New California Law Allows ADU Sales Separate from Primary Home

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New California Law Allows ADU Sales Separate from Primary Home

Posted by Home Quest on October 31, 2023
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Gov. Gavin Newsom recently signed Assembly Bill 1033 into law, which repeals an earlier ban on the sale of accessory dwelling units – or ADUs – separate from its primary residence. For renters who have been unable to become homeowners due to high home prices and interest rates, this new law may make it easier to buy a home in California

These ADUs could be separate backyard cottages or converted garages attached to the primary residence. Legally converting the home and the secondary living unit to a two-unit duplex or condominium might now be possible.

Unlike a series of 2020 state laws designed to fast-track ADU construction and sales, specific rules on how to convert an ADU into a condo are being left up to each municipality. If local ordinances are followed, homeowners with ADUs can keep, rent, or sell the units as it works to their advantage and depending on their stage of life.

“AB 1033 is a great concept and while it might take time to get cities and counties on board, it could definitely help ease the housing shortage,” said Shane Joffe, general manager and partner at HomeQuest. “It could also help those who have the space on their property or want to make a return on their investment. Perhaps they have an existing ADU they no longer need or want to place and sell one as a flip. It would also likely lower their property tax by selling the secondary unit.”

The number of building permits for ADUs continues to rise as regulations ease and the popularity of these units increases. The pandemic also had many homeowners realize the benefits of ADUs, such as creating home offices, gyms, or living quarters for aging parents or young adults who had to move home.

AB 1033 also comes at a convenient time for home shoppers, as HUD (the U.S. Department of Housing and Urban Development) recently announced updates to its FHA 203(k) property rehabilitation financing program. In part, financing for ADU construction, conversion,       and rehabilitation is allowable for units attached and detached from the primary residence.

At HomeQuest, we’ve seen a significant uptick in ADU orders and anticipate this continuing to rise. Let us know how we can help you with an ADU purchase.

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