Is My Lease Enforceable if the Rental Unit or ADU Is Unpermitted?

States and local housing agencies regulate rental properties to ensure tenants have the basic needs for safety and habitability. Renting out a unit that does not comply with applicable housing, building, or fire codes can be illegal, and a court may refuse to enforce some or all of a rental agreement for an unlawful unit. Illegal rentals may limit a landlord’s rights, but renters generally have tenant protections when landlords wrongfully evict them from unpermitted housing.

Tenants renting illegal units or accessory dwelling units (ADUs) can report the violations to local code enforcement, and in some places they may qualify for relocation assistance if an enforcement action requires them to move. To find out about your legal rights if you are living in an unpermitted rental unit, talk to a local landlord-tenant attorney.

Leasing an Unpermitted ADU or Rental Unit

Renting out a basement unit, backyard cottage, or garage conversion can seem like a great option for homeowners and tenants. In a tough rental market, people can get a place to live for under the average rental price.

However, state landlord-tenant laws and local housing codes place strict limits on what types of spaces homeowners can rent to prospective tenants.

State housing codes require landlords to provide a space that meets housing safety and habitability requirements. The specific requirements vary by state and city, but generally include functional plumbing, sufficient heating, weather protection, smoke detectors and carbon monoxide detectors, garbage facilities, and other minimum protections.

Consequences for Landlords

Landlords and tenants put themselves at risk by renting unpermitted units or ADUs. Homeowners renting units that don’t get building permits or meet the minimum housing codes are in breach of local housing laws.

Homeowners could face fines and civil enforcement actions, tenant lawsuits, denial of insurance claims, and costly renovations to restore the property to its original condition.

Consequences for Tenants

Tenants may not care about specific code violations if they get a cheap rental. However, tenants may be served with a forced eviction if the city or county discovers the unpermitted rental.

Tenants may also lose some of their legal protections if they knowingly rent an illegal unit.  If a tenant loses property because of flooding, fires, or other damage, their insurance may not cover their property loss.

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Can Landlords Enforce a Lease for an Unpermitted Unit?

Most states bar landlords from enforcing lease terms for unlawful rental properties. Renting out an unpermitted rental unit in violation of habitability requirements generally voids the lease agreement.

Depending on state law, landlords cannot enforce rental payments for an illegal dwelling. Similarly, landlords cannot generally withhold a security deposit for an unlawful rental unit. However, the state can force you to relocate if you are living in an illegal unit.

Options for Tenants When the Unit Is Not Permitted

If tenants find out their rental room, basement, garage conversion, or ADU does not have a certificate of occupancy, they have a few options. A tenant’s legal options for renting unpermitted units vary by location. Legal options may include:

• Report the illegal property rental to the state or local housing enforcement
• File a tenant lawsuit to recover back rent and security deposit
• Seek relocation assistance for financial help in finding a new rental property

Another option is just to stay in the property and continue paying rent. Avoid living in a rental that does not meet basic habitability standards. Properties that are not up to code could pose safety risks, including mold exposure, fire hazards, and chemical or pest exposure. However, some renters may find that the risks are worth the low rental costs.

If you knowingly live in an unpermitted property and continue to pay rent, you may lose some of your legal protections. In some jurisdictions, if you know the property isn’t legal, you cannot recover back rent if you later get an eviction notice or the city condemns the property. Talk to an attorney about the risks of renting an unpermitted rental unit or ADU.

Legal Advice for Tenants Living in Illegal Dwellings

A cheap rental may not be worth the risks of living in a property that does not follow local building codes. However, renters should be aware of the risks of living in a place with habitability issues, including health and safety risks. For more information about what you can do if you’re renting an illegal unit, contact a local landlord-tenant attorney for legal advice.