The Laws of Renting Out Separate Dwellings on Your Property

If you’re looking to create a separate dwelling unit in your home, do it the legal way.

If you want to create a separate dwelling unit on your property, you might be tempted to avoid red tape and do it illegally. No harm, no foul, right? Maybe not.

Most municipalities set rules about apartments in single-family homes to preserve neighborhood character and to ensure the safety of tenants. If your home is in a neighborhood zoned for single-family dwellings, you may have to obtain a special exception from the local board of appeals. Typically, you must get a permit for the construction, meet building-code requirements for such things as headroom and a separate exit in a basement, have adequate off-street parking, pass inspections, and purchase a residential-housing rental license (for example, $38 in Montgomery County, Md.), which you must renew annually.

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Patricia Mertz Esswein
Contributing Writer, Kiplinger's Personal Finance
Esswein joined Kiplinger in May 1984 as director of special publications and managing editor of Kiplinger Books. In 2004, she began covering real estate for Kiplinger's Personal Finance, writing about the housing market, buying and selling a home, getting a mortgage, and home improvement. Prior to joining Kiplinger, Esswein wrote and edited for Empire Sports, a monthly magazine covering sports and recreation in upstate New York. She holds a BA degree from Gustavus Adolphus College, in St. Peter, Minn., and an MA in magazine journalism from the S.I. Newhouse School at Syracuse University.