You Can Now Sell Your ADU in California

In a bold move to boost housing stock and promote homeownership, the state of California has paved the way for homeowners to capitalize on the emerging trend of backyard homes. This week, the state has taken a significant leap by passing Assembly Bill 1033, a legislation that permits homeowners to sell accessory dwelling units (ADUs) constructed on their property.

A Rising Trend in Backyard Homes

The concept of ADUs is not new to the Golden State. Over recent years, there has been a marked pivot towards utilizing backyards as a means to increase housing availability. This is a direct response to the escalating housing crunch in the region, with an increasing number of residents seeking affordable accommodation.

In 2021, as part of the initiative to foster the growth of these units, several cities in California pre-approved plans for architect-designed ADUs. Taking it a step further, Los Angeles even introduced a complimentary version earlier this year, aiming to streamline the process for homeowners to erect a backyard dwelling. Such units serve a dual purpose; they can either house extended family members, like in-laws, or be let out as rentals, offering homeowners an additional source of income.

Assembly Bill 1033: A Game-Changer

The recent enactment of Assembly Bill 1033 is set to revolutionize the ADU landscape in California. This bill empowers homeowners to sell an ADU erected on their property, thus presenting an opportunity for them to leverage their existing equity in novel ways.

However, as highlighted by the Los Angeles Times, there are some caveats to this new rule. The bill mandates cities to actively choose to participate in the program. In other words, only property owners residing in cities that opt into this initiative will be granted the right to sell their ADU. The selling process is somewhat reminiscent of how condominiums are sold. Specifically, homeowners wishing to sell their ADU will have to notify their utility providers. Moreover, they will be mandated to establish a homeowners association, responsible for overseeing property maintenance. This move ensures that while the ADU can be sold separately, it remains an integral part of the community. As for taxation, it would be handled distinctly, with ADU owners paying their taxes separately.

In Conclusion

The passing of Assembly Bill 1033 is a testament to California's commitment to tackling its housing crisis innovatively. By allowing homeowners to sell their ADUs, the state is not only amplifying housing stock but also granting residents more flexibility and financial opportunities. It remains to be seen how many cities will opt into this program, but it's clear that the ADU trend in California is only gaining momentum.