Legal Questions Answered By Griffin & Murphy, LLP

by Prince Of Petworth March 11, 2010 at 11:30 am 87 Comments

More Monroe Street Rowhouses
Photo by PoPville flickr user Mr. T in DC

Griffin & Murphy, LLP, is a boutique law firm in Washington, D.C. concentrating its practice in real estate law (including development, finance, leasing, zoning and condominium conversions), as well as estate planning and probate, civil litigation, and business law. The attorneys of Griffin & Murphy, LLP are licensed to practice law in the District of Columbia, Maryland and Virginia. Griffin and Murphy, LLP was founded in 1981.

Please send any legal questions relating to real estate, rentals, buildings, renovations or other legal items to princeofpetworth (at) gmail (dot) com, each week one question will be featured. You can find previous questions featured here.


Hi PoP,

We own a rowhouse in Columbia Heights, and rent out our 1BR basement apartment. Our tenants (past and current) have always signed a pretty basic 12 month lease with us, stipulating rent, portion of utilities, pets, etc… we don’t have separate utilities (they pay a portion) but they do have a separate front entrance. We share the laundry room in the basement. We do not have a certificate of occupancy for the basement, because the ceilings are a half foot too low for DC code. A pretty common arrangement in DC I think. My question is about our taxes: last year our rental income from the basement came to just under $12,000, so we reported it as miscellaneous income on our DC return. It is my understanding that income over $12,000 must be reported as a business income, or something else other than misc. I fully expect that in 2010 we will make more than $12,000 from the basement, so how should I report it on my returns? An accountant friend of mine says we should just make sure we keep our income from it under $12K, but we can probably do much better than that (and we really need the cash). He also thinks that if we report it as tenant income, then DC might investigate and see that we don’t have a C of O. Of course, we do not want to cheat on our taxes but at the same time we want to minimize them as much as is legal. Finally, I have heard some people say that we could list it as ‘housemate’ or ‘roommate’ income, rather than as ‘tenant’ and avoid some of the reporting requirements. Do we have any choices aside from capping our income at $12,000 or but to taking a tax hit and risking DC govt getting angry at us?


A landlord

PS: I’m sure that many people will claim I’m an evil gentrifying jerk, but I’ve been here for over ten years and have spent a lot of time, money, and energy not only fixing up our house but also keeping the neighborhood clean and being actively involved in it. And, in the end, it’s our house and I see nothing wrong with renting out some of it to help us make ends meet.


Dear Landlord:

There are probably hundreds if not thousands of unlicensed basement apartments in the District of Columbia. These basement apartments are often referred to as “in-law suites” because there is no Certificate of Occupancy available for the basement apartment and, if the apartment is not code compliant, none can be obtained. Without a valid Certificate of Occupancy, no Housing Business License can be obtained and the rental unit cannot be registered with the Rental Accommodations Commission. This also means that the landlord cannot request an exemption from the rent level limitations imposed by the rent stabilization laws in the District. Continues after the jump.

People who rent out these apartments usually do so out of necessity because they need the income; however, they do so at their peril because what they are doing is illegal. If someone leases an illegal basement apartment, they have to be prepared for the consequences if they are caught. Here are some of the problems such a landlord might face:

1. Rent roll back because the basement apartment is not exempt from rent control.

2. Civil enforcement action by the DC Government seeking to stop the use and penalize the landlord with civil fines.

3. Problems with insurance coverage. Most landlords don’t tell their insurance carrier that their rental unit is not legal. However, if something happens to the unit, or worse, to the occupants of the unit, there may be no insurance coverage.

4. Possible difficulty in using the courts to evict a non-paying tenant because the landlord has no Certificate of Occupancy, no Housing Business License and no Rent Control Exemption Certificate.

If the basement unit is physically connected to the upstairs by an internal staircase, then the landlord might take the position that his tenants are really roommates. However, there is no guaranty that such a position would be upheld, especially if there was a lease describing the basement apartment as a separate rental unit.

Given all of these problems, why would anyone want to rent out an illegal basement apartment? There are several reasons:

1. Economic necessity.

2. Lack of enforcement of the laws pertaining to these apartments.

3. The general need of the community for affordable rental units in good locations.

If a property owner is going to rent an illegal basement apartment, the owner should at least be aware of the possible consequences as well as the obvious benefits.

We are not able to comment on the tax consequences associated with how this income is reported. This is a question best answered by a competent CPA or a tax lawyer.

This response was prepared by Mark G. Griffin and Patrick D. Blake of Griffin & Murphy, LLP. The material contained in this response has been prepared for informational purposes only and should not be relied upon as legal advice or as a substitute for a consultation with a qualified attorney. Nothing in this response should be considered as either creating an attorney-client relationship between the reader and Griffin & Murphy, LLP or as rendering of legal advice for any specific matter.

  • j

    My understanding is the if you are getting rental income from “roommates” you also need a basic business license from the city.

