The Story Behind Unwarranted In-Law Units

An “unwarranted” in-law unit is one that hasn’t been done with city permits. That means city inspectors didn’t verify that unit construction was done in accordance with city safety codes.

When city inspectors approve electrical, plumbing and general renovations, the city records those sign-offs on the property’s building permit history. The “3R” is one of the key mandatory reports sellers provide to future buyers in a sale, and it lists all general permits that past owners applied for, let expire, or completed. If you see a 3R for a single-family dwelling that has an unwarranted unit, you can be sure that the unit wasn’t done with permits—or the 3R would classify the property as a two-unit dwelling.

There are some risks and complications that could arise when it comes to unwarranted units. For one thing, you may run into safety issues if electrical or plumbing work wasn’t done to code. Additionally, the city could require you to “legalize” an in-law unit if it discovers one exists.

The city is currently looking to add housing any way it can, so you may consider turning an unwarranted unit into what’s known as an “accessory dwelling unit,” or ADU.

Keep in mind though, that turning a single-family home into a legal, two-unit dwelling will end up affecting your insurance costs. It will also affect future buyers’ loan options when you decide to sell, as buyers will need to qualify for a duplex vs. a more straightforward single-family home loan. The good news is that duplexes are common in San Francisco, and there are plenty of banks and insurance companies willing to offer loans and coverage.

And most importantly, as my colleague Tracy Ballard of SF City Rents emailed me to say, both legal units will be subject to rent control if the building was constructed before 1979.

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Get in touch:

Eileen Bermingham

Corcoran Global Living

415.823.4656

eileen@insidesfre.com

DRE# 01352627

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