<< Good lord, I see one issue after another with this! I doubt any part of that would fly where I live! First there's the multi-family zoning issue. You'll need more meters for water, gas and electric or beef up existing services if you intend to patch off of them.
Is the lower floor remaining a garage? There's issues about having living quarters over garage space. It should be lined with fire rated drywall either way. The current ceiling joist will need to be beefed up to become a floor. The front side of a free standing garage generally doesn't have enough diagonal cross members, like a notched corner stringer or 4x8 sheet of plywood to hold that wall square, never mind having the extra weight up top!
It would probably need a second emergency exit from that top floor. Is it on a decent foundation now? Whew, that's more than I'd care to bite off!
Good Luck! >>
Well, it's probably not as bad as you think. A little more info on the situation: The garage sits on a deeded separate lot, so if I turn it into a residence I don't think I will have to deal with multi-family zoning. The lower floor will remain a garage, it's masonry blocks on a slab foundation. The roof is made up of pre-fab triangular trusses sitting on the outside walls, so once I take off the roof there will be no ceiling joists. In one long weekend or two I'm planning on removing the roof, building the new floor, framing up the outside walls & slapping the roof back on (hopefully reusing the existing trusses, if I can get them all off in one piece during the roofing removal).