California's New Law on Selling Accessory Dwelling Units as Condominiums

Real Estate

California's New Law on Selling Accessory Dwelling Units as Condominiums

California has long been a hub of innovation and progressive policies, and this trend extends to the real estate market. Accessory dwelling units (ADUs), often referred to as "granny flats" or simply guest houses, have been a valuable addition to California's housing landscape for years. These secondary living spaces come in various forms, from converted garages to backyard cottages and even unused portions of the main house. Traditionally, ADUs have been available only for rent. However, a new law, Assembly Bill 1033 (AB 1033), is changing the game, offering Californians the opportunity to buy and sell them as condominiums.

Assemblyman Phil Ting, hailing from San Francisco, championed this groundbreaking legislation, recognizing the potential it holds for homeowners and aspiring buyers alike. Under AB 1033, property owners in participating cities now have the option to construct an ADU on their land and sell it separately, adhering to the same regulations that govern condominiums. This not only expands the choices available to homeowners but also aligns with the hope of promoting greater homeownership in the state.

The key to this transformative shift is that local governments must opt in to the ADU-as-condominium approach for it to be a viable option within their jurisdictions. Furthermore, like newly developed condominiums, homeowners building ADUs are required to notify local utilities such as water, sewer, gas, and electric about the creation and separate conveyance of the unit. 

One significant aspect to consider is that, similar to condominiums, the main house and the ADU will have two different property tax assessments. Assemblyman Phil Ting anticipates that, initially, many of the ADUs going through this process will be sold to family members or close friends of the homeowner. As people become more comfortable with this concept and the practice becomes more widespread, it could evolve into a traditional real estate transaction.

Meredith Stowers, a loan officer at CrossCountry Mortgage in San Diego specializing in ADUs, believes that AB 1033 brings benefits for both homeowners and prospective buyers. She points out that many homeowners who can benefit from this new law are retirees who have paid off their mortgages but are living on limited Social Security and meager retirement funds. For these retirees, downsizing to a smaller house doesn't make financial sense. AB 1033 offers them an opportunity to earn supplemental income from their properties while also creating affordable housing.

In some cases, retirees are even building ADUs in their backyards, which they then move into, potentially selling off their main homes. This innovative approach helps them leverage the equity they've built up in their homes while finding financial stability in their retirement years.

California's AB 1033 opens up exciting possibilities for homeowners and potential buyers, tapping into the value of ADUs not just as rental properties but as true assets for homeownership and financial security. With more cities embracing this change, we can expect to witness a shift in the real estate landscape that benefits both homeowners and those in search of affordable housing solutions. If you're considering the ADU-as-condominium option, it's a great time to explore the potential it holds for you and your community.

Recent Blog Posts

Stay up to date on the latest real estate trends.

California's New Law on Selling Accessory Dwelling Units as Condominiums

November 9, 2023

A new law, Assembly Bill 1033 (AB 1033), is changing the game, offering Californians the opportunity to buy and sell them as condominiums.

Spread Holiday Cheer: Join Our Toys for Tots Toy Drive and Canned Food Drive!

November 1, 2023

Title Pirates: Protecting Your Homeownership from Modern-Day Pirates

October 26, 2023

Title pirates are criminals who exploit vulnerabilities in the real estate industry to deceive homeowners and make off with their properties.

Anvil Real Estate Lands Position On Best Of Orange County List

September 26, 2023

Best of Orange County real estate company category, according to the latest reader's choice poll for The OC Register.

Anvil Real Estate Wins Luxury Lifestyle Award

September 19, 2023

Anvil Real Estate was selected over several other brokerage firms in the area due to their impeccable reputation with clients and the professional performance of the e… Read more

Retire Your Equity To Achieve Your Goals

September 17, 2023

Are you considering making a move in the near future? Whether it's downsizing, relocating, or simply seeking a change of scenery, your home equity could be the key to … Read more

Melody Smith & Associates Secures One Of Three Spots For Zillow’s New Exclusive Program, Listing Showcase

August 21, 2023

Zillow, the real estate giant known for its online property listings and home value estimates, has disrupted the status quo once again with its most intriguing product… Read more

Navigating the California Fair Plan: Your Last Resort for Home Insurance

August 17, 2023

The California Fair Plan, formally known as the California Fair Access to Insurance Requirements (FAIR) Plan, is an insurance program designed to provide coverage for … Read more

What Do Rising Home Prices Mean For Buyers And Sellers?

July 17, 2023

Strong home prices are a positive indicator for the real estate market, reflecting buyer demand and limited housing inventory.

Let's Talk

You’ve got questions and we can’t wait to answer them.