I built a two story second house behind a single story house in Normal Heights in 2003 the lot was 50′ x100′. I didn’t get the permitting done, the owner hire his own draftsman, but I know it took the owner about a year because the draftsman he was working with was pretty slow. The lower floor too small for the size of house, with a single car garage and stair well taking up a lot of space. Upstairs had 3 bedrooms and a bath. Upstairs had a larger footprint due to cantilever floor design.

Everything was easy as the builder. We put a 2 meter power main on the new house and underground the electrical from there to the new house. Dug up the yard and replaced the old cast iron drain pipe with 4″ ABS that served both houses. I don’t think you can have a plumbing main under either house so make sure it can be routed around if necessary with the proper additional fall for any new length of run required to accomplish that if needed. Upgraded the water main from 3/4 to 1″ and put in a mandatory anti-siphon station on the main ( another contractor did that).

I don’t think the owner had to sign any agreements not to rent both houses.

This was an alley property. The owner had to hire an engineer to finish the alley in concrete even though the alley had sections of dirt behind other houses.

I think an off street non tandem space is required for each bedroom of both houses, but check that out, the existing house may be grandfathered in.