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?s Abt Property W/adu, Disclosed Unpermitted Kitchen

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first_time_buyer

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Aug 25, 2016
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My wife and I are first-time buyers in the Bay Area. We just looked at a single family home yesterday with an in-law unit built in the garage. The owners have tenants living upstairs (3 bed, 1 bath) as well as other tenants living downstairs in the in-law unit. The owners disclosed that the kitchen in the in-law unit is unpermitted, and the owners' agent mentioned the stove could be removed for the appraisal. The house has been on the market for a month, and the price was recently reduced. We are considering an offer, but don't want to proceed until we clear up issues regarding the in-law unit.

Should these factors (lack of permit for kitchen, removal of stove for appraisal) prompt us to look elsewhere immediately? Will we have difficulty getting the lender to sign off on financing? Or is it worth pursuing further? Any advice would be greatly appreciated. Thanks.
 

Randolph Kinney

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North Carolina
You need to check with local zoning to find out what are the legal uses allow and if they enforce permits.
 

Terrel L. Shields

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May 2, 2002
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Certified General Appraiser
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Arkansas
Personally I would not waste my time with it, but ... you might make an offer contingent upon the property being bought up to code and inspected accordingly.
 

glenn walker

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Certified Residential Appraiser
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California
There are two separate issues. The lender in most cases will require the cooking facilities to be removed . Most Cities and Counties in California rarely give permits for converted garages to be used as rentals. The real big issue here is you are buying as owner occupied to live in this house and the lender will require the property to be used as a house. The tenants will have to move out and in California it's required the owner give them a 60 day notice in writing that the home is being sold. In the event you close the escrow and the tenants are still living in either the house or garage or worse both you have now become the new landlord with a house you can't live in because you just inherited two hostile tenants and now you may need an eviction attorney.

In summary:I am now putting on my Broker Hat .
1-you won't know what the lender is going to require on the ADU until the appraisal is done.
2- Make sure the owners have or are giving the tenants 60 days written notices to vacate .
3- Due not close escrow unless the tenants are out and reinspect the house.
4- Good luck
 
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hastalavista

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Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
My wife and I are first-time buyers in the Bay Area.
I work in the Bay Area.

We just looked at a single family home yesterday with an in-law unit built in the garage. The owners have tenants living upstairs (3 bed, 1 bath) as well as other tenants living downstairs in the in-law unit. The owners disclosed that the kitchen in the in-law unit is unpermitted, and the owners' agent mentioned the stove could be removed for the appraisal. The house has been on the market for a month, and the price was recently reduced. We are considering an offer, but don't want to proceed until we clear up issues regarding the in-law unit.

Randolph, Terrel (contingent offer) and Glenn give good advice.

Two things are at work here:
A. How diligent the appraiser will be in his/her research and reporting?
B. How does your lender handle non-conforming or possibly illegal units?

You really have no control over the above. I can tell you if you are considering buying in an area where there is rent control, you should not only do some research of the zoning (what is allowed to exist) but also review the rent control ordinance (find out if the tenants, be it a non-conforming or illegal unit, are covered/protected in any way).

But in general, a house in a single-family zoned area with a converted garage that is rented and a non-permitted unit above it that is rented is going to have issues getting financed.

Good luck!
 
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