  • Zee

    Let’s play what if. What if all these illegal basement apartments were eliminated? Supply of tenants would go way up and so would the competition for legal rental units. Too bad for people wanting a cheap place to rent, buuuut, is there a chance the cost of buying would go down? I’m guessing many of the people stretching to afford a row house are buying with the expectation that they can supplement their mortgage payment with rent from a downstairs tenant. If they had to forgo that, then the cost of a row house becomes more unreasonable which means fewer buyers, less demand, prices go down. Not a bad scenario.

    Is there some place online to look up whether a potential rental unit has a certificate of occupancy?

  • Beancounter

    Income is income, all of it is reportable. The $12k gross income from rents is a reporting threshold for DC, not the Feds. For DC see Form D-30.

    Done properly, you report the rental income on Sch E of your 1040, allocating based on rental square footage to total square footage, your interest, taxes, insurance and utilities to Sch E to offset the income. This in-turn reduces the amount you would claim on Sch A for your interest and taxes.

    Your accountant friend should consider learning the rules rather than providing poor advise.

    • Beancounter

      Rather than offset income, you are probably reducing it, unless your basement is larger than the rest of your house.

  • Anon

    I rent out a house and have no basic business license. The rules are not enforced and I see no reason to invite DCRA into the house to cause me giant headaches. Given the low percent of landlords who have a business licenses it seems that many people feel the same way. Has any landlord reading this post every gotten fined for NOT having the business license?

    That said, I make sure the house is to code, I use a legal standard DC lease, and my insurance company knows the house is a rental and I have a landlord’s policy on my homeowner’s insurance. I also file the business income on my tax return (it’s over $30,000) and I had to file a special form when it went over $12,000. Because it’s complicated I’ve been having an accountant do my taxes the last couple years.

    Based on what the original poster said, it sounds like you have rental income from housemates and you will be fine reporting it that way (I did that for several years before I moved and started renting the whole house). You can also deduct a portion of your utilities as business expenses and depreciate major home improvements (I depreciated my new furnace and electrical upgrade). I really recommend using an accountant to help figure this all out–you’ll probably save more in taxes than the accountant costs.

    • Be creative

      Depreciations come as deductions, You report income separately and deductions separately.

    • Silver Spring JD

      Another reason not to move to DC. Not only do cheat on your taxes, you also avoid being code compliant. DCRA should enforce a policy that if you have no Certificate of Occupancy, you have no presumption warranty of habitability.

  • Be creative

    You can make the tenenat pay all utilities and reduce the bills paid from the monthly rent – This will make your rental income lower.

    Get the tenant to buy you a VISA gift card or something instead of paying you rent every month. Even if you do it for two months out of twelve, it will offset the $12,000 cap.

    There are many ways to work around this, you just have to be creative, and legally you are not wrong at this. It is no crime to receive a gift card.

    • Beancounter

      How do you feel about corporate tax loopholes?

      • Be creative

        I am an Auditor ^_^

        I see what my clients to every day

        • Beancounter

          Right, corporate tax “loopholes” are legal… what you are advocating is not.

          Do you work with Charlie Rangel?

          • Be creative

            Haha.. no association with that individual, but when the person is not legally allowed to have tenants in that space, what difference a visa gift card would do, that too in the month of the landlord’s bday?

            Lanlord’s Bday – Tenant gives a gift card. Landlord gives a return gift by not charging him rent that month.

    • Nick

      It’s not a gift if the tenant is obligated to give it to the landlord as a condition to renting the apartment. Just because it says “gift” on the card doesn’t make it so.

      Same probably goes for requiring the tenant to pay for the landlord’s portion of utilities. That’s also income, even if it’s in the form of electricity/gas/water/etc.

      Creative? Yes. Hard to detect? Certainly. Legal? Probably not.

    • Actually

      Thats called tax evasion and its illegal.

      • Be creative

        If you are smart about it there are so many ways, to pay less tax or avoid tax in a certain year, and pay it in the next.

        The Land Lord here, could use more income this year 2010, while not going over the 12k limit. Just change the due dates of the rent for each month. Not sure if you are putting this on individual income or you have an LLC that the rent goes into.

        I would even recommend setting up an S-Corp… With a Cash Based accounting method to report the income to offset and carryover the amount to say 2011. And in case your property needs repairs/renovation anything, and you dont make as much rent as you put in for renovation, the difference can be reported as a loss. A loss in an LLC can be carried forward 15 years and back 3 years.

    • Parkwood Person

      Wow- nothing says “I’m doing this illegally, so don’t worry about paying your rent because I won’t be able to evict you” like “pay your rent with a gift card.”

      As a landlord of a basement rental, this just has bad idea written all over it.

  • fomer Georgetowner

    I haven’t had the chance to read this, but here’s what I found when I poked around on the IRS website.


    • fomer Georgetowner

      I’m just skimming this right now. I also have a roommate but I don’t report money from her to be income. I didn’t make her sign a lease and we have no written contract..

      I charge her below market rate. She has free run of the condo. According to this publication, it seems I would actually have a loss. It’s all very confusing.

  • Beancounter

    You take money from her in exchange for her use of the property… leases, rental rates, free-run have no bearing on the reporting requirement, you have income.

    If you depreciate the property, you would shield more of your income from tax, but at the same time reduce your tax basis in the property. The basis reduction wouldn’t impact you until you decide to sell.

  • crin

    These responses so far are unbelievable.

    It’s illegal, but OK if I do it especially since I won’t get caught. People like this probably cheat on their spouses too.

    • True! And they probably kick puppies and start large fires as well! And they also probably claim parking spaces after they dig them out after large snowstorms! This kind of thing is destroying America! These people are clearly traitors to our great nation! Get out the screws, the pillories and the stocks people, for there must be a reckoning!

  • jay

    Also, this didn’t really answer the question about alternatives.

    That said, the apartment I live in definitely is definitely not licensed as a rental unit and I pay way more than $12,000 per year. No idea what MY landlord does on taxes.

  • BBL experience

    OK, this won’t apply to 90% of landlords reading this, but for those of you that have a BBL and an inspected property, care to share the experience? Assuming you have a proper C of O, what was the other half of the DCRA experience like? How long did it take, etc? What I could find online seems to indicate everything from it will be done w/in 2mo (lightspeed for that dept) to the second coming will occur well before you get an inspector to show up

    • Anon

      Yes – I want to know – landlords who have gotten a Basic Business License, how was the process? Torture or not bad? Did they send someone to inspect the property? If so, what where they looking for in the inspection? Thanks!

      • briefly

        I am in the midst of it now and it sucks, everything bad you’ve ever heard is true. I am contemplating using this guy:


        I think he charges about $200 over what the license itself costs ($300 or so total I think) but he’s got connections and knows how to work the process and, most importantly, has patience to deal with DCRA. I remember someone saying DC is the 51st worst place in America to do business and my experiences with DCRA over the last two weeks indicate this is true. I got started the day I read this article:


        Not a good omen…

        • Parkwood Person

          Oh my goodness- if someone will get you a CofO for $300 DO IT.

          I went through this process in 2007 and it was an enormous pain. I say that relative to everything else in DC. It’s kind of like dealing with Comcast plus a trip to the DMV to register an out of state vehicle and get a driver’s license. Is it possible? Yes (assuming the basic structure of the building meets the codes). Did I eventually do it? Yes. Will you have to spend many business hours at DCRA waiting for your number to be called? Yep. Yes, it is worth it? I think so.

          In terms of the inspection, it was pretty basic- the bedroom had to have a door and a window (or second emergency exit point), had to have running water, smoke detectors, safe electrical (you can’t power the thing with an extension cord from the upstairs unit…), hand rails on the stairs etc. You know- just the basic things for a safe and habitable dwelling. Scheduling and being home for all of the inspections was a pain though- at the time, the process was not good, there were scheduling problems(no-shows). It’s not just one inspection- there were 3 or 4, all inspecting different aspects of the unit (plumbing, electrical, structure etc). The actual inspectors were all easy to deal with. It’s just the process management (or lack of) that was difficult. Perhaps it has improved by now?

    • Districtvs

      I didn’t realize I was in the minority as a landlord with a BBL. We rent out my wife’s condo, and she got a BBL as a sole proprietor. The process was on par with other dealings with the city government. I’d give yourself a good 3 to 4 hours to go through the licensing process. We were contacted a week after applying for the license by an inspector and had our business license two weeks after the inspection (about 4 weeks from start to finish). Also, the inspector’s office was extremely helpful in answering questions when I called. This link: http://dcra.dc.gov/dcra/cwp/view,A,1411,Q,641889.asp has all the information you’ll really need. Here’s my advice to make the process go smoothly:
      -make sure you meet all of the requirements on the inspection checklist
      -meet the inspector personally at your place and walk them through all of the things they are inspecting for (they went right off the list that is available on the website)
      Overall – a good experience.

      • briefly

        Districtvs, did you do the OTR Registration application (Form FR500)? If so, how long did it take you to get approved? I think I am having the opposite experience as you…

        • Districtvs

          I did the FR500, but I can’t remember if I did it online or in person on the same day I applied for the BBL. Either way, I was never waiting to receive anything in the mail.

      • DCer

        Thanks for sharing your experience with the inspection. I ended up not having to have an inspection because I was able to transfer the old COO over but I wondered about that list and whether they would keep to that list or add other things that I hadn’t anticipated.

        • Same Boat

          The C of O is not tied to the inspection. My understanding of the process is that it’s two part. First is the C of O which is done in conjunction w/ construction, or if you bought a place that already has one you can get a new one issued in your name. Second is the business license and rental inspection, you need the C of O prior to this step.

          If you have a two unit w/o a C of O, there’s a good chance all sorts of unpermitted work was done. Whomever did the construction did not get plans approved, if you want a C of O, good luck

    • I JUST got my BBL and it was a headache, but now it’s done. I was unwilling to be on the wrong side of the law tho I know people do it all of the time with no repercussions. I don’t want to take a chance of being in a pickle if somebody doesn’t pay me my rent. I do not play with my paper.

      Captcha: The addition

  • dcdude

    Honestly, what are the chances that the DC Office of Tax and Revenue will bother to look into whether the rental property is even located in DC, and if so, whether it has a CO and a business license, and then bother to report it to DCRA and THEN, that DCRA would actually bother to follow up? Next to zero, I would imagine.

    • briefly

      The more important issue is not DCRA and their fines, but rather if you have problems with your tenant then if you don’t have your license you are not a landlord and thus have zero rights in landlord / tenant court. Further, if you want to use a licensed property manager (as I do, will be overseas), then you MUST have a license. Lastly, using a manager means you must accept Section 8 vouchers, and thus you also want a license if they turn out to be ferals who get dropped by section 8 and you need to evict them. Problematic to get the license of course but less risk in many situations.

    • Parkwood Person

      Oh- I have found that the DC office of Tax and Revenue never misses an opportunity to look for money, even when none exist (ie, you pay your taxes on time, have a canceled check to prove it, but 6 months later get a bill for your taxes along with interest and stiff penalties for failure to pay…) I feel like they either work on commission, or just figure that a certain percentage of people will just send a check for whatever the bill says?

  • Charlie Rangel

    I was Chairman of the House Ways & Means Committee, until recently having to resign chairmanship for not reporting rental income, but I help write the rules and am an elected official, so the public holds me to a slightly higher standard than you peasants.

    According to Joe Biden, the OP lacks patriotism for there inability to pay taxes.

  • Anonymous

    *sarcasm* What do you mean, the two offices do a great job of collaborating. Look at how well they ensure an accurate, up to date vacant property list. It was so effective that the vacant tax was no longer necessary */sarcasm*

  • The reason a license exists in the first place is to ensure that the property is inspected and meet codes – especially fire safety codes. Rental licenses are not a major money maker for the city, but are extremely important for the safety of your tenants. And we are aggressively going after illegal rentals. Today alone, we investigated 90 suspected illegal rentals. Over the past few months, we have discovered illegal rentals with major gas leaks that could have cause a major explosion in the tenant’s unit AND the landlords home. We also discovered two units filled with Carbon Monoxide from leaky water heaters. So while avoiding DCRA investigators might be an incentive, you could be putting your tenant and yourself in danger. These are real issues. We are also reaching out to tenants to report landlords who are unlicensed through our http://thisshouldbeillegal.com and our Proactive Inspections program http://bit.ly/weySt . People want to know they’re safe and they can look you up right now: http://dcra.dc.gov/dcra/cwp/view,A,3,Q,641385.asp

    So if you plan to continue to rent illegally – the C of O, license and inspection is just $280 total and good for two years which is not much when you’ll make 25K for rental – we strongly suggest you get an independent inspection.

    And people with safe units are getting their licenses in 30-45 days. For people with unsafe units, why would you want to put people in there anyway? While I’m sure you need extra cash, at least be safe and protect your tenants and yourself.

    – Mike Rupert, DCRA

    And P.S. @Anonymous re: vacant property – Not sure you have accurate information.

    • ng

      Mike while we have you here, I have a question. I bought a 3 unit house with CofO. I was able to transfer the CofO to my name. When I was ready to rent the units I went and filled out bunch of papers at the North Capital building. Few weeks/month or so later I finally received my business license. I think I paid like $391 during the application process plus some more for getting a copy of the new CofO. I now have CofO and BBL in my possession; however, I am not sure if that is all. Is there a certificate for rent control? I never went to another building in relation to this permit process since the person at the north capital who gave me the license said I have everything I needed. Please confirm.

      • @ng You need to file with the DHCD’s Rental Accommodations Division for rent control. The information and forms are here: http://dcra.dc.gov/dcra/cwp/view,A,1411,Q,641875.asp
        We don’t issues licenses without this so it is possible the building was already registered or was an oversight. And based on the fee, it appears that might be the case.

        @Anon (below) We want people to come into voluntary compliance. It’s easier for everyone involved. We’re not going to punish you for doing the right thing. I have personally helped a ton of student housing landlords through this process with this exact same concern.

        If anyone has questions or a unique situation, email me at michael.rupert(at)dc.gov or tweet us at @dcra.

        • Anon

          So to clarify, there is not a fine just for having rented already without a BBL? What about the tenants – it wouldn’t jeopardize them by making them move out? (assuming all is safe with the home). What would happen if you did find housing violations? Assuming issues are minor and not dangerous, what happens – do you get a fine or are you just required to fix it before you get the BBL?

        • ng

          “We don’t issues licenses without this so it is possible the building was already registered or was an oversight. And based on the fee, it appears that might be the case”

          I looked at that page, well, based on that the fees I paid seems to include payment for ROA.

          3 unit (license fee 167 + app fee 70 + endorsement 25 + ROA fee for 3 units 43 + 43 + 43 ) is $391. What am I missing? also how do I check if I am registered or not?

        • DCer

          “@Anon (below) We want people to come into voluntary compliance. It’s easier for everyone involved. We’re not going to punish you for doing the right thing. I have personally helped a ton of student housing landlords through this process with this exact same concern.”

          This is good to hear. As I noted below, I avoided dealing with you folks out of fear of an imagined nightmare scenario but I would much rather be in compliance!

        • Anonymous

          I rent a basement apartment. I know there is no way this place could possibly be up to code or legal. I moved to DC in January from California and have no family here and needed a reasonably priced place to live. My living room has no electricity (I run huge orange cord from bedroom to power tv etc) and ther is a large rectangular whole cut into the wall revealing the pipe that needs to be fixed.

          My landlord has been promising to fix these issues since I moved in. I have been looking for other places to live but haven’t found anything comparable in price size or accessibilit. While I want to report her because I think it’s unfair the conditions she has me in (I’m a 26 yo female) but I need somewhere to live. But living in a fire hazard is unacceptable. I don’t kno what to do.

    • Anon

      So what is the incentive for someone who is already renting out a property without a BBL to get one? If you are already a landlord and don’t have a license will you be fined if you try to get one now? If that’s the case I imagine you don’t have many landlords coming forward.

    • not buying it

      But for people with safe units, as most of us provide since we have the mental capacity to read & understand the regulations, a wait of 35-40 days means a loss of $1000-$2000 of income, which is in effect, a TAX of $1-2000. Why not just charge us $500.00 tax and get it done in 3-5 days?

      I have a legal rental with a C of O – I’m speaking from experience. DC govt. failure to show up for inspection appointments caused me a delay of 6 weeks, and loss of $2000.00

      • Anonymous

        That level of uncertainty is unacceptable. I’m sure that Douglas and the larger developers get the special same day turnaround. I’m glad I don’t rent in DC. I have a place rented out in Greenbelt, their whole licensing process was well under a month from start to finish.

        Nice to know that you can’t even start advertising a move-in day since it may be up to two months before you MAY have a permit. No wonder why nobody does it.

        • I would imagine that most people, and developers such as Douglas, begin the permit process long before the unit is ready to be occupied. It’s not like they build a place and one day go, “ok. We’re done. Do we need a license or something?”

  • j

    I have a C of O that was in place when I bought the house and so an inspection was not necessary. It was grandfathered in (not sure if that is the correct term?). It was fairly easy — one visit to DCRA and some paperwork — to get all of this in my name and apply for the Basic Business License. I think it was a $75 fee. So far so good, and I feel good doing everything honestly and keeping my tenants safe.

    To be sure, if I did not have everything done legally I would constantly be worrying about a fire or something bad happening to the tenant or house.

    Two cents.

  • Anonymous

    DC’s is crazy sometimes. Row houses all over the city have basement apartments. These basement apartments provide affordable housing for students, young NGO workers, and the other low-paid people out there. It lets them live in the city, in the neighborhoods.

    Here in Columbia Heights (where there is tons of absolutely disgustingly maintained section 8 housing) I hear no end of bitching about the “lack of affordable housing” and yet, getting a C of O on even a fairly nice basement apartment is impossible (see e.g. the above GDON post with the “in-law suite” its an inlaw suite b/c they can’t get a C or O). The rules create the very problems we are trying to solve with other solutions.

    And, yes Virginia, they do enforce those laws and the do investigate the apartments if you report the income. It has happened to more than one friend of mine and is why we do not rent our basement apartment.

    DCRA clearly does not inspect all the section 8 stuff for habitability. But, if some “gentrifying” homeowner tries to help cover the mortgage by renting out a basement with ceilings that are too low, they are on top of that.

    • A Certificate of Occupancy represents a determination that particular premises can be occupied safely. I am sure that there are plenty of basement apartments that look “fairly nice” on the surface but have all kinds of health and safety code violations. You may not think that the low ceiling in your basement is a big deal (hey, you’re not living in it so why should you care?) but if your tenant accidentally pokes a hole in the ceiling and bursts a pipe or a gasline, then it will become a big deal. If landlords think that some of the requirements for a C of O are too onerous, they should lobby to change them. But it’s not right to blame the rules for your decision to ignore them.
      The bottom line is that you can take a chance on renting out an apartment illegally but if something goes wrong, you are probably completely screwed.

  • “And, in the end, it’s our house and I see nothing wrong with renting out some of it to help us make ends meet.”

    –Actually, what’s wrong with it is that what you are doing is illegal. You have no C of O and you admit that you can’t even get one at this point because your ceiling is too low. Instead of looking for legal cover and ways to mask your income, you should just keep doing what you are doing and pray that nothing goes wrong, recognizing that if something does go wrong in the apartment and someone is injured, you will be screwed because the apartment is illegal.

  • DCer

    Just want to add that,as someone noted above, if you buy a house with an apartment with a legal Certificate of Occupancy, you can transfer it over without an inspection and apparently you have 10 years to do that. The former owner of the house we bought said he had a COO somewhere and he would send it to us. He never did. When I realized later the importance of a COO in making a rental legal, I was afraid to pursue it because I was afraid the former owner was lying. I was so scared of DCRA that I didn’t even want to call them to find out. I thought they’d come after me just based on a phone call.

