Los Angeles City Boundary Map, Tan Color is the City of Los Angeles, White areas are separate municipalities (West Hollywood, Beverly Hills, Santa Monica etc) or the county
The risk from the housing department is that they make you pay back the tenant all the rent that you collected, plus pay the tenant a relocation fee. In addition to this risk, you will probably have some legal fees when you get a lawyer involved (~$5,000 for a settlement, ~$20,000 for a trail).
Los Angeles Municipal Code: Chapter XV Rent Control excludes single family homes from Rent Control- however it DOES NOT exclude illegal rental units in Single Family Homes.
Look to the Definitions section in the code for the definition of a rental unit:
SEC. 151.02. DEFINITIONS.
Rental Units. (Amended by Ord. No. 157,385, Eff. 1/24/83.) All dwelling units, efficiency dwelling units, guest rooms, and suites, as defined in Section 12.03 of this Code, and all housing accommodations as defined in Government Code Section 12927, and duplexes and condominiums in the City of Los Angeles, rented or offered for rent for living or dwelling purposes, the land and buildings appurtenant thereto, and all housing services, privileges, furnishings and facilities supplied in connection with the use or occupancy thereof, including garage and parking facilities. (Sentence Amended by Ord. No. 170,445, Eff. 5/6/95, Oper. 7/5/95.) This term shall also include mobile homes, whether rent is paid for the mobile home and the land upon which the mobile home is located, or rent is paid for the land alone. Further, it shall include recreational vehicles, as defined in California Civil Code Section 799.29 if located in a mobile home park or recreational vehicle park, whether rent is paid for the recreational vehicle and the land upon which it is located, or rent is paid for the land alone. (Sentence Amended by Ord. No. 181,744, Eff. 7/15/11.) The term shall not include:
1. Dwellings, one family, except where two or more dwelling units are located on the same lot. This exception shall not apply to duplexes or condominiums. (Amended by Ord. No. 170,445, Eff. 5/6/95, Oper. 7/5/95.)
6. Housing accommodations, located in a structure for which the first Certificate of Occupancy was issued after October 1, 1978, are exempt from provisions of this Chapter. If the property was occupied for residential purposes prior to October 1, 1978 and a Certificate of Occupancy for the subject building was never issued or was not issued until after October 1, 1978, the housing accommodation shall be subject to the provisions of this Chapter if relevant documentation, such as a building permit, establishes that the building was first occupied for residential purposes prior to October 1, 1978. This exception shall not apply to individual mobile home coaches, mobile home parks, individual recreational vehicles or recreational vehicle parks. (Amended by Ord. No. 181,744, Eff. 7/15/11.)
If you are renting a converted Garage you
Sec 151.09 Evictions
“If termination of the tenancy is based on the grounds set forth in Section 151.09
A.11. of this Code, and the subject property has an approved use as a single-family home and the structure containing the single-family home contains two rental units, the landlord shall pay a relocation fee in accordance with Section 151.09
G. of this Code to the tenant(s) of the affected rental unit(s) within 15 days of receiving notice from the tenant(s) of their intention to terminate the tenancy.”
That means that the tenant in your illegal unit has all the protections of rent control the tenant calls LAHD and reports that you are renting to them and its an illegal unit a few things will happen. First, the tenant may start sending the rent directly to LAHD instead of you. This will continue until the tenant leaves- it is important to note that the tenant must still keep paying rent, and this rent will be given to you by LAHD once the tenant has left.
The next big obstacle is if the tenant decides to hire an attorney. You will probably end up having to settle with the tenant for $15,000 – $20,000 to get them out.
Otherwise, under rent control tenants of illegal rent control units are entitled to RELOCATION ASSISTANCE. Legal Reason # 11 for eviction applies to this situation, and relocation assistance is required.
The Tenant is considered Qualified if they are 62 or older, Handicap, or have a minor child under the age of 18. Eligible tenants are everyone else. Relocation is $18,000 for Qualified, and $9,000 for eligible.
As a landlord of an illegal rental unit, you can lower your risk by only renting to eligible tenants, and only rent to people who are close friends that you know very well. It has a lot of risks- so I would recommend avoiding it if possible.
If you need help turning your illegal unit into an ADU try this company:
17940 Ventura Blvd Unit B
Encino, CA 91316
O. (213) 373-4513
C. (818) 923-3664