ADU’s for Development & ADU’s as Investments

AB 976:

This bill makes ADU’s more versatile by removing the owner-occupancy requirements. By allowing ADU’s to be built exclusively as rental units, property owners are incentivised to build an ADU. In 2017 owner-occupancy requirements were temporarily removed, and ADU construction grew massively. This resulted in thousands of new rental homes across California. Given Californians’ growing struggle to secure affordable rentals, an increase in rental units could help stabilize the inflated rental market.

AB 1033:

Under this new law, ADU’s can be built and sold as condominiums. This legislation offers new options and possibilities to property owners, as well as opportunities to those looking to enter the housing market. Rather than ADU’s only being available as rental units, this huge step in the right direction allows a homeowner to sell thier ADU. It is hoped that this move will help supplement the income of retirees and offer young families affordable starter homes.

ADU’s must be approved through all the proper channels, particularly with AB 1033 construction becasue there are a separate category of tax filing, and permitting is more involved. We suggest hiring an expert in Design / Build, ground up construction who can take you through the entire project as a single point of contact. COAT Design Remodel is our recommended option to take your project from its infancy, all the way to the close of Escrow of your ADU.

SB 897:

Another recent modification is SB 897: This eliminates the restriction on homeowners building an ADU if unpermitted work is discovered on the property.

Additionally:

AB 2221:

Alters California’s ADU Laws and Regulations:

Changes to the 60-day rule:

Even for the most experienced contractors, engineers and design experts, the permit process can be uncertain. ADU Laws vary between jurisdictions, and even within the same jurisdiction, different laws or standards may apply, making permits a complex and non-linear process.. Since 2020, permitting offices have had to either approve or deny ADU permits within 60 days. However, many offices only issued a denial once the 60-day limit was up. Starting in 2024, they are now required to give a comprehensive list of reasons for any denials, along with suggestions on how to make necessary improvements to remedy any issues.

ADU’s in Commercial Areas:

In 2023, AB 2221 simplified California’s law, making construction of ADU’s easier, particularly in commercial areas. Previously, developers were largly unable to include ADUs in plans for multi-dwelling / