Neighbors on the Little Mesa in Bolinas settled a lawsuit this month over property boundaries and an unpermitted second unit that has housed a longtime resident. As a result, Helen Sirica—a midwife who has lived in the unit off Crescente Avenue for 14 years—will have to move off the property owned by Liliane Ninaud and Jerry Tergis, according to local attorney Jack Siedman, who is representing all three defendants.

Ms. Sirica is the latest in a wave of longtime residents uprooted from their homes—legal or otherwise—as the housing stock in Bolinas continues to shift from permanent dwellings to high-priced houses vacant most of the year and Airbnb rentals. Likewise, the episode has spotlighted tensions between the town’s longstanding inhabitants and newcomers, as well as the difficulties in legalizing existing second units for use as affordable housing.

“To me, this is a tragedy of what could have been workforce housing,” said Richard Pedemonte, a Fairfax resident whose family has owned a second home in Bolinas for over 50 years. “Now it’s going to go away. It’s what we’ve all been worrying about: big money is coming in and things are going to change. This is a perfect example.”

According to court records, San Francisco financial consultant Graham Green and his wife, Bianca, filed suit in February against Ms. Sirica, Ms. Ninaud and Mr. Tergis after the trio refused to correct the reach of a second-unit, which appears to encroach onto the Greens’ property. Last fall, the couple offered to purchase a portion of their property—after which the Greens planned to remove the shed—but the offer was rejected.

A survey of the property lines, paid for by the Greens, revealed that the structure—referred to in the lawsuit as a “shed,” though described by neighbors as a “cottage”—extends at least two feet onto the Greens’ property, posing a fire hazard and preventing the couple from completing an extensive renovation of their home, which they purchased in 2012. The structure lacked a water meter or a permit that would establish it as a habitable second unit—making Ms. Sirica’s tenancy illegal.

But Mr. Siedman’s clients countered that no part of the structure was encroaching onto the property, citing another survey. They also alleged that the Greens’ home had been demolished entirely and replaced with a new structure, contrary to county records that show the Greens applied for a remodel of the existing 1,596 square-foot residence and construction of an additional 1,125 square-feet. Others in Bolinas have agreed that little to nothing remains of the original house.

Additionally, the Greens’ deposition states that the couple incurred emotional and mental distress caused by both the loss of their property’s market value due to the encroaching structure and Ms. Sirica’s alleged “threats of violence.” Mr. Siedman’s clients, meanwhile, alleged that the Greens also were “guilty of unclean hands.”

Mr. Siedman’s clients declined to comment. Lee Stimmel—a lawyer for the Greens—said that a binding agreement between the parties prevents them from discussing personal disputes.

“That agreement was entered into to eliminate the all too prevalent back biting and slanders that seem to be endemic among certain neighborhoods,” said Mr. Stimmel, of San Francisco-based Stimmel, Stimmel and Smith, P.C.

Mr. Green, who does not live in the house full time, told the Light that the experience has been tough on him and his family, who since arriving in Bolinas have been treated as outsiders. He added that the issue in this case may not be one of affordable housing, but rather of respecting property-line rules.

“Everything we did was totally by the book,” he said. “And then we’ve got this structure on our property that is not by the book.”

The president of the Bolinas Community Land Trust, Arianne Dar, agreed that the Little Mesa situation presents a unique problem. She stressed that it’s really Airbnb and the influx of short-stay weekend visitors that has taxed the town’s housing stock. 

“I think the larger context is the loss of affordable housing, some of which has been [illegal] second units by necessity,” Ms. Dar said. “As things become more legal, it calls into question everything around them, and you lose even more housing.”

During a community meeting in June, the land trust emphasized that it is looking into ways to relieve the housing crunch by legalizing both new and old second units. But securing permits for second units is challenging, Ms. Dar said, because of septic system constraints. The town’s longstanding water moratorium makes expanding water consumption an even more daunting proposition.

Nonetheless, Ms. Dar said that the land trust has been in talks with the county about easing the septic restrictions.

Offering advice to the town’s newer residents, Ms. Dar suggested they keep the spirit of Bolinas in mind, and that it would be best to join “very gently.”

“We’re not always going to be happy with each other,” she said. “And we need to work together as best we can.”