    When I finally got the nerve to call, they were very pleasant and they found the record of the old COO. Since it had been years since we bought the house I assumed we would have to go through an inspection but the folks at the DCRA told me that as long as I transferred it over within 10 years I was okay.

    I’ve now filed back D-30s and am in the process of getting the Basic Business License. This is what I’ve always wanted to do (I’d much rather be legal and do what is right — and I did report the rental income on my income taxes. I just didn’t know about the D-30) but frankly DCRA has such a scary reputation, I was even afraid to call them on the phone. DCRA has made improvements — the people in the office were nice and their Twitter guy (who I think has posted on this blog) is really wonderful to deal with — but they should do more to educate homeowners *before* they buy the home with that basement apartment. If I had known about all these requirements I would have taken care of everything immediately rather than procrastinate for years out of fear.

    Yes, I know — it’s my responsibility to know the laws before I buy but the reality is that there are a lot of people out there like me. Let’s educate them before they buy the house planning to rent out the basement.

    • Anonymous

      Was your apartment currently rented while you were getting the BBL? If so, what’s the fine going to look like?

  • DCer,
    Thanks for your comments. And we will certainly add some additional language to our website.

    You are absolutely right. When you are considering buying a house with a basement apartment, absolutely insist you get a copy of the C of O for unit before closing. A lot of people have come in and said they were promised the basement was legal (“had been rented out for years”)and bought the house based on anticipated income. And the basement ceiling was 5′ 8″ inches in areas where the HVAC wasn’t jutting down. Thanks again for your comments.

    • Oh C of O?

      I built in my basement apt. 4 years ago, legal to code, and I know we got a C of O – but should I have a piece of paper here in my files? Can I find out somewhere online if it is registered? I’m not great with paperwork. I know someone from DCRA or property tax called me – (and raised my taxes) – and my insurance covers it – but how do I really know it is in order?

  • Anonymous

    What happens to a landlord if they’re caught with out a certificate of occupancy? Does the tenant have to leave?

    Say there are problems in an apartment due to cheap workmanship like small holes in the wall next to plumbing or exposed pipes in a utility closet. If the landlord doesn’t want to fix it and definitely has no certificate of anything, is it worth threatening them with DCRA?

    • Anonymous

      Curious, the rent must be attractive enough for you to move into this situation, now you want to threaten? Sad Sad.
      Just to echo what someone further up, said, suppose DCRA enforces everything then a huge percentage of basement dwelling could be a thing of the past since the cost associated with making a unit legal ( for example ceiling height) is great. The former basement dwellers will be forced to compete out on the apartment market with everyone else. More demand means expensive. What to do, what to do…
      Will you have small hole in your apartment building unit next to plumbing, no, would you be paying tons for your apartment living, sure.

      • Anonymous

        continued… I don’t mean YOU in particular… just saying

      • @Anonymous(s) The vast majority of basement apartments in DC already have C of Os – especially those with entries in the front. It’s the converted basements where you either enter through the back or through the main entry door then head down that we find out of compliance more often.

        • Anonymous

          I have front and back entrance for my basement as well as stairs inside to go up and down. House was renovated so electrical and plumbing all is up to date, but it is all one electric, gas, water, etc. ceiling height is like 6.7 most parts except where a duct crosses the house and that is 6’. What does it take to make this legal unit with CofO ?

          • anon

            Agreed. I am in the same situation. Everything is up to code, except ceiling height is about 2 or 3 inches too low. The cost of excavating would be huge. Shouldn’t the DCRA standards take into consideration the height that most english basement already are? If the height was to code, I would definitely get a COO.

        • Anonymous

          Since a good deal of these have C of O’s, would it be possible for DCRA to put out a, so you want to get legal type of guide. Also, a lot of owners probably think a C of O is all they need. Is it? From the comments, it looks like a lot of people are confused.

          I think the stories like the one mentioned in the Wash PO (1yr and 3 days for an inspection, from this year) make a lot of people think it’s not worth it.

          • @Anonymous What the Post story didn’t highlight – but did mention near the end – was that DCRA issued more than 1,100 rental licenses (not including renewals) last year with an average turn around time of 40 days. While focusing on one case makes good news, it doesn’t reflect the true performance of the agency.

            We do have a complete page on two family rentals with all the information you need here: http://dcra.dc.gov/dcra/cwp/view,A,1411,Q,641896.asp and as I mentioned before, we post rental information at our blog: http://thisshouldbeillegal.com which focuses on a lot of these issues and comes up on the first page of a Google search for most key words. With this and our website, the information is very easy to find.

            To rent an English Basement, you need a C of O and a two-family rental business license.

            And anyone who has questions, concerns can email me at michael.rupert(at)dc.gov anytime or tweet us @dcra and we can walk them right through the process. It’s an easy process Three people emailed me today that were involved in this discussion today.

