What happens to a lease agreement after filing for bankruptcy? Does it automatically terminate or must the obligations in the agreement be upheld?

Accessory Dwelling Units (ADUs)

Accessory Dwelling Units (ADUs) are smaller residences such as back houses, in-law units, or granny flats which can be built on existing property. By definition, an ADU is a residence that has its own entrance, a kitchen, and at least one bathroom. These smaller residences can be built by homeowners and used as an additional source of income and are a cheaper living option for renters. State policies and local rules govern the specific requirements for constructing ADUs.

In California, homeowners in single-family neighborhoods are permitted to build ADUs on their property. However, the ADU must be at least 10 feet from the main residence and 5 feet away from the property line. Although local governments can impose additional setback requirements, cities absolutely may not require parking for any ADUs that are within half a mile of a major public transit stop – meaning homeowners do not need to find the means to provide an additional parking spot for the unit.

It is also unnecessary to build an entirely new structure. ADUs may be established from existing structures, such as from garages or even portions of the main residence. Under California law, an ADU that is attached to the main house may only be the smaller of either 1,200 square feet or half the size of the existing residence, while detached units may not be larger than 1,200 square feet. Los Angeles specifically limits the size of ADUs to the larger of either 640 square feet or half of the square footage of the main house up to 1,200 square feet.

The median cost of construction of an ADU is $86,500. If a homeowner is interested in building an ADU, their local department of building and safety must approve the plan (e.g., the LADBS in the City of Los Angeles). After construction is complete but before the ADU may be rented out the homeowner must obtain a certificate of occupancy. This requires the unit to be inspected and the utilities to be in working order.

Single-family homes are exempt from rent control requirements in Los Angeles but building an ADU on a property built before October 1978 may make the property subject to such requirements under LA’s Rental Stabilization Ordinance (LARSO). With the addition, the property can no longer be categorized as a single-family home.

ADUs are one potential solution to the housing crisis. They provide additional income to homeowners and a cheap(er) living option for renters. Cities in California may modify state regulations, so it’s important to verify the specific requirements in your city.

Authors: Kristina Iliopoulos and Brandon Anand