A Complete Guide to Accessory Dwelling Units (ADUs)

Accessory dwelling units (ADU) are also commonly known as in-law apartments, granny flats, or in-law suites. You’ll probably come across other names for ADUs such as basement apartments, companion units, guest houses, and pool houses, depending on where you live.

A recent study by NAHB revealed that accessory dwelling units gained a lot of popularity in 2019 compared to the previous year, owing to a growing number of home renovations involving ADU constructions. Moreover, the number of first-time property listings with granny flats has snowballed over the last decade all across the country.

Unfortunately, there is a lot that many homeowners, buyers, sellers, and renters do not know about ADUs. It’s about time you learned all there is to know about accessory dwelling units in Rhode Island — what it means to have one, what it takes to build, and all the legal requirements and processes involved in erecting an ADU structure.

This article takes an in-depth look at ADUs and what you should consider when constructing an additional housing structure on your property. Let’s dive in, starting with the very basics and building up from there.

What is an accessory dwelling unit?

An ADU is a smaller residential building sharing the same property lot and utilities as the main house. The most common example of an ADU is a detached garage with a residential apartment above it or a standalone housing unit built next to the primary residence.

An accessory dwelling unit is generally a secondary living area, mostly used to house guests and extended family members or generate rental income. Although ADUs share water, electricity, gas connections, and other basic utilities with the main house, they are pretty self-sufficient. Most ADUs have their own living areas, bathrooms, kitchens, and bedrooms in separate rooms, while some are designed more like loft apartments with space economy in mind.

During the housing boom that followed after World War II, most U.S. residential areas were zoned to control population density and set limits on the separation and size of single-family dwellings. Later in the 1970s, most municipalities started easing their zoning restrictions. The relaxed laws opened doors for homeowners to expand their residential units by constructing ADUs and other forms of home extensions.

Even today, the construction and use of accessory dwelling units are closely controlled by state and municipal authorities. In some cases, the relative or absolute size, purpose, or design of a companion unit may be determined by where you live. In Rhode Island, the zoning laws governing the construction of ADUs are relatively relaxed compared to some other states. But we’ll get to that.

Types of accessory dwelling units

ADUs come in a variety of sizes, designs, and styles. However, there are generally three types of ADUs categorized based on how they are set up in relation to the principal dwelling unit.         

Interior accessory dwelling units

This is the most basic and common type of ADU. It is a dwelling unit built through renovating an existing space or room inside the main house. In most cases, interior ADUs are fashioned from unused attic, basement, or garage spaces. Ideally, they should have their own completely independent entryways to bring some element of privacy and exclusivity from the main house.

The construction of an interior ADU is quick and inexpensive compared to other types of dwelling units. You only need to do some light renovations to convert a disused room into an ADU, cutting the construction time as well as the material and labor costs. Plus, it economizes space usage by repurposing the already available or neglected rooms.

Piecing together an interior ADU can be an affordable way to expand your living quarters. But since the unit would technically be part of the main house, it might compromise privacy, which may limit the unit’s usage. For instance, some tenants may be reluctant to rent out a space so close to the landlord’s residence.

Attached accessory dwelling units

The second type of ADU is an attached unit — meaning that the structure is adjoined to one of the sides or rear of the main house. This type of ADU can also be constructed on top of an attached garage. Unlike an interior ADU, an attached unit creates new spaces rather than reuse existing ones.

An attachment is more costly and sophisticated to construct than an interior ADU because it may involve some serious architectural planning and heavy construction. But on the upside, it offers more privacy, is more practical, and genuinely increases the home’s dwelling space.

Attaching an additional unit to the main house does reduce the cost to some extent, but the main purpose of doing so is usually to minimize wastage of lot space. In some cases, it might actually be more expensive to build an attached ADU than an equivalent standalone structure.

Detached accessory dwelling units

A detached building is probably what most people imagine when they think about accessory dwelling units. This is an entirely independent unit from the main house, usually constructed some distance away from the primary residence (depending on the lot size).

