It’s a great time in California to own an ADU. Last year, our government made it easier than ever to build authorized accessory dwelling units (ADUs). But now, thanks to Assemblyman Phil Ting’s (D-San Francisco) recently drafted Assembly Bill 1033, it’s becoming just as easy to sell these units as ADU homes the way one would sell a condo. It’s a big step toward solving California’s housing crisis. And it’s expected to only get bigger as people grow more comfortable with the idea of ADUs as legitimate homes. 

How AB 1033 Opens Up the Market to ADU Homes

Photo credit: Envato

California’s renting masses are no strangers to ADUs. But after the passage of AB 1033 this week, they’ll actually be able to purchase ADU homes. No, not homes with ADUs. But actual ADUs as homes! And, more importantly for those with properties supporting ADUs, Californians will also be able to sell their ADUs instead of rent them. The sale of an ADU will basically mirror the kind of rules and regulations we see for condo sales. 

The Attraction of ADU Living for Buyers and Sellers

AB 1033’s passage comes at an opportune time for owners of properties with ADUs who don’t necessarily want to be landlords. More obviously, it stands to benefit prospective first time homebuyers who have been feeling shut out of an ultra-competitive housing market. 

That’s not to say every potential homebuyer is jumping at the chance to purchase an ADU as a starter home. As can be expected, there are those balking at the idea of starting their home investment journey in a former garage or office. But denser living in smaller housing units has long been proposed as a stable means of addressing the nation’s housing crisis. Opening up the market to saleable ADU homes is an immediate way to implement this plan. 

Considerations for Selling ADU Homes

Photo credit: Envato

Of course, it won’t be as easy as converting a garage into an ADU and posting a “For Sale” sign in the front yard. Californians wanting to take advantage of AB 1033 will still need to navigate a slew of rules and regulations. For example, though AB 1033 would apply to the state as a whole, the bill also specifies that local governments will need to opt in to the law. Angelenos need not worry too much since LA is expected to opt in.

Those selling ADU housing will need to separate utilities from the main home by contacting their local utility companies. This includes:

• Water
• Sewer
• Gas 
• Electric

Property owners are also required to establish homeowners associations if selling ADU housing. By creating a homeowners association, they will be able to manage maintenance costs for shared amenities and spaces. Likewise, ADU units sold as homes will have their own property taxes separate from the original unit. 

The Dawning Reality of ADU Living

Photo credit: Envato

Purchasing a former shed, office, or garage as if it were a condo is going to take some adjustment. That’s why it’s predicted that initial purchases of ADU homes in California will likely most appeal to family members and close friends of property owners. There’s already a relationship to support both parties through a novel transaction. However, as the model is further tested, it’s expected to become commonplace. 

While selling ADU homes may seem like a novel idea, similar laws have already shown success in Washington, Oregon, and Texas. With California’s current housing challenges, the passing of AB 1033 couldn’t have come too soon! 

All the best,

Nathan

📍JohnHart Real Estate
📞(424) 303-0440
📧 itsnathanderry@gmail.com
🤖 nathan@jhagents.com
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