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.”
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!