Converting garage to livable space while keeping it functional as garage

Well, I’m confused and need to go read the regulation. I thought as long as I left the garage door where it could be used as a garage but have the walls finished, that this would not be breaking the regulation. Lots of garages have finished walls. This all has to do with the garage being detached from the house. If it were connected to the house by a finished space then I wouldn’t have to worry about the amount of square footage of finished space. I could close in the garage and make it a living space.

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