How to sell your ADU in California

California's housing market is as dynamic as it is challenging, with Accessory Dwelling Units (ADUs) emerging as a versatile solution to the state's housing shortage. The recent passage of AB 1033 has introduced new possibilities for homeowners, enabling the separate sale of ADUs under certain conditions. This guide aims to demystify the process, offering valuable insights for homeowners looking to capitalize on this opportunity.

Introduction

Accessory Dwelling Units (ADUs) have grown in popularity across California, thanks to their potential to provide additional income, increase property value, and offer flexible living arrangements. With the implementation of AB 1033, the landscape for selling and owning ADUs in California is evolving, presenting new opportunities for homeowners. Some of the first movers that have passed ordinances permitting ADU sales:

San Diego Region:

• City of San Diego
• Chula Vista

Bay Area:

• City of Oakland
• City of San Jose

Los Angeles Region:

• City of Los Angeles
• Santa Monica

Sacramento Region:

• City of Sacramento

Central Valley:

• City of Fresno

Understanding Your ADU's Market Value

The value of an ADU in California can be influenced by various factors, including location, size, amenities, and compliance with local regulations. Conducting thorough market research can help you determine a competitive selling price by comparing similar listings in your area and considering the unique features of your ADU.

Tips for Enhancing Market Value:

• Highlight Unique Amenities: Features such as energy-efficient appliances, private entrances, or landscaped outdoor spaces can increase appeal.
• Ensure Compliance: Verify that your ADU meets all local building codes and regulations to avoid potential legal or financial complications. Book a call with our ADU experts

Preparing Your ADU for Sale

Qualifying Criteria for Separate ADU Sales

For homeowners to sell their accessory dwelling units (ADUs) separately from the main residence, local agencies must adopt specific regulations outlined in AB 1033. These rules aim to ensure compliance with legal requirements and maintain safety standards.

Condominium Conversion Compliance

Local agencies can permit the separate sale of ADUs and main homes as condominiums, provided they adhere to certain guidelines, including:

- Adhering to the Davis-Stirling Common Interest Development Act, which governs the formation and operation of condominiums.

- Meeting all requirements set forth in the Subdivision Map Act and local subdivision laws.

- Conducting a safety inspection of the property before recording the condominium plan.

- Obtaining consent from any lienholders (parties with a financial claim on the property) before recording the condominium plan. Lienholders may impose specific terms or withhold consent.

- Creating a detailed condominium plan that clearly delineates individual units and common areas.

- Establishing a maintenance agreement for a homeowners' association (HOA) to manage common areas, such as shared driveways, outdoor spaces, or amenities.

Designated Zones for ADU Development

Moreover, local governments can designate specific areas where ADUs are permitted based on the availability of water and sewer services, as well as potential impacts on traffic and public safety. If the local government does not directly handle these services, cooperation from the responsible authorities is necessary to ensure adequate service provision for ADUs.

ADU Standards

AB 1033 builds upon existing regulations for the physical features of ADUs, primarily by increasing maximum building height allowances. Local agencies cannot impose height limitations that restrict ADUs to:

- Less than 16 feet for ADUs on a lot with an existing or proposed single-family or multi-family dwelling unit.

- Less than 18 feet for ADUs on a lot within a half-mile walking distance of a major transit stop or a high-quality transit corridor, with an additional 2 feet allowed to accommodate a roof pitch matching the primary dwelling.

- Less than 18 feet for ADUs on a lot with an existing or proposed multi-family, multi-story dwelling.

- Less than 25 feet or the height limitation applicable to the primary dwelling, whichever is lower, for attached ADUs.

Streamlined Approval Process

The approval process for ADUs and junior ADUs remains streamlined under AB 1033, as established by previous legislation (SB 9). Applications must be processed quickly, without a public hearing or discretionary review. This means local agencies have 60 days to approve or deny an ADU application if a primary dwelling already exists on the property.

