Was the single-family home you’re considering buying previously a multi-unit building converted without permits? If so, you could be stepping into a property with serious ownership risks.
Single-family homes in San Francisco are typically more valuable because they appeal to a broader pool of buyers—people who want a straightforward home without tenants or the responsibility of managing multiple units. So it stands to reason that there might be more than a few multi-unit building owners who’d love to turn their property into a house.
But the city rarely approves this type of change because it will reduce the number of housing units available. If an owner is somehow allowed to undertake this renovation, he or she will need the proper permits.
Your home-buying due diligence should begin with the building permit history (called the 3R), which is included in the disclosure package. The 3R is a key document in determining exactly what you’re buying. Item 1A lists the building’s “present authorized occupancy or use.” For a house, you should see “one-family dwelling.” If it instead says, for example, “four-unit dwelling,” that’s a red flag.
If the authorized use doesn’t match the current configuration, you run the risk of a neighbor or member of the public filing a complaint alleging that the property was improperly converted. The city would then investigate and likely request access to inspect the property. If the physical layout doesn’t correspond to the authorized occupancy, you could be required to restore the building to its original multi-unit configuration.
There are, of course, nuances to every situation, and outcomes can vary. But do you really want to be the one navigating a city investigation and potentially facing significant costs to undo renovations after you’ve already closed?
Pro tip: Review the 3R carefully, along with the tax records, and make sure you fully understand the risks before purchasing a property with unpermitted changes. A little diligence upfront can help you avoid a major and expensive headache later.