My Client says his basement AirBNB should be listed as an ADU. Is he right?

What a great question! The answer is, "it depends". On what? On how the space was permitted! 

It always comes back to how the space was permitted. 

Local regulations may require separate cooking facilities including stove, access to the water heater, or specific fire separation in order to be considered an accessory dwelling unit. If it is not an ADU, it is extra square footage. 

For example, let's say there is a house with a daylight basement including bathroom, . The owner decided they wanted to rent out the space in order to generate some additional income. They added a hotplate, put a lock at the door at the top of the stairs, and indicated that the sliding door was the entrance. 

Is this an ADU? Not if the owner doesn't have an ADU permit. 

Here is another example. In this case, the homeowners decided to build a mother-in-law suite, complete with separate bedroom, separate full kitchen including oven, and it has its own hot water heater. 

Is this an ADU? Not if the owner doesn't have an ADU permit. 

One final example. In 1962, a homeowner builds a garage with an apartment above (a Fonzie apartment). The permit was for an accessory building, but accessory dwelling units were not standard issue at the time. It has its own electrical box, water heater, but shares a water meter with the house. 

Is this an ADU? This is a tricky one, but if there isn't a permit for it as an ADU, it is not an ADU. In this case, I would go back to the permitting jurisdiction (city or county) and see what it would take for this to be permitted as an ADU. It might mean simply someone signing a document indicating it is an ADU based on the construction OR it might require an inspection and passing with today's code. Ouch! 

If it is not a legally-permitted ADU, follow your MLS guidelines for how the property should be listed and don't call it an ADU if it is not an ADU.