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Simple House Building / October 9, 2019

Before building an accessory dwelling unit on your property, consider these legal, design and financial implications.

Those tiny, often very cute homes that people are adding on their properties seem to be popping up everywhere these days. The tiny buildings can provide extra rental income, offer a less-expensive housing option or provide a home for a relative.

Accessory dwelling units, or ADUs, are second dwelling units created on a lot with an existing house or attached house. They’re often referred to as mother-in-law apartments, granny flats or studio apartments. As a homeowner, what are the legal issues to consider before building an ADU of your own?

Different cities, different rules

First off, different cities have different rules. Before plotting the space for your new tiny house, check with your city’s planning and zoning department to determine what those rules are. You can start online at for a list of regulations by state and city.

Although it’s not always necessary to hire an architect or engineer in the design process, it’s often a good idea, says Lydia Afeman, who is building a home with two micro-apartments on her property in Houston. Involving professionals can help ensure that you’ve covered all your bases on structure safety.

Southern California real estate lawyer Flavia Berys urges homeowners to check local zoning laws and apply for the proper building permits with their local planning department. She also advises them to confirm that their contractor is insured and licensed.

Homeowners should check for building restrictions in their home or property title policy and consult their homeowners association, if applicable.

Portland, OR

Portland is one of the leaders in allowing ADUs. The city has eliminated its rule that the owner of an ADU must live on the same lot, and each structure on a property may now function as a separate unit.

An ADU can be created in a variety of ways, including by converting a portion of an existing house, adding to an existing house, converting an existing garage or constructing an entirely new building.

A building permit is required to build an ADU in Portland, and owners must consider:

  • Design standards
  • Construction standards
  • Water service
  • Sanitary and storm sewer connection

Plans for an ADU must be reviewed for all of the above in addition to fire and structural safety.


In Seattle, ADUs are only legal if they have been established through a permit process. The property owner must live in either the main house or in the attached or detached ADU.

Seattle homeowners are advised to research the city’s building code so that they build ADUs only in a single-family or low-rise zone. City codes limit the size (1, 000 square feet in a single-family structure and 650 square feet in a row house or town house) and placement of ADUs, and off-street parking is required in most areas.


Atlanta’s regulations are less hospitable to adding new structures on an existing property. Properties zoned for residential structures must meet minimum building setback requirements, restricting potential space for ADUs, says Atlanta real estate attorney Chris Pahl.

“Homeowners should also be keenly aware of permissible lot coverage restrictions. This includes the main structure, garages, impervious driveways, swimming pools, patios, decks and parking spaces, ” Pahl says.

The city also requires building permits for construction, electrical, plumbing, heating, ventilation, air conditioning and water, so a unit including any of these features must go through the permit process.


California, meanwhile, amended its second-unit law, also known as the “granny flat law, ” in 2003. The law encourages ADUs by prohibiting local governments from mandating discretionary review of ADU applications, says Kevin Casey, chief executive and founder of New Avenue Homes, an Emeryville, CA, company that has ADU projects throughout the San Francisco area.

A look at the numbers

While cities have been proactive in setting rules and regulations for ADUs, banks have not yet figured out a standard way to finance them. This can pose a problem for homeowners who are not able to finance a new ADU on their own.

Pahl also cautions that problems could arise as a result of an ADU, including landlord-tenant disputes, parking issues and expenses such as hazard insurance premiums.

On the flip side, Casey argues that there is a strong financial benefit in the long run. A survey of his New Avenue clients, soon to be released in partnership with University of California, Berkeley, found that renting out an ADU can ultimately provide close to $1 million in rental revenue for the owner.

“One client built an ADU to move into and ended up renting out the main house to Airbnb users. It’s been quite the payoff, ” he says.


Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.