Reference: https://www.nixonpeabody.com/insights/articles/2024/09/09/what-is-the-new-california-adu
Overview of California ADU laws
An accessory dwelling unit is a second residence that can be built on the same lot as the primary residence. In California, ADUs have been gaining in popularity as the demand for housing in the state continues to grow. ADUs can provide additional housing units in existing residential neighborhoods, which can help address the housing shortage in California. Homeowners, developers, and investors can benefit from ADUs in a number of ways, including (1) increasing property value by adding additional living space to the property, (2) allowing for multi-generational living where families live together but maintain their independence, and (3) providing rental income by renting either the ADU or the main residence, or both.
The legal framework for ADUs in California continues to evolve, and a number of new laws that took effect in 2024 encourage their development.
Key considerations of the new ADU laws for 2024
AB1033: Separate Sale of ADUs. Assembly Bill 1033 (AB 1033) is a significant first step in allowing for the sale of ADUs in California because it removes the state-level restriction on selling ADUs. Previously, an ADU could only be sold separately from the main residence in very limited circumstances, such as if it was developed by a qualified nonprofit. AB 1033 creates the legal framework that authorizes local governments to allow for the separate sale of any ADUs as condominium units, as set forth in Section 66342 of the California Government Code.
San Jose adopted an ordinance in June 2024 to implement AB 1033, but thus far, AB 1033 has not yet been widely adopted.
For Homeowners Associations (HOAs), new ADUs in existing associations must comply with HOA governing documents, the Davis-Stirling Act, and the Subdivision Map Act. Lien holder consent is required, and HOAs must approve the creation of condos if local ordinances are met. Local agencies must notify ADU applicants of these requirements.
This is an area that homeowners, HOAs, developers, and investors interested in ADUs should continue to watch, as there will be the opportunity to sell ADUs once other cities implement AB 1033.
AB 976: No Owner-Occupancy Requirements. Property owners may continue to build rental ADUs in California because Assembly Bill 976 (AB 976) permanently extended the rental unit provisions set to expire in 2025. Previously Assembly Bill 881, which was passed in 2020, prohibited local governments from imposing owner-occupancy requirements on properties where ADUs are built until 2025. The new AB 976 removes the sunset provision and permanently allows owners to build rental ADUs on their properties, which promotes the construction of additional rental housing in California.
AB 1332: Pre-approved ADU Plans. By January 1, 2025, all cities and municipalities in California will be required to develop a program for the pre-approval of ADU plans, pursuant to Assembly Bill 1332 (AB 1332). The pre-approved ADU plans will be posted on the local agency’s website. The pre-approval of plans also provides for a streamlined review process. AB 1332 requires the local agency to approve or deny the application within thirty (30) days from the date the local agency receives a completed application for an ADU containing pre-approved plans. The intent is to simplify the approval process and make it easier for homeowners to build ADUs.
Impacts of the 2024 ADU laws on homeowners and developers
Homeowners, developers, and investors may now build ADUs for rental housing without any owner-occupancy requirements, as set forth in Section 66315 of the California Government Code. Starting in 2025, the potential to use preapproved ADU plans, as set forth in Section 65852.27 of the California Government Code, will help streamline the development of ADUs. And looking forward, as local governments implement AB 1033, homeowners, developers, and investors will also be able to turn ADUs into condominiums and sell them separately from the main residence.
Navigating local regulations and legal considerations
The State of California is encouraging the development of ADUs, though most implementation happens at the local level. So, it is necessary to understand the local ADU rules for the particular cities and counties where the project is located. As always, working with knowledgeable professionals—licensed architects and legal experts—is important when navigating the complexities of local regulations for developing projects, whether large multi-family housing complexes or small ADUs.
Conclusion
The legal framework for ADUs in California continues to evolve. The new ADU laws effective in 2024 will help streamline the approval process, allow property owners to develop ADUs for rental properties, and—once implemented locally—allow for the sale of ADUs. The development of ADUs is a great way to add additional housing to existing residential neighborhoods and address the housing shortage in California. Homeowners, developers, and investors should stay informed about local regulations and obtain professional advice when planning an ADU project, including legal advisors and licensed architects, to help navigate the planning, designing, and permitting process.
Wallz Inc. will be with you in all the stages and help you to design, receive necessary permits, and construct, your dream ADU. Please Contact Us. Our Experts will communicate with you in the shortest possible time.