How much would you risk to earn a little extra income?
If you had an empty garage sitting unused, would you remodel it, furnish it, and rent it out for $1,000 a month? For many Las Vegas landlords, that quick cash can be hard to resist.
In the rush to earn, few stop to consider the legalities of rental properties, until the city notices. What starts as easy income can quickly turn into costly penalties and legal trouble.
In Las Vegas, an illegal unit refers to any residential space, such as a converted garage, basement, or shed, used for housing without the required permits or zoning approval.
Many landlords create these spaces to meet housing demand or boost income, but doing so carries serious legal and financial risks. Unpermitted rentals can lead to fines, unenforceable leases, and costly corrective actions.
Our team at Avalon has led countless owners through the process of bringing rental properties into compliance while protecting their investments.
In this guide, we’ll explain the cost, process, and ROI of legalizing an illegal unit in Las Vegas. Continue reading to learn how.
Key Takeaways
- Legalization protects your investment and keeps your rental property compliant.
- Compliance builds trust. Permitted units attract stable tenants and prevent legal consequences.
- ROI extends beyond profit through safety, habitability, and reduced liability for Nevada landlords.
- Documentation matters. Keep all rental agreements, inspection records, and court orders on file.
What Makes a Unit “Illegal” in Las Vegas
A rental unit in Las Vegas may be considered illegal when it is used for residential purposes without the proper permits or zoning approval. This often includes converted garages, basements, or outbuildings that were never approved as dwelling units.
Common violations involve the absence of a valid building permit, nonconforming zoning, or missing safety features such as adequate exits, ceiling height, or heat.
Landlords can verify the legality of a rental unit by checking with the City of Las Vegas Building Department or the Clark County Department of Building & Fire Prevention, where records and certificates of occupancy are maintained.
Operating an unpermitted space can lead to fines, code enforcement, or void rental agreements, and in some cases, authorities may require the landlord to remove the unit or relocate the tenant.
This rental unit's illegal status can also result in legal consequences under local ordinances and state laws, particularly when basic weather protection or habitability standards are not met.
Legal Framework: Nevada Landlord-Tenant and Zoning Law Overview
Nevada’s landlord-tenant laws require landlords to maintain rental properties in a habitable condition by providing essential services such as plumbing, heating, electricity, and a safe water supply. These legal requirements align with both Nevada law and local housing codes.
In Las Vegas, the landlord-tenant law governs lease terms, security deposits, late fees, and grace periods for rent payments. This means landlords must also comply with rental property requirements, including obtaining a business license and adhering to local zoning requirements before renting.
Because compliance involves multiple agencies, Nevada landlords are encouraged to seek legal advice or contact local code enforcement before starting the conversion process. Doing so helps ensure accessibility for tenants with a physical or mental disability and prevents discrimination based on national origin or similar protected categories.
Landlords should also disclose information about known hazards before signing a lease to avoid legal action under state laws.
Step-by-Step Process for Converting an Illegal Unit
Step 1: Inspection and Assessment
Hire a licensed contractor or property inspector to identify any structural, electrical equipment, plumbing, or safety deficiencies.
Step 2: Consult with City Planning
Confirm that the property’s zoning allows residential use for the space. Some single-family zones limit additional units, while others permit accessory dwelling units (ADUs).
Step 3: Apply for Permits
Submit “as-built” plans for review and pay related fees. Some cases may require a surety bond to guarantee completion of work.
Step 4: Renovate to Code
Fix anything that makes the space unsafe or uncomfortable. Install egress windows and smoke detectors, add air conditioning if needed, and repair issues like leaks, poor waterproofing, or damaged walls.
The landlord must also ensure that all essential systems, such as heating, ventilation, and plumbing, are functioning properly before the inspection.
Step 5: Final Inspection and Certificate of Occupancy
Schedule the final inspection. Once approved, you’ll receive a Certificate of Occupancy, legally recognizing the dwelling unit.
For cases with prior code issues, the court clerk may record compliance documentation. Be sure to maintain the unit in good repair to keep it aligned with local ordinances.
Estimated Costs of Conversion
Legalizing an illegal apartment in Las Vegas can vary based on the property’s condition and required upgrades.
Typical costs include the following:
- Permit fees: a few hundred to a few thousand dollars.
- Code compliance upgrades: repairs, safety systems, and renovations.
- Professional services: architect or engineering plans, and inspections.
Landlords have several ways to finance conversion costs, including home equity loans, construction financing, or partnerships with property management companies. Older units often need plumbing upgrades or an approved sewage disposal system, which can add to expenses.
To keep the project manageable, it helps to plan the work in phases. Some lenders may also require a surety bond or proof of code compliance before releasing funds.
Calculating the ROI: Financial Benefits of Legalization
A legalized rental property attracts higher-quality tenants, offers stable income, and increases overall property value. It can also prevent legal action, relocation assistance costs, or insurance issues.
If a tenant fails to pay rent, landlords must follow proper procedure under Nevada’s landlord-tenant laws, issuing a written notice before an eviction notice or eviction lawsuit. Doing so protects both tenants' rights and the landlord’s legal right to recover unpaid rent.
To assess return on investment, compare upgrade expenses to increased rent payments or property value gains. You will find that even if recovery takes time, compliance minimizes risk and strengthens long-term returns.
Common Pitfalls and How to Avoid Them
Landlords often struggle when they start work without verifying zoning, hire unlicensed contractors, or attempt partial legalization. These actions leave the unit considered illegal. If a landlord fails to maintain essential services, tenants may legally withhold rent after giving written notice.
For month-to-month tenancies, landlords must provide a landlord-written notice before changing rent terms or ending the agreement. When returning a security deposit, they must also issue an itemized statement in compliance with Nevada law.
Cases involving domestic violence or criminal activity may allow affected tenants to seek other relief or access new housing support under state laws.
FAQs
1. Can I rent out an unpermitted unit in Las Vegas?
No. Renting an unpermitted or illegal tenancy violates local ordinances and state laws and can result in fines or tenant relocation.
2. How can I confirm if my unit is legal?
Contact the City of Las Vegas Building Department or the Clark County Department of Building & Fire Prevention to verify building permits and occupancy status.
3. What if a tenant refuses to pay rent or damages the property?
Landlords can serve a written notice and pursue legal action through the court clerk. Tenants may owe up to one month’s rent, and a surety bond can protect against damages caused by other tenants.
4. Is legalizing an illegal unit worth the cost?
Yes. Although the actual cost varies, legalization increases value, ensures compliance with landlord-tenant law, and promotes safer housing for tenants.
From Risk to Reward: Why Legalization Pays Off
More than compliance, legalizing an unpermitted or illegal tenancy is an investment in stability and credibility. A code-compliant rental property safeguards your investment, supports tenants' rights, and enhances long-term profitability.
At Avalon, we are always ready to help Nevada landlords navigate zoning codes, meet legal requirements, and maintain safety standards that protect both owners and tenants. Want to protect your investment and unlock its full potential? Contact us today for a free consultation!
Bonnie is the visionary that has driven the company and culture of Avalon since 1993. Her passion is improving procedures and practices; incorporating technology and value added services for both our clients and tenants.