This publication explains what makes an in-law apartment legal. The term “in-law” suite comes from units attached to the main house where parents/in-laws commonly live in. An in-law unit could be on the side or back of the house with a separate entrance on the same property. It is just a converted basement or other space for living.

What makes an in-law apartment legal?

There’s no legal definition for an in-law apartment, and neither is it even a legal term. This term is typically used generically to mean an apartment carved out of a stand-alone dwelling built on an existing home.

Regarding “legal” however, you must do some research to figure out if your in-law unit is legal, or if you can legally lease it to people other than accommodating in-laws. Thus, the legality of an in-law apartment is not by definition but determined by its use and whether or not it conforms to the certificate of occupancy for the property.

That said, it’s legal to have your family member (in-law, sibling, or adult child) live in an additional apartment attached to a house formally designated as a one-family. However, unless your house has been certified as a two-family, it’s illegal to rent it out to another person.

You want to change the certificate of occupancy if you have to legally make money from your in-law apartment. However, changing the occupancy certificate is not a walk-in-the-park process—you may require a variance in zoning and your existing building may not meet your city’s requirements.

Note that a kitchen and bathroom in your building do not make it eligible for your city’s certificate of occupancy.

How to make an in law suite legal

Meanwhile, some key factors you should consider to make your in-law apartment legal include the following:

1. Local zoning laws

Usually, in-law units are not part of the original design of the home, so they are attached to existing parts. Depending on your jurisdiction and dwelling type, your in-law apartment could be considered a multi-family building and is subject to a different property tax assessment.

Regulations vary depending on the city but most local regulations permit in-law apartments if you don’t collect rent. If you rent to a non-family member, make sure to follow your local landlord/tenant regulations.

2. Building permits

Your city’s zoning laws and building codes may restrict building an in-law unit. Thus, find out the limitations first before attaching any accessory dwelling to your existing building.

Only professionals should handle home additions, including residential remodeling. Make sure the home additions are completed following your local building codes, laws, and regulations.

Also, if the work is not done well enough, homeowner’s insurance may not provide coverage. If the work is not permitted, it can be challenging to sell your home later, as well as devalue your property.

3. Electrical supply

Suppose your home uses a 100 amp service; it may not have sufficient energy to handle a mother-in-law apartment attached to the building, especially with appliances such as a dishwasher, refrigerator, stove, rice cooker, and air conditioner.

If you opt for a panel box upgrade, this can increase the cost of your in-law unit by up to a few thousand dollars. Thus, before you add an in-law apartment, have a professional evaluate your home to determine if it requires a new panel box.

4. Vehicle parking space

Your building may require additional parking space when you build an in-law apartment. If you don’t have the space, you need to widen the driveway to accommodate additional vehicles, even though it’s legal to park in front of a neighbor’s house.

Have your contractor estimate the cost of attaching or widening the driveway.

5. Health and physical needs

If your mother-in-law suite is on the upper floor of the building (even on top of the garage), the renter may have difficulties going in and out.

In this case, build an alternative entrance, it could be a residential elevator, to assist the person to enter or exit the apartment during or no emergencies at all.

Building an in-law apartment

In terms of property value, an in-law apartment can be an asset or a liability, depending on the community. Generally, homeowners are eligible for home improvement loans to finance the construction or remodeling of their in-law suite if they’re legal in the city.

Contact a licensed contractor for answers on the construction logistics, including the necessity of utility lines or a separate mailing address.

The zoning rules differ according to state. If in-law units are permitted in your ordinance, make sure to follow the requirements and take note of any restrictions. Verify the following:

• suite size
• design
• in-law unit location on the property

It’s a zoning law violation if there’s no two-family home zoning in your district but you go on to attach an inlaw suite—you’d also have to pay fines and permit requirements for breaking the rules.

Again, it’s a violation if your local zoning regulations prohibit constructing an in-law unit but you go on to do so and receive rent. You’d be subject to fines and penalties, according to the rules.

Nevertheless, you may get an exception in your state often known as a special use permit by petitioning the zoning board, and sometimes with neighbors’ approval.

Alternatively, you can change the scope of your project to a type of in-law apartment whose construction is permitted by the zoning code.

In New Hampshire, for example, the Accessory Dwelling Unit (ADU) law mandates municipalities to allow internal or attached accessory dwelling units in all zoning districts that allow single-family dwellings. This establishes in state law that internal or attached ADUs are not separate use but a part of a single-family.

Renting out an in-law suite

You can make an additional income by renting out your in-law apartment. Just be sure there will be a relatively little intrusion on your privacy. Generally, however, in-law units offer homeowners privacy since they have a separate entrance, which is unlike house hacking a single family apartment.

It’s also easier to find tenants since in-law suits tend to be attractive and do not require having a roommate. An in-law apartment is part of a building and is mostly located in a community of largely single-family homes.

You’d be more flexible as an in-law suite landlord than a manager at an apartment complex. And if your in-law unit is already furnished for guest visits, you can list it as “furnished” for short-term rentals such as Airbnb. Mother in-law apartments have separate entrances and amenities, including bathroom and kitchen, making them also attractive for long-term rentals.

So instead of your in-law unit sitting vacant, turn it into a traditional rental, with long-term monthly leases.

Note that you have the responsibility of maintaining the property, which could mean late-night phone calls about damages. You need to be on the lookout for:

• collecting rent
• setting lease terms
• repairs and emergencies
• security deposits
• pet deposit
• pet rent
• filing property taxes

Meanwhile, here are some late rent excuses you’d be getting from your renters.

The downsides

You should be prepared to welcome someone into your personal space before you rent out that in-law unit. Although your in-law suite has a separate entrance and bathroom, your tenant will still be living on your property, which is still your space.

You need to know the kind of renter you’re approving. Some people are can be noisy, and you don’t want a tenant who plays loud music at night.

Another aspect to consider is pets. If you’re not okay around pets or feel pets may damage your property, then filter out potential tenants with pets. If you’re not comfortable with certain dog breeds, use this guide to tell dog breeds apart.

Parking space can be a problem, so make sure there’s enough space to discourage your renter from parking on your neighbor’s driveway—that can be annoying. Make sure you sort out parking problems (if they own a vehicle) or approve only a tenant without a car.

Renting out an in-law apartment is legally equivalent to renting out your property. As such, you must follow the local municipality laws. For example, if you’re leasing as a short-term rental like Airbnb, you have to:

• collect occupancy taxes
• register guests
• or even obtain an operational license from your local authorities to run Airbnb

The registration requirements and the occupancy tax rate depends on your city, county, and state. You may have to fill a single registration form and remit taxes to a tax agency in some states while other states may have 3-4 different registrations, which include licensing forms with separate city, county, and state agencies.

Some states require a business or rental license to operate while some require just registering and paying the occupancy taxes without obtaining a license. As you can see, it all goes down to your city or state.

Note that renting your in-law suite can impact your homeowner insurance policy, so make sure to contact your insurance agent before listing your attachment.

Renting is a business activity, so the average homeowner’s policy does not cover losses that relate to your rental.

Finally, you may have to evict a tenant at some point, which can be expensive and time-consuming. Just make sure not to do a self-help eviction—it’s illegal and can get you in trouble.