However, if the ADU application is part of a new construction project, the agency can defer the decision until the primary dwelling is approved. In cases where demolition is required (e.g., tearing down a garage to build an ADU), the demolition and ADU permits must be reviewed and issued together.

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Marketing Your ADU

Effectively marketing your ADU is crucial to attracting the right buyers. Employing a multi-faceted approach can broaden your reach and highlight the unique selling points of your ADU. Book a call with our ADU experts

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Strategies:

• Online Listings: Utilize popular real estate platforms to list your ADU, ensuring high-quality photos and detailed descriptions are included.
• Leverage Social Media: Share your listing on social media platforms to tap into wider networks.
• Word-of-Mouth: Inform friends, family, and neighbors about your listing. Personal referrals can be incredibly powerful.

Navigating the Legal and Financial Aspects

Selling an ADU in California involves navigating a complex landscape of legal requirements and financial considerations.

Key Considerations:

• Understand AB 1033: Familiarize yourself with the specifics of AB 1033 and how it impacts the sale of ADUs in your local jurisdiction.
• Consult Professionals: Engage with real estate attorneys and financial advisors to ensure all legal paperwork is correctly handled and to explore financing options for potential buyers.

Process of Selling an ADU with Condo Mapping After AB 1033

With the passage of AB 1033, homeowners in California may have the opportunity to sell their accessory dwelling units (ADUs) separately, provided their local jurisdiction permits it. This process often involves condo mapping, a legal procedure that divides a single property into individually owned units. Cities like Seattle and Portland have already embraced this concept for ADUs.

Initial Assessment

Before embarking on the condo mapping journey, homeowners must conduct a thorough evaluation. This includes examining zoning regulations, property dimensions, existing structures, and local ordinances to ensure eligibility.

Application and Documentation

The next step involves submitting a comprehensive condo conversion application to the local planning or development department. Detailed plans illustrating the division of units and common areas are essential components of this application.

Additionally, legal documents such as a declaration of covenants, conditions, and restrictions (CC&Rs) must be prepared. These documents outline the rights and responsibilities of the condominium association and individual unit owners.

Regulatory Compliance

Adherence to local building codes and safety standards is paramount. Inspections and necessary upgrades may be required to ensure each unit meets the criteria for safe and habitable standalone properties.

Public Report and Final Mapping

A public report, containing detailed information about the property, units, and association, is prepared to provide transparency for prospective buyers.

Furthermore, a final condominium plan, legally defining the divided units and common areas, must be created and recorded with the county recorder's office.

Approval Process

The local planning department meticulously reviews the application, documentation, and final map. This process may involve public hearings and potential revisions to the plan.

Once approved, the property officially gains condominium complex status, allowing individual units to be sold separately.

Homeowners Association Establishment

In most cases, an HOA is formed to manage the common areas and enforce the CC&Rs. The HOA is responsible for maintenance, repairs, and upholding community rules.

Sales and Marketing

After the conversion, individual units can be marketed and sold to interested buyers. While the sales process is similar to any real estate transaction, the condominium structure adds an extra layer of complexity.

Navigating the condo mapping process for ADUs can be intricate, but it opens up new possibilities for homeowners seeking to unlock the value of their properties.

• Book a call with our ADU experts

The Endnote

Selling an ADU in California offers a unique opportunity for homeowners to capitalize on their investment and contribute to the state's affordable housing solutions. By understanding the market value, preparing your ADU for sale, effectively marketing it, and navigating the legal and financial aspects, you can successfully sell your ADU. Remember, the landscape is continually evolving, so staying informed and engaged with local housing policies is key.

For homeowners considering the potential of their ADUs in the current market, the introduction of AB 1033 opens new doors. Whether you're looking to sell your ADU or explore other opportunities, now is an exciting time to be part of California's housing solution.

For further advice or consultation, don't hesitate to reach out to industry professionals who can guide you through this process and help maximize the potential of your ADU.

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