ADUs May Now Be Sold Separately


Anne Rawlinson, Esq., Whitney | Petchul, APC


Last year the California legislature continued its drive to create more aff ordable housing by enacting additional laws intended to make accessory dwelling units (ADUs) attractive to property owners. This was done through Assembly Bills 976 and 1033, both of which became law on January 1, 2024.


Quick reminder: an ADU is an additional residential structure with independent living facilities built on the same lot as a primary residence.


Assembly Bill 976, which amended Government Code Section 65852.2, makes permanent a law previously set to expire in 2025 prohibiting local governments from requiring property owners to live in the primary residence on a lot with an ADU. In other words, a property owner may now rent both the primary residence and the ADU. This bill also tweaked the timeline for ADU rentals, clarifying that local agencies may require ADUs to be rented for 30 days or longer, rather than for terms longer than 30 days (a one-day difference).


Assembly Bill 1033, which amended Government Code Sections 65852.2 and 65852.26, has attracted wide attention by permitting, for the fi rst time, ADUs to be sold separately from the primary residence. Previously, ADUs could only be sold as part of the entire lot along with the primary residence. The purpose of this change is to create more residences available for sale at affordable prices. According to the bill’s author, State Assembly member Phil Ting, “The absence of available homes for purchase at rates affordable to moderate-income working families bars wealth-building and housing stability for Californians harmed by historic discriminatory housing policies. AB 1033 allows cities and counties the freedom to pursue homeownership programs and to create a path to wealth- building for families by repealing the current law prohibiting the separate conveyance of ADUs.”


ADUs sold separately within a common interest development would almost certainly cause problems for the association because each new ADU sold would: • Increase the number of permanent residents and thus the impact on common facilities; and


18 March | April 2024


• Add new property owners whose voting power and obligation to pay assessments and comply with the governing documents would be legally uncertain.


For these reasons, CAI successfully lobbied to add a requirement that the property owner obtain the association’s approval in advance. At minimum, this would mean approval by the board of directors. However, approval of the entire membership would be required if this is stated in the governing documents.


The prerequisites for separate sale of an ADU may be too diffi cult and expensive for most property owners, so the effect of the new law may only be felt in a few associations. These requirements include: • Create and record a new subdivision map and condominium plan;


• Obtain approval from all lenders with a mortgage on the property, which they are not required to give;


• Obtain approval from the association, which it is not required to give;


• Obtain a permit and comply with all local government construction rules; and


• Notify all utility companies. Recommendations:


Consider amending one of the governing documents to add a requirement that the full membership approve the separate sale of an ADU;


Consult legal counsel if there is a possible or actual separate ADU sale in the association for help navigating the legal issues described above.


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