      • Zee

        Well, as I posited above, the cost of buying might go down. I can deal with that.

        Bring the basement apartment not up to DCRA code day of reckoning!

        • Oh C of O?

          Think for a minute. If the cost of buying went down 75% people still need rental apts. It would still not be a viable option for thousands of people who move here for new/temp jobs, or school or internships or to check out the city. Where in the world do 20 somethings leave home and go buy a house? Maybe a yurt in Mongolia. . .

  • Debbie

    This issue has come up recently when a couple of friends moved in with me (not in basement, just available bedrooms)temporarily because they are between houses at the moment. They wanted to pay me something to cover the costs of utilities, supplies, etc. So it’s not much. But one of them asked me if I was reporting it as income on taxes. So it made me wonder if I should register, get COO, etc., even though I hadn’t expected them to stay with me more than 6 months. (Apparently they really are liking this arrangement!) On the plus side, I think I could deduct many of the renovations/repairs I’m making on my house from income taxes (like I do for my rental property). On the negative, there is still the unanswered question of facing a fine if DC finds out I already have people living in my house without registering, etc. Also, since my house was inspected when I bought it in ’08, I don’t think I’ll have any problem getting a COO. But if I do, does that mean my two friends will have to move out?

  • happyrenter

    A HUD lawyer friend of me told that if you’re renting an illegal apartment, the landlord doesn’t really have a leg to stand on. You can move out (or not move out) without giving any notice, refuse rent increases, etc. Your landlord is also at your mercy if there are code violations & you decide to report them.
    Then again, if your rent is really cheap & your living situation is to your satisfaction, then why screw up the arrangement?

  • I tried using the DCRA web site to search for my landlord. Unfortunately, the way that form is set up makes it very difficult to find someone, especially if you aren’t exactly sure how the property is classified. Also, once you do get results back, the page display is screwed up in Chrome, resulting in the table overlapping the left sidebar. This happened because you specified a style on the table’s parent div to be 100px wide and then plopped an obviously larger table inside of it set to align=right. At least remove the align=right (which makes no sense there anyway) and it’ll go back where it belongs.

    • Anonymous

      where do you do that? I was able to search for business license. Is that what you mean?

  • dcdude

    If DCRA is really interested in getting illegal landlords to come forward, they should offer an amnesty period that says “We won’t fine you for having an illegal rental, and we won’t force you to kick your current tenants out while you get your paperwork in order.” I imagine that would take a lot of the fear out of coming forward and would increase compliance greatly.

    • @DCDude If you come in to get your license we will not fine you. As I stated earlier our goal is voluntary compliance and these relatively inexpensive license are not huge revenue producers. The goal is to make sure the apartments are safe. The minimum height is 6′ 8″ and the checklist inspectors actually use is posted online here: http://dcra.dc.gov/dcra/cwp/view,a,1343,q,644171.asp
      Again, these rules aren’t just arbitrary rules establish for DC, they follow the International Property Maintenance which is followed across the country and across the world.

  • Oh C of O?

    At the risk of getting all Ayn Randy here, I believe Govt. (even the sadly incompetent) is an essential institution to regulate scofflaws and evil doers but they ought to just leave most of us alone.

    I just went to the DCRA web site to try and check on my C of O status but was reluctant to even enter my address at the risk of raising a red flag.

    NOT because I have an illegal apt. it is totally (overly) compliant and perfect in every way – just because after 27 years of living and dealing with DC gov. (in every possible capacity) I simply don’t trust them to be competent and know from experience how damaging and obstructionist they can be.

  • Accountant

    @Beancounter – you seem like an honest, ethical accountant – is your firm hiring?

    @ Be creative – you are a disgrace to the auditing profession. Income is income. Remember the concept of substance over form? Being technically not-illegal does not make something right.

  • I want to expand on my earlier statement: I got my BBL (or, rather, I passed inspection last week, am waiting on the actual license) after three inspections between October and March and having to go downtown twice. All the issues were legit, it was just irritating to keep getting the big “NO” from the inspectors when IMO my house was fine. The biggest thing was getting some electrical work done — had to add outlets in the bathrooms and hardwired fire alarms. That was expensive, but it’s done now. Everyone I dealt with was helpful, pleasant and even sympathetic when I didn’t pass the first two times.

    Thankfully I finally passed and am compliant as I don’t want anything to happen to someone living in my property because I wasn’t willing to be inconvenienced.

    On another note, PoP, I think this legal questions feature is a good public service. Thanks.

    • Also, scheduling the inspections was simple and didn’t take long. I called on a Friday they were there by Wednesday. The process does not have to take a long time at all.

  • NotARube

    IT COSTS MORE MONEY TO BE AN ILLEGAL LANDLORD. As a legal landlord, I can charge the highest market rates in my neighborhood, while the illegal landlords are currently 30% to 40% less. If we were all legal, we’d all make more money.

