Anytime you decide to create a studio or living space for yourself you would need to get permits. Many homeowners tend not to go this route till a neighbor complaints or an inspectors sees workers at your door. Then there are fines and other costly penalties from the city. Any project that costs over 500$ requires permits. The only exclusions we heard of are Painting and etc.
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When it comes to the city or county of L.A. all properties have to have a functional garage, you can make the chances but if a city inspector sees work been done, they will find you and make you convert it back into a garage. I will recommend to call Building and Safety first before investing any money, you can call 311, and they will redirect you to Building and Safety and they will give you the requirements.
I hope this will help you make the best decision.
In terms of resale, you won't find many buyers who are happy to have lost the garage and gained the bonus room instead.
You are fine with everything except for removing the garage door,you could change out & get an insulted garage door.if you take away the garage door then you should create some other sort of parking for the space you have removed from your property,with permits ! Good Luck !
Converting the garage may also bring up setback requirements. Many garages in LA are quite close to the property line. Acceptable for an existing structure built a long time ago, but when it comes to remodeling or building a "living" space, the new construction or work being done may have to be a certain distance from the side boundary. I'm not 100% sure on this.
When you convert a garage to a living space with permits, you will also be required to create some other type of garage housing...or a car port to make the conversion legal.
Again, check with Building and Safety. I have attached the link below.
All the best,