The Ins and Outs of Mother-In-Law Dwellings

One of the interesting byproducts from this pandemic has been the re-evaluation by many of their housing situation. Our rethink of space and utility – as well as the intensified affordable housing shortage – has created a growing acceptance of accessory dwelling units, or ADUs.

So, what are ADUs? They are self-contained residences located on the same lot as a traditional single-family home with four minimum-required facilities for living independent of the primary household: cooking area, living space, sleeping area and bathroom. The units can be attached to the main home, to a separate structure or detached:

The terms ADU and DADU (detached accessory dwelling unit) are more commonly used in the Pacific Northwest and a few other parts of the country. You may see or hear a handful of different terms to describe the same thing: casita, mother-in-law, carriage house, granny flat, basement suite, laneway house, backyard cottage and house hack (though that last one has different meanings).

These modest homes provide much-needed housing options in established neighborhoods. If not occupied by family members, the takers of these (usually rented) abodes can be Baby Boomers on a fixed income or who are downsizing while wishing to stay in their community, students just out of university still burdened by school debts or young adults saving for their first home. Amid the pandemic, primary homeowners are converting existing spaces into ADUs or building anew for all types of reasons: to conduct business in a more professional setting, work up a sweat on exercise equipment without distracting others, or provide a more structured learning and play environment for kids. The extra space – which King County-area builders tell me averages 800 sq. ft. – is so welcome for so many reasons.

What’s not to love about them!? Well, there are a few (okay, potentially several) challenges to adding an ADU. Most of them involve financing and red tape. Every municipality has its own restrictions and permitting requirements, but a number of local governments have recently eased their rules, including:

Seattle, notorious for a slow building-permit process (and a reason for many unpermitted accessory dwellings in the city), now offers fast-tracking of 10 preapproved ADU styles – a move that should reduce application fees and save at least 2 weeks’ waiting for a thumbs-up. Since 2019, the city also allows two ADUs of up to 1000 sq. ft. but only one can be detached from the primary residence. Up to 12 residents unrelated to the property owner can now live in a two-ADU arrangement, and there are no longer off-street parking requirements for these units.
Burien, like Seattle, has now removed requirements to have property owners live on-site while also permitting two ADUs (one attached and one detached).
Kenmore recently agreed to have DADUs of up to 1500 sq. ft. and as tall as 35 feet, or 2 stories (if conditions are met), regardless of lot size, but maintained its position of having only one accessory dwelling on-site after city council rejected a 2020 plan for permitting one of each unit on a lot.
Kirkland now permits two units (one of each type) of up to 1200 sq. ft. In its summer 2020 announcement, the city said the move promotes “the creation of these smaller units while enabling greater” use of existing residential lots, “without a significant change in community character.”

Bellevue, however, has yet to roll out a second Welcome Mat; it prohibits DADUs altogether, limits built-in ADUs to 800 sq. ft. and requires the homeowner lives on-site. In fact, owner-occupancy laws also remain on the books in Kent, Redmond, Shoreline and in other locations outside the county. The City of Renton, meantime, forbids ADUs attached to the main residence and requires an additional off-street parking space unless the home is within a quarter-mile of a mass-transit facility. To address Renton’s restrictions, one local architect is moving forward with a short-plat site with DADUs behind every primary residence (below).

Lawmakers in Olympia have been working a few years on this issue with an aim to provide statewide regulations – most notably to ease lot-size requirements and streamline the permitting process – but, so far, the proposals have died in the proposal stage. They did approve in 2020 a rule that removes off-street parking requirements for ADUs located within a quarter-mile of transportation hubs, but it’s my understanding Bellevue and a few other cities are maintaining their own rules that require off-site parking for both the primary and ADU residence regardless of public transit proximity. (As of January 2021, state lawmakers were taking up a proposal to revise a property tax exemption for improvements on single-family homes to only include construction of accessory dwelling units. In addition, the state is proposing DADUs are not included in rural density calculations, a step that should generate more of these dwellings in outlying areas, and there are competing proposals to remove owner-occupancy requirements to build an ADU..)

The biggest misconception of ADUs is cost. A project can run at least $30,000 and easily climb into six figures. DADUs are usually pricier, costing in the neighborhood of $325,000 for a 1000 sq. ft. dwelling, according to local builders and architects who spoke privately, and typical ADU projects run $250-$300/sq. ft.

The price tag is expected to climb in many cases as builders pass-through rising costs. In addition, the timetable for building these homes has slowed as manufacturing centers suffer stoppages and worker shortages during the pandemic and even face setbacks from wildfires that are said to have burned some of the lumber earmarked for construction.

There are many ways to pay for the project, but through a traditional mortgage is not one of them. Homeowners could consider getting a home equity line of credit, reverse mortgage or cash out mortgage refinance to help pay the bill. They could possibly get a construction loan using the future home as collateral or work with the building developer to share in the costs and future rental income. When not seeking assistance from others, owners can use money from savings or retirement accounts (with early withdrawal fees).

In Seattle, homeowners can “condominiumize” the DADU by adding an interior wall to split the structure in half (say, a pair of 500-sq. ft. homes) and then sell them – likely at a nice profit. To make it work, the primary owner should seek the help of a real estate lawyer to ensure the plan is zoned, permitted and sold correctly.

Homeowners, of course, should think of the ADU/DADU idea as an investment. It can generate rental revenue for years to come (if not offered free to family or friends). There is some contention that owners don’t always receive a fair market value when the property is appraised, and ADU experts in King County tell me that’s because appraisers don’t have enough local data on these types of dwellings to make an accurate assessment. That issue should resolve itself as more dwellings are added.

If a rural homeowner is considering adding an ADU (especially a detached unit), there are other factors to consider. Septic systems built for a primary residence may not be able to handle the addition of another bedroom/bathroom. This leads to the question of whether to install a bigger septic system or build one solely for the new dwelling, assuming there is enough land to provide for the system and required drain field. There are also potential issues with providing electric service to another home and having it upgraded can be an unforeseen expense.

Fear not, efforts are underway across the country to reduce both building costs and completion time for ADU consumers.

Node is among a handful of local builders specializing in energy-efficient accessory dwelling units that the company claims is a faster, less expensive method of building a home. Colorado-based Studio Shed, which has experienced explosive growth, also offers prefabricated designs but for sheds that can act as a greenhouse or backyard office.

In the interest of saving time, hire an architect and builder that have worked with each other in the past, or at least share the same ethos and who understand the potential pitfalls of government bureaucracy. Even with Seattle preapproved home designs, for example, there are potential delays during the site-planning phase as well as with delivery of materials from reliable sources. Patience is prudent.

Not interested in a permanent solution? Urbaneer will install a DADU and charge a startup fee, often ranging from $7,500 to $10,000, with the customer paying roughly $2,000 a month to lease the unit for a minimum of 5 years. The company removes the dwelling when it’s no longer needed.

Or how about Wilderwise? The company has an idea for a house on wheels – but first check for feasibility and zoning issues with the local municipality.

As you can see, there is a lot to know about these units as they grow in popularity and the housing landscape evolves.