BRIEF HISTORY OF THE ADU
While ADU’s have been around since the late 1980’s, the state of CA in 2019 made significant changes in the way cities can regulate ADU’s .
In an effort to ease the housing shortage in the state, CA Governor Newsom passed several new laws making ADU’s easier to add to a property, while limiting local Government’s ability to regulate them. These new laws, among other things, say Single Family HOA’s must allow them. In this legislation, there is no minimum lot size requirement and side & rear set-backs were reduced to 4′ with no parking requirement.
With the new rules came new permits to build an ADU on an existing property. Permits started to explode, In 2018 there were about 6,000 permits issued across CA, in 2019 more than 15,000 were issued and in 2022 nearly 24,000 were issued, a 300% increase.
EVOLUTION OF THE ADU
Last week CA Governor Newsom signed AB 2221 into law. Effective January 1, 2024 property owners, in participating cities, will be allowed to build an Accessory Dwelling Unit, (ADU) on their property and sell that ADU separately as a condo. and new FHA mortgage underwriting guidelines will now recognize existing and anticipated ADU rental income as part of the mortgage approval qualifying process.
If the property is located inside an HOA, AB 2221 will require the HOA to allow the transfer. This new law will add untold number of new housing units throughout CA and add new tax revenues to the state coffers.
WHAT DOES THIS MEAN FOR YOU AS A CURRENT HOMEOWNER?
You can now potentially build an ADU on your existing property, and sell that new unit as a separate property, classified as a “condominium”. While there are guidelines, the state has made it pretty easy and inexpensive, relatively speaking, to accomplish. A new way to generate income. You can either rent it for monthly income, or sell it under the new state law.
WHAT DOES THIS MEAN FOR YOU AS A HOME BUYER?
Pretty much any single family home you look at has the potential for you, or your next door neighbor, to build an ADU 4′ from the back or side property line, and that ADU can now be sold to another party.
LOCAL CITY’S WEIGH IN
While the state is pushing for more ADU’s and has cleared the way to make it possible, the cities each have their own guidelines, so you will want to consult with your local authority for the local rules and regulations. Below, we have the contact information for the building department for several of our local cities.
