What Is The Fine For Renting An Illegal Basement?

Gideon Zielinski
by Gideon Zielinski

Renting out a basement is complicated. The first step is to make sure your basement is legal for occupancy. If your basement does not meet living standards, and you decide to rent it out anyway, you could face serious legal ramifications. Though basement apartments seem like a convenient situation for landlords and renters, the reality is that many issues can arise if you handle the situation carelessly.

The fines for renting out an illegal basement can range from $500 to $15,000. However, you could pay even more than $15,000 if the tenant can prove their health was negatively affected by the living situation. The amount varies significantly based on location and how strict your city is about unlawful apartments.

Not all basement apartments are illegal. However, if they are unlawful, problems will arise. Learn more about the penalties for renting an illegal basement in the next section.

Penalties for Renting an Illegal Basement

The penalty for renting an illegal basement can range from a fine to jail time for harming a tenant. When you rent out an unlawful apartment or basement, you’re carrying all the risk on your shoulders. Most insurance companies aren’t going to cover damages incurred to a home by an illegal apartment.

Here are three aspects of risk to consider:

  • Fines for building code violations 
  • Penalties for harm to tenants
  • Loss of insurance coverage 

Each of these issues can be equally detrimental.

Fine for Basement Apartment Code Violations

Officials may find out you’re renting an illegal basement through an inspection. Sometimes, the tenant can ask for an inspection. And in some places, they can do this confidentially. If the inspector finds a code violation in the living space, they will ask you to fix the issues to continue renting the unit.

If you don’t remedy the issue, some areas will fine you up to $500 a day. The city of Seattle states that if you don’t fix the issue promptly, you could be charged anywhere from $150 to $500 for each day the problem goes unresolved.

Penalty for Harm to Tenants

The government isn’t the only one who will come after you with fines. If harm comes to the renters in any way, they could sue you for damages. How much you are responsible for paying for will be a court decision; however, if the landlord’s negligence or code violation caused direct harm to the tenant, then the penalties can be severe.

There have been instances of landlords receiving jail time for blatant ignorance of safety hazards. These cases are often the result of tenants who died in a basement fire due to the unit lacking points of egress. The courts charge the landlords with manslaughter.

Loss of Insurance Coverage for Illegal Basement Apartment

Insurance plans come with promises of safety – and a lot of fine print. There are whole sections of your policy dedicated to things that nullify your coverage. If you’re renting out an illegal basement, you will probably lose some or all your insurance protection in a disaster.

Insurance companies make their money on risk assessments. If there is something risky on your property that you do not include in the policy, then your insurance company will likely deny your claim.

If you decide to rent out an illegal basement, know that you’re climbing onto a rotten limb. The branch could snap at any time, leaving you with a long, painful fall to the ground.

Perhaps you’re reading all this, but are unsure if the basement you’re renting out is illegal. In the next section, we’ll discuss what makes a basement apartment illegal.

Is My Basement Apartment Illegal?

There are lawful basement apartments and unlawful basement apartments. Sometimes the line can be blurred between the two. As we mentioned in the previous section, you don’t want to mess with renting out an illegal basement. If you’re currently renting a basement and are unsure if it is lawful, it’s best to check your local codes and guidelines.

Several things will be the difference between a lawful and unlawful basement apartment. Here’s a chart below to get you started:

Legal Basement ApartmentIllegal Basement Apartment
Ceiling Greater Than 7 feetCeilings Under 7 Feet
Basement Ceiling 3.5 Feet Above StreetBasement Mostly Underground
Properly Sized Fire EscapeNo Fire Escapes
Dry and WaterproofMold and Unclean – Not Waterproof

Let’s break these down.

Basement Apartment Legal Ceiling Height

A legal basement apartment generally needs a ceiling height of at least 7 feet. If your ceiling height falls below this, then your basement apartment probably isn’t permitted.

There are ways to raise the roof of your basement, such as digging the floor lower or lifting your house’s foundation. However, both of these options are expensive.

Fire Escape for Basement Apartment

There must be an escape window or door in your basement for it to be a legal apartment. The window needs to be at least 36 inches tall and 36 inches wide. Also, if the window is very high off the floor, you will need to install steps or a ladder so that the escape is easily accessed.

The fire escape serves several purposes. First, it’s a conduit to your safety in the event of a fire. Second, its large size allows rescue personnel to access the lower level if they need to get to you or a fire.

Waterproof Your Basement Apartment

Even if you have an appropriate ceiling height and a fire escape, if your basement isn’t finished and sealed from water, it could be illegal to rent.

Many basements will collect water, especially in heavy rain. Be sure to protect your basement from the water if you plan on renting it out.

Some state guidelines and building codes will use phrases like shall be fit for human habitation. This will mean different things to different people; however, it’s a good idea to be on the higher end of habitable.

Here are a few more things you can do to make sure your basement is habitable:

  • Ensure proper ventilation 
  • Install adequate lighting and windows
  • Keep as moisture-proof as possible

If you’re renovating your basement into an apartment, see our article on the legality of finishing a basement without a permit.

Multiple Access Points

Illegal basement apartments generally only have one point of access. In most instances, this is simply the interior door that leads from the main floor into the basement. Without either an egress door or a large shutter window for an emergency exit, there is a huge risk to the wellbeing of the basement apartment’s occupants.

For a basement apartment to be legal, it must have multiple paths for both entry and exit. That way, the occupants have more than one option for getting in or out, in case of an emergency. The room must have a door leading to the yard or street, or large windows.

Illegal Basement Red Flags

There are a number of red flags that indicate a basement apartment is illegal. For example, if you have to go through an office or another person’s space in order to access your room, chances are it is unlawful. Also, another strong indication that the apartment is most likely illegal is if the kitchen is not fully equipped.

If electrical power is serviced through an extension, this is another red flag and the room is most certainly illegal. Finally, if the door locks with a padlock, the apartment is an illegal unit.

While renting out a basement may be convenient for both the landlord and the renter, it’s important that it is done lawfully. This ensures the safety of the occupants and prevents the landlord from having to pay a pretty hefty fine.

Related Questions

What Happens if You Rent an Illegal Apartment?

If the authorities catch you, it depends. Remember, a tenant can sometimes anonymously ask an official to inspect their apartment. If you are a landlord, you may be fined and even prosecuted if there is any harm to the renter. If you’re a tenant, you will not get renter’s insurance or have many usual legal protections.

Is it Illegal to Rent Out Your Basement?

You can rent out your basement if the area meets codes and standards for an apartment. Your basement needs to have high enough ceilings, appropriate fire escapes, and adequate ventilation. Basements that do not meet these standards are illegal to rent as apartments and leave both the landlord and tenants at risk.

Can a Tenant Sue for Back Rent if Evicted from Illegal Apartment?

If evicted, you probably won’t receive back rent due to living in an illegal unit. If the renter and the landlord both knew the apartment to be unlawful, it is unlikely that a court will grant you a reimbursement. Legal situations are complicated, so based on your circumstances (whether the living conditions caused harm, etc.), you might be entitled to payment. It’s best to consult an attorney who specializes in this area.

If you want to get out of renting an illegal apartment, see our article on breaking a lease vs. getting evicted.

Gideon Zielinski
Gideon Zielinski

Gideon is a writer and hobby woodworker. He enjoys working on projects small and large-everything from crafting boxes and benches, to replacing carpet and landscaping a yard.

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