While the city says it needs to meet the code requirements, but in reality they also don't enforce or care about those small accessory buildings unless someone complains about something major. Sure if you build a shed out of matches and someone complained they would enforce the applicable code given the risks at play, but if we're talking a run of the mill shed no one is going to bat an eye if it is against the fence like 90% of sheds in the city. You'd have to have a D-bag neighbour who complained incessantly.
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