Being standalone houses, such units have maximum privacy and exclusivity for guests and tenants. They can also be purpose-built to host small gatherings and parties. However, all those benefits come at a cost. Constructing a detached ADU can be quite expensive, considering you have to erect the building from scratch and outfit it with all the essential amenities.

Choosing between these three types largely comes down to how much lot space is available, the construction budget, and the purpose of building an in-law suite in the first place. The zoning department may also have restrictions on the type of ADU you can build.

Accessory dwelling units vs. extensions

Some people often confuse house extensions and accessory dwelling units. And it’s easy to see why one would mistake an extension for an attached ADU, or the other way around. But these are two distinct types of structures.

As the name suggests, an extension is simply a structure that adds a bit of extra floor space in an already existing room, such as a kitchen, dining room, or living room. An accessory dwelling unit is a bit more elaborate and sophisticated than that; it provides an entirely independent living area. Additionally, the zoning laws and permits for constructing an extension differ significantly from those of building an accessory dwelling unit.

Why build an ADU?

Building a guest house on your property is an excellent idea, provided you have the funds and space to do so. Here are the top five benefits of constructing an ADU to supplement your living space.

Space for hosting visitors, guests, and caregivers

If you frequently have guests, friends, or family members over for long or short visits, an ADU is an ideal place to house them. It is a perfect short-term housing solution for guests spending a night or a few days at your home.

An independent lodging room will certainly make your guests feel more at home and comfortable, especially if the only other alternative is offering them a couch in the main living room. Plus, you’ll avoid some of those awkward experiences with having guests over.

Besides housing guests, an ADU can also serve as more permanent living quarters for a caregiver if one of your family members needs on-hand specialized attention such as elderly care or physical therapy.

Convenient housing for family members

Families sometimes outgrow their residential houses at a time when moving to a bigger one is not a viable option. Perhaps some friends or relatives suddenly move in, or the kids grow up and start demanding their own rooms. If that happens, building a companion flat might be the most convenient and cost-effective way to relieve an overcrowded household.

You can have your teenage kids move into an ADU. That way, they maintain their independence but still be close enough for parental supervision and care. In a different scenario, members of the extended family living in the main house can move into the extra unit.

Rental income opportunities

Many homeowners set up ADUs to earn some extra passive income in the form of rent. Rental in-law suites are trending in most places due to the high demand for housing and the rising cost of living. A completely self-sufficient guest house can earn you a lot of cash from long-term tenants and short-term renters such as students and holidaymakers.

Interestingly, most rental ADUs actually start off as housing units for family members or guest rooms that eventually become rental spaces after their original occupants move out.

Raised property value

A typical ADU amounts to about 25 to 35 percent of the property’s cost, but it can contribute as much as a 50 percent rise in property value after appraisal. In other words, the cost of building an accessory dwelling unit is usually less than the value it embeds on the host property.

Understandably, most homebuyers are willing to pay more for a home with an ADU to take advantage of the extra floor space. Constructing a guest house on your property is an easy way to raise your asking price when selling a house. If your sights are not set on selling, having a high-value investment is still a huge advantage in other respects, such as when taking out a loan or refinancing a mortgage.

Keep in mind that it’s not always that straightforward to raise the value of a property. A lot more comes into play when boosting appraisal value through re-investments in renovations and new constructions. First, it takes careful cost calculations and predictions to make the right decisions. Second, external factors such as location and real estate market trends could drastically affect property costs and buyers’ preferences.

Sustainability and aesthetic qualities

Although rare, some ADUs are designed mainly for aesthetic purposes. But generally, having a cottage house adjacent or attached to the main residence is more visually appealing than constructing a big, blocky mass of bricks. In many ways, an ADU complements the main house’s appeal and sometimes even highlights the landscape. The aesthetic influence of ADUs is so strong that some municipalities only allow for specific designs to preserve the neighborhood’s visual uniformity and style.

ADUs are usually much smaller than the main house. For that reason, they consume less material and energy to construct. They also run on a smaller energy footprint since they require less power to heat, cool, and drive various utilities. These are some of the key features of sustainable housing and living. Given a choice, it’s more environmentally friendly to construct an ADU instead of an entire house.

