AB 1033: CA ADUs can be Sold like Condos

Several law changes have taken effect starting January 1st 2024. For instance, jaywalking is now legal. As drivers, we will have to be on the lookout for pedestrians darting out into the street. As pedestrians, we are now not limited to just the crosswalk if we need to get across the street. Great! Though we can hope little to no accidents will occur with this new law change, odds are it could lead to someone being more likely to get hit. Another law that took effect on the first is AB 1033, which allows Single-Family Residences (SFR) to not only build Accessory Dwelling Units (ADU), but sell them separately from the residence.

ADUs & AB 1033

When ADUs were first introduced, they were meant as an extra space for someone to live in separately from a main residence. These units were often referred to as “Granny Flats”, since it was often grandma’s that lived in them. They are typically 1 or 2-bedroom units complete with kitchen and bathrooms, usually no bigger than 1200 sqft or so. However, today’s housing shortages have pushed for less restrictive legislation for building residential housing. Eventually, AB 1033 was approved, which allows a homeowner with an ADU to sell the unit separately from the main residence as condos.

Requirements

  • AB 1033 was approved for the state, however local governments will need to opt in to use the program.
  • Homeowners building ADUs must notify the local utilities, including water, sewer, gas and electric, of the creation and separate conveyance of the unit
  • Each property must form a homeowners association to assess dues to cover the cost of caring for the property’s exterior and shared spaces, such as the driveway, a pool, or a common roof.
  • Both the primary residence (home) and the ADU being sold as a condominium will have separate property taxes.

Benefits

Increased Property Value: By converting ADUs into condominiums, property owners can potentially increase the value of their real estate, which can have a positive impact on local property values.

Supplemental Income for Retirees: AB 1033 benefits retirees who have paid off their mortgages but have limited retirement income. It allows them to earn supplemental income by selling ADUs, leveraging the equity in their homes.

Multigenerational Living: The bill enables multigenerational living arrangements by allowing homeowners to share their property with aging relatives or adult children, making it easier for families to live together.

Potential Drawbacks

What do you think? Let us know in the comments!

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