With the tough economy, many people are looking for creative ways to increase their income. For those with a large home (or those with a separate mother in law house), dividing a part of it into a separate rental unit may seem like a good idea. However, if you don't want all of your earnings, and possibly more, to be lost in a lawsuit, you need to fully understand the laws in this area.

Are You Allowed to Create a Garden Apartment?

There are several things to check to find out if you're legally allowed to make part of your home an apartment. 

The first is local zoning laws. Can multiple families live on your property, or is only a single dwelling permitted?

The second is fire and building codes. Will the part of your home be considered legally suitable for permanent residential occupation? This is especially important if you're renovating a garage or basement.

The second is any occupancy restrictions. Are you required to provide things like a kitchen, and how many people can live inside?

What Are Your Responsibilities as a Landlord?

If you're able to make an apartment, you take on the role of the landlord. It's important to remember that this is a job and not something that requires no work.

You will be responsible for any repairs needed in the apartment, and the law will require you to make them quickly. While you might be fine with cold showers for a week, if the tenant loses hot water, you'll often have as little as 24 hours to restore it without being required to reimburse them for rent on days they didn't have hot water.

Who Can You Rent To?

Even if the apartment is next to your home, it will be considered publicly available housing subject to civil rights laws. You cannot discriminate on race, religion, gender, age, or familial status. You can only pick and choose a roommate sharing the same dwelling not a tenant living in a separate apartment.

However, you are allowed to set non-discriminatory rental qualifications. Proof of income and good credit are standard. If the fire code limits the number of people, you can and must follow that limit. You also retain full discretion as to whether or not you want to allow pets.

To learn more about the laws on adding an apartment to your home, contact a local real estate lawyer, such as Schulze Howard & Cox, today.