RI zoning laws and accessory dwelling units

The state law regulates the construction and use of accessory dwelling units in zoned areas through ‘An Act Relating to Towns and Cities – Zoning Ordinances’ (R.I.G.L. § 45-24). Municipalities can also add more zoning legislation, giving them the power to prohibit, limit, or restrict the development of various structures such as ADUs in zoning districts.

Before constructing an ADU, you should make sure that your plans adhere to the laid-out guidelines. Otherwise, the municipality will not grant you the necessary permits. Here are the main statutes defining ADUs in zoning cities and towns:

• As of January 2017, the state requires all localities to allow a single accessory dwelling unit by-right to an owner-occupied single family-residence if one of the family members is disabled or above the age of 62. Since 2008, homeowners were only permitted to build an ADU by-right to house a disabled family member of any age. That law now extends to include elderly family members, regardless of whether they have a disability of not. The amendment was meant to help address the unique housing demands for seniors aging in place and multi-generation homes.
• In zoning districts that allow accessory dwelling units, the state allows only one ADU for every single-family dwelling.
• As a separate dwelling unit, an ADU should have individual sanitary and cooking facilities and its own legal means of ingress and egress.
• An ADU can only be rented out or occupied by one or more members of the family owning the primary residence. The unit may also be reserved for rental occupancy by a family or person, provided that the principal residence is owner-occupied.
• The structure’s appearance should resemble that of the main building and have its own entrance if possible.
• An ADU can be a freestanding structure or one attached to the main family-dwelling building or other detached accessory structures within the property, such as a garage. However, some zoning districts permit detached accessory dwelling units, while others do not.
• The state recognizes natural, historical, cultural, and scenic characteristics as factors for zoning regulations. This means that municipalities can control development rights and permits in certain areas to conserve the local heritage or scenery. In some towns, additional structural and image requirements are imposed on ADUs so that every new building matches the style and layout of the surrounding neighborhood.

The law can sometimes be a complicated maze. The best way to determine whether you can build an ADU is to contact your local zoning or building department. The local authorities will describe the kind of ADU you can construct, its design, and its purpose. Areas without zoning laws do not necessarily follow these regulations, but even so, they may still have some unique requirements.

A step-by-step guide to building an accessory dwelling unit in Rhode Island

The process of building an ADU is quite similar to that of building a house, except it is a bit scaled-down. Here is a sequential breakdown of all the things to consider and steps to follow when constructing an accessory dwelling unit in Rhode Island.

Get the city’s approval and construction permits

If you are thinking about building a granny flat, you should at least have a rough idea of the kind of structure you want to erect. But before spending time on any elaborate planning, contact your local authorities or building consultants to find out the permits and requirements needed to build an ADU in your home.

ADU permits and regulations vary from city to city, and so does the permit application process.

Generally, the law requires that you file a declaration of the accessory dwelling unit along with its restrictions with the municipal zoning department and building officials. You will also be required to fill out forms and submit various documents, such as proof of property ownership, building plans, and affidavit as part of the permit application process.

Keep in mind that you may need additional permits from other departments depending on the nature and characteristics of the structure. For instance, if the ADU is to be serviced by a separate sewage disposal system, the installation must be approved by the Department of Environmental Management.

The municipality will then review your application and grant you the necessary building permits if the proposed structure meets all the zoning requirements. After that, you can go ahead and start rolling out the project.

Source funds

Consult a quantity surveyor to estimate the cost of the entire project. The price will vary depending on various factors, such as the ADU’s size, material, design, and location. Once you have a cost estimate, you can then start sourcing for funds.

The ideal way to finance such a project would be by using your own cash or soft loans from family and friends. But those are not always viable options for most homeowners.

The next best solution is taking out a bank loan. Depending on your financial situation, credit history, and available assets, there may be several loan options available to you. The most common solution is a home equity loan, where you can borrow a large sum of cash against your property’s value. You can also get a cash-out refinancing of your mortgage or a dedicated construction loan.

Remember that every financing approach involving loans has its risks. Make sure you understand and agree with the loan terms before filling out any applications. Go for loans with fair interest rates, repayment periods, and flexible terms’ adjustments.

