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I would first look up the definition of “living” before getting to worried about it.
I doubt many inspectors will be willing to work the night shift necessary to catch someone sleeping in there. And, without plumbing, they’ll be hard-pressed to prove anything.
I think they care about someone renting it out and cooking/sleeping, etc.
Still – I’d ask a lawyer what, exactly, you can’t do just so he can get his story straight if anyone ever asks.
I think the limit for un-permitted detached structures in San Diego is 100 sqft and for the unincorporated parts of the county 120 square feet? Maybe this is a different county?