    Also, if you don’t have a C of O, a judge can rule that you must reimburse the tenant all the rent they’ve paid. Is it worth risking $25,000 to $50,000 — or more — just to avoid the hassle of dealing with the DCRA? If a tenant stops paying rent, you have no standing in court — none.

    I mean, your only recourse would be “street justice”. And for that, you’d need some loyal henchmen. ;)


  • Just how many basement apartment rental units are there in DC, anyway? I’ve never seen an estimate.

  • Charles Rangel

    Anyone who doesn’t cheat on their rental prop taxes is an idiot.

  • Better but not Fixed

    The real problem is the inspection process.

    I’ve gone through the BBL several times, including for individual condos I own in a huge building.

    No one else in the building bothered to get a BBL, and to date they haven’t faced any sort of action from DCRA (to my knowledge).

    My problem wasn’t the paperwork, although there is room for improvement on that. But it is FAR better than the process would have been in years past.

    My problem is the inspectors.

    Simply put, many have no idea what they are talking about.

    I had several great inspectors. They knew what to look for, and were efficient and professional.

    But for a variety of reasons I had to have several places inspected more than once.

    Each inspector had totally different ideas of what was legal and what wasn’t.

    The issues were things like hardwired smoke detectors (which I had, but the inspectors couldn’t agree on if their placement was at proper heights or not), means of egress (locking mechanisms on security doors), and the like.

    They also seemed infinitely confused on having HVAC equipment in the apartment itself.

    A lot of basement units and individual condos have HVAC equipment in the apartment.

    Yet one inspector told me flat out this was against code.

    It is not.

    One actually told me you couldn’t have water heaters in the apartment, but that he would ‘let it go this time’. He backed down after I asked him where exactly he thought water heaters in every single property on the block we were in were housed, as I didn’t see a single one standing out in the backyard.

    Several inspectors were great – very friendly, very efficient, and I agreed with their findings even though on two occasions it meant I had to do additional work before I could get the license.

    But several inspectors were terrible.

    They showed up late, they blamed me for a lack of parking in the area, and one actually insinuated very strongly that I was the wrong color and socio-economic group.

    The context was the number of condos in the area being renovated. He told me pretty clearly that he thought the improvements were driving black people out of the area, and that people like me were responsible because we were all greedy.

    How exactly are you supposed to respond to something like that from someone that is supposed to be licensing your business?

    I got the very strong feeling that he used his licensing capabilities as some sort of one-man war on ‘gentrification’.

    He did eventually pass me, but only after I was extremely patient and subservient to him, explaining that the deficiencies he cited were simply not against code, pointing out that I had made modifications already EXACTLY how a previous inspector had told me, and pointing out an identical unit of mine at the same location that his coworker had passed two weeks earlier.

    Should I have reported him to DCRA? Yes.

    Did I? Hell no.

    I need my rental income too much to do something stupid like stand up for basic competency and impartiality from DC employees.

    When you get such uneven results in inspections the whole thing seems designed mostly just to make you pay an additional license fee to the city indefinitely. Actual safety or consistent enforcement of standards seems to be the ‘on paper’ goal only.

    So, in summary, it’s a crapshoot. You may get a very good inspector, or you may not.

  • Architect

    As a DC licenced architect, I would be willing to examine anyone’s apartment, note any deficiencies and point out your options for moving forward legally. The codes can in fact be confusing but the principles are mostly straight forward.

    Please feel free to contact me at bowie (at) wingatehughes (dot) com

  • Steve

    DCRA is not run well. I tried to get my housing inspected in order to rent it legally. I filled out the basic business license and paperwork. Waited for an inspection…no show on the day they said they would come. Called DCRA again and nobody returned my calls more than 3 times. Why even bother when DCRA inspectors don’t show up as planned and never return your calls? They should track every request with a specific tracking id.

  • Anonymous

    ‘Better but not Fixed’ hit the nail on the head…the weak link in the DCRA chain is the inspectors. There’s no telling if you will get a good, bad or flat out confrontational inspector, if they show up at all. To make matters worse, my unit (a rowhouse, not a basement) is in the HCVP Program(Section 8) so we go through this every year. The “Checklist” is not worth the paper it is printed on because the inspector can always interpret items the way they see fit.

  • Ryan

    I called the Office of the Tenant Advocate recently to complain about some of my landlord’s shenanigans and was THRILLED to learn that my landlord: a) does not have a basic business license b) has never had the house I live in inspected and… best of all… c) claiming a homestead exemption on his house that I have lived in for a year while he is living out of the country.

    This is wonderful news… if I ever have to move out early, get him to pay for something, whatever, I can just throw this stuff in his face. I doubt my lease is even a binding legal document at this point.

  • stephen85281

    Can someone who owns a house just claim they’re renting a room? If the room they’re renting happens to be a basement, what difference will that make?

  • Elle

    I would like to know if I have any recourse against a rental agent. I was told I was approved for a house. We set up a day to sign the lease and give the deposit. The agent called back and said the owner of the home changed their mind and wanted to go with another applicant. Is that legal? Can I get my application fee back since I was approved and they decided not to rent it to me after they said they would?


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