3) If a home is zoned a “Single-Family residence” does this type of arrangement violate city code? (At the minimum it seems a fire hazard for the occupants)
Some code compliance offices do not allow anonymous complaints. So in case you are considering complaining check it out.
The code compliance officer is not supposed to say anything. I have met people who have said the code compliance people let the cat out of the bag. If code compliance shows up, don’t take it for granted that things will change much.
Be careful.