AB 1033 is the latest state law designed to develop a market for ADUs, and thus lessen California’s grinding housing crisis. However, past legislative attempts have not met with much success.
In 2021, the legislature passed SB 9, which allowed homeowners to split their single-family parcel into two lots and build up to two units on each lot. It went into effect in January 2022.
Earlier this year, UC Berkeley’s Terner Center, a housing policy research group, released a study following the progress of ADU development after the passage of SB 9. It looked at 13 cities where developing ADUs seemed to make the most financial sense for property owners and “found that SB 9 activity is limited or non-existent in these 13 cities.”
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1033
This is a nightmare for title insurance. If you want to get a clear and marketable title, the property would need to be officially subdivided, or turn into condos – which the new law did address:
(10) In addition to the requirement that a local agency allow the separate sale or conveyance of an accessory dwelling unit pursuant to Section 65852.26, a local agency may also adopt a local ordinance to allow the separate conveyance of the primary dwelling unit and accessory dwelling unit or units as condominiums. Any such ordinance shall include all of the following requirements:
(A) The condominiums shall be created pursuant to the Davis-Stirling Common Interest Development Act (Part 5 (commencing with Section 4000) of Division 4 of the Civil Code).
(B) The condominiums shall be created in conformance with all applicable objective requirements of the Subdivision Map Act (Division 2 (commencing with Section 66410)) and all objective requirements of a local subdivision ordinance.
(C) Before recordation of the condominium plan, a safety inspection of the accessory dwelling unit shall be conducted as evidenced either through a certificate of occupancy from the local agency or a housing quality standards report from a building inspector certified by the United States Department of Housing and Urban Development.
(D) (i) Neither a subdivision map nor a condominium plan shall be recorded with the county recorder in the county where the real property is located without each lienholder’s consent.
Lenders aren’t going to give their consent, so in order to sell off an ADU, all you have to do is have a property with no mortgages, and file a condo map with the state and work it through the process for a few years!
“Rate hikes are like tequila shots: one never knows when one’s had enough until one’s had too much.”
– Louis-Vincent Gave, Gavekal Research
The more government dictates the type of development patterns it wants, the less likely the market is going to oblige.
The real problem is that government is dictating development patterns people do not want.
What existing municipality would willingly accept/subsume a brand new Levittown?
Does anybody actually ever “condominiumize” part of their single family home? I can see building an ADU for personal use or to rent it out, but selling a share seems like it has all the maintenance responsibilities of being a landlord without the fallback of being able to evict a problem tenant.
but selling a share seems like it has all the maintenance responsibilities of being a landlord without the fallback of being able to evict a problem tenant.
Agree and I can’t imagine the success rate on these will be any different than what their first survey found – that virtually nobody is actually doing this.
A condo map has to start at $100,000 plus what about utilities? What are you going to do, collect an approximate share each month? No – if you are selling, you are looking for a clean break so add another $100,000 for the utilities split. Plus you still need to live next door with no control of what happens there which probably isn’t a good thing unless keggers every weekend is your thing. Parking not required so enjoy more cars being around too.
New law allowing ADU sales could face hurdles in San Diego County
A new law allows Californians to buy and sell ADUs as a separate entity. The question is — will cities in San Diego County go for it?
The optional statewide law, Assembly Bill 1033 , was signed by Gov. Gavin Newsom in mid-October, and allows accessory dwelling units, sometimes called granny flats, to be sold separately — and, presumably, at a lower price than your average home. The thinking is it could give low- to moderate-income Californians a chance at homeownership.
Now, it’s a matter of what municipality wants to enact the law when it takes effect in January. All cities, from Chula Vista to Carlsbad, would have the option to include the law — but the fact that it is voluntary could pose some political headaches. San Diego Mayor Todd Gloria recently lost a bruising battle to enact the optional statewide law, Senate Bill 10 , which aimed to change some single-family housing zoning.
“The mayor supports any opportunity to increase homeownership opportunities in the city,” said Gloria spokesperson Rachel Laing. “City staff is evaluating the law for possible implementation.”
A question for any municipality in San Diego County, and its residents, will likely be how much an ADU will cost as a separate unit. One place to find an example is Seattle, which has had a similar law on the books for several years. A Seattle city report in March showed 15 ADUs that sold for much less than the traditional single-family house in front. They weren’t exactly cheap, with one ADU going for $680,000 while the home in front sold for $1.2 million. Most of the sale examples had similar prices.
There are no real-world examples in California yet, but bill author Assemblymember Phil Ting, D-San Francisco, envisions a scenario where a homeowner breaks off an ADU spot for an adult child or close friend. Rather than spend money on rent, the buyer — who might not have been able to afford a house or condo — instead can start building equity.
It’s bound to get complicated from there: The homeowner and ADU owner would need to set up a homeowners association to cover the cost of shared spaces, such as a driveway, pool or shared roof. It wouldn’t be as extensive as an HOA in a big townhouse development, but it still adds another layer of paperwork. The home and the ADU would have separate property taxes.
Of course, trying to solve the state’s housing shortages with ADUs isn’t the most efficient method. Higher density and zoning changes would be a more substantial fix, said Ting, but ADUs are one thing that seems to make it past heavy opposition.
“There are people that are so completely opposed to any increased density,” he said. “ADUs are one of the few things that many communities are supportive of.”
Chris Thornberg, economist and founding partner of Beacon Economics, said the new law was “cute” but was another example of California politicians making a small tweak to housing laws without taking any serious action. He said minor changes over the past decade make it look like governing bodies are working hard but it hasn’t increased residential building . He said zoning changes, to things like retail, would actually make a difference, unlike minor ADU laws.
“We continue to sit around with this idea that retail should be a sole-use option on a hunk of land,” he said. “If they passed a law that said every hunk of retail land is mixed-use then, boom, problem solved. You have to force density, but they have yet to do that.”
ADUs have been a cornerstone of planning success in recent years. Following California reforms in 2019, permits for ADUs increased 61 percent over the next three years, said the Cato Institute . However, other changes have been hard to come by, especially locally.
Ting said making the law optional was one way to get it passed in Sacramento, even if it means a bigger fight for city councils across the state.
“We were worried about significant backlash from the cities,” he said, “so we thought we would get the policy moving, and allow the cities that are more pro-ADU to opt in and slowly see how it’s going. It’s a first step.”
In mid-November, the San Diego City Council rejected a variety of housing proposals — which included a variety of zoning changes aimed at encouraging more homebuilding — when the governing body disagreed over certain low-income housing requirements.
Most of the changes were considered minor after the housing package was significantly scaled back, but still faced much community opposition. Even though ADUs tend to be less controversial, many cities in San Diego County have a vocal group of opponents.
Thornberg said state laws can’t seem to get around what he called Not In My Backyard, or NIMBY, opposition.
Thanks to the ut