Need to Know

What is an Illegal Conversion

Converting a space, building, or portion of a building to a non-approved or permitted use may be considered an illegal conversion. Usually illegal conversions involve code violations, or zoning violations and/or “Health and Safety” issues.

Owners (both home owners and investors), often make illegal conversions, to get extra space or additional income from a conversion.

Failure to Recognize An Illegal Conversion May Result in Injures, Death or Litigation

Not all illegal conversions are serious or dangerous, however, the are some that are very serious and should be corrected. Building and Health Departments are there to protect people and are usually more than happy to work with an owner to make the proper corrections.

Common examples of “Illegal Conversions”

• Converting a garage or portion of a garage into an apartment or bedroom
• Converting an attic area into a bedroom
• Making an area in a basement into a bedroom
• Modifying a duplex, making it into three units instead of two.
• Widening a garage several feet closer to the property line
• Converting the garage into a place to conduct business or an office

What happens when discovered by the local building authorities?

The answer varies from building department to building department and what was done. At times the “Department of Building and Safety” will issue a NOTICE or ORDER to Comply.

Some of the common actions taken:

• Owner is required to restore the modifications back to the original condition.
• Owner is required to get proper permits and at times bring the condition up to current codes.
• Tear down or remove what was done or constructed: at times requiring a demolition permit to be obtained.
• Cities often have fines and even up to six months of jail time, if corrections aren’t made. Some cities will  may also cut off utilities, ie. The electricity, if the owner refuses to comply.
• If the property is being rented out, then the owner may have to pay for the tenant to move; the tenants may have to pay their rent to a “Rent Escrow Account Program.”

Costly

Correcting illegal conversions can be costly at times. The local building jurisdiction may require engineered plans to be submitted for approval. Permits, including a demolition permit for the work that was done. Special inspections or reports may be required by licensed professionals, etc. In other circumstances, corrections or compliance may be very easy or inexpensive.

Safety concerns

Illegal conversion of garages converted into apartments or bedrooms, as well as attic and basements being improperly converted can be dangerous. LA had eight deaths in a three month period from illegal conversions of garages into bedrooms or apartments. Often improper electrical is done, carbon monoxide fumes from water heaters or improperly installed heaters causes deaths, or wrong materials are used in the construction which are not fire safe.

Buyers and Agents

In the interest of full disclosure and clarity; sellers should disclose any non-permitted work, any illegal conversions and any citations, legal notices or compliance issues that they are aware of. Buyers and agents should look for indications of non-permitted work and for evidence of illegal conversions.  Once recognized, further investigation should be conducted.

Bottom Line

Not all illegal conversions are expensive or difficult to correct; but a number are.

1. Time – it often takes time to make the corrections or get proper solutions which some real estate transactions may not allow for.
2. Loan commitments may be withdrawn or made conditional upon corrections and permits.
3. Injuries, death or fires occasionally occur because of unsafe unpermitted work done in the illegal conversions.
4. Insurance policies may not cover some loses. (check with your insurance carrier)

Disclaimer and Perspective

Note that no legal advice is being given. Consulting with a qualified real estate attorney is recommended. Each illegal conversion is different and various governmental agencies have various requirements and policies. Seek the advice of qualified professionals when you suspect or are aware of permit, zoning or compliance issues are noted.

David Jones - General Contractor, Home Inspector, Consultant

David has over 45 years’ experience as a general contractor, inspector and professional instructor. He writes articles for homeowners, new home buyers and Real Estate Agents. Read more