Hire a contractor

Find a professional contractor to run the construction project. An ideal contractor will take care of supplies, materials, labor, equipment, and the project’s management. Most ADU constructions are relatively small projects that do not necessarily need a project manager. But you may require an architect to make drawings and designs for some of the more sophisticated features. Some architects and contractors can help you secure zoning and building permits.

Make sure that the contractor is certified, licensed, and bonded. That way, you can rest assured that the construction process will follow standard building codes, and the final product will meet all the due requirements. In most cities, builders’ certification criteria include adherence to safety, pollution, and qualification standards.

Another thing you should probably consider is the cost of hiring a contractor and their preferred payment plans. Hire a construction company that fits your project’s budget and its financial structure. Some contractors may be open to negotiations regarding schedules, pricing, and payments. After agreeing on the details, put together a binding construction contract describing the project’s scope and each party’s responsibilities.

Start construction

Once all the preliminary paperwork is out of the way, you can finally start the construction. An ADU construction project can take anywhere between a few weeks to a couple of months, depending on its complexity. Keep a close eye on the project to ensure that it follows the predefined schedule. Close supervision will also allow you to solve any unexpected problems quickly to maintain a good pace.

City building officials will visit the site a few times to inspect the structure after some critical milestones in the construction process. You may have to present some paperwork and permits during these inspections and revise some construction plans following assessment reports and recommendations.

Host the final inspection

After the contractors finish their work, the unit is finally ready for the final inspection. The municipality will send officials to thoroughly check the structure’s adherence to building codes and zoning laws. They will also compare the finished unit’s characteristics to the features described in the permit application proposal. It is always a good idea to bring in a licensed independent building inspector to examine the building before the council’s inspection, just to be sure.

If the structure fails the final inspection, you can either appeal to the municipality or make the recommended changes and request a second inspection. But, if the city inspectors are satisfied with what they see, you will receive an occupancy approval for the new housing unit. Once you have settled all the post-construction documentation, you can start using the ADU for its intended purpose.

Wrapping up

Constructing an accessory dwelling unit is a convenient and affordable way to increase your household’s living space. On top of that, an ADU can open up an extra revenue stream and, at the same time, raise your property’s resale value. For the most part, the RI government is behind the idea of constructing new dwelling spaces in its push for affordable housing and better living conditions for the citizens. However, you have to check with local zoning administrators before setting up a secondary residential unit in your home.

Buying or selling a home that already has an accessory dwelling unit is a different matter altogether. You have to understand how an ADU affects the cost of a home in a particular area to make the right sale or purchase decisions.

Get in touch with Bobby Bohlen, a renowned real estate agent, to get the best deal if you’re interested in selling or buying a property in Rhode Island. Bobby will guide you through the legal and financial technicalities of owning or selling a home under the most favorable terms.

Accessory Dwelling Unit FAQs

Here is a list of some of the most frequently asked questions about companion flats:

How can I check whether an ADU is legal?

If the structure is not listed on any city records with the building department or land evidence records, it’s probably illegal. If it is listed, check with the zoning authority to determine whether the construction was permitted.

Does an ADU permit automatically transfer to a new property owner?

ADU occupancy permits are non-transferable; they terminate after the property's title lists a new name. The former owner must write to the zoning department to notify the zoning officials of the ownership change. If you are buying a home with a pre-built ADU, you will have to apply for a new occupancy permit under your own name.

What happens when a senior citizen moves out of an ADU?

If the ADU was constructed by-right to house a senior family member, it may not be used for a different purpose under the same permit. If the original occupant moves out permanently, you have to notify the city zoning officials, who will then terminate the occupancy approval.

How will an ADU affect my appraisal report?

A legal ADU can boost the value of your property, but that largely depends on the appraiser. For instance, a buyer's appraiser may not factor in an ADU's value if its permit cannot be transferred to the new owner. Some lenders may also consider an ADU as an illegal dwelling, especially if it has its own utilities and entrance. On the same note, some loan products do not consider ADUs as part of the property's collateral value. Technically, an ADU does increase your property value, but not everyone will see it that way.