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January 20, 2025

City on Lookout for Unwarranted Units

Ocean View

A quick heads up: The Planning Department has started a more aggressive program to determine if unauthorized dwelling units (UDUs) are present in residential properties, with the goal of requiring owners to legalize as many as may be technically feasible, as per real estate attorney firm Goldstein Gellman. Indeed, several of my colleagues have reported that their listings have been flagged for UDUs over the past year.

How is Planning doing this? The department is actively reviewing online listings for properties to investigate. It will then count the number of legal dwellings advertised and compare that number to what’s on record for the property. If it turns out things don’t match up, Planning will send a Notice of Enforcement (NOE) requesting a site visit. This will be followed by a Notice of Violation (NOV) if the homeowner doesn’t respond, or if a staffer  sees an illegal unit during a visit.

What happens next is up for grabs. Volunteering to remove the unit may not be the solution it once was before the city started viewing unwarranted units as a great way to boost affordable housing. The city also believes that legalizing units is much less expensive than new construction, and there simply aren’t many new homes available in San Francisco at the moment. However, as per Goldstein Gellman, if a homeowner can prove that the cost to legalize the unit will exceed the cost of actually adding a new unit, the city may not insist on legalization.  One way to prove this is to show that, for example, your ceiling height doesn’t comply with building codes. The cost to excavate would likely be prohibitive.

Failure to comply with Planning regulations can involve penalties of up to $250,000. If you’re aiming to bring a home on the market with an unpermitted unit, discuss your marketing options with your Realtor before you decide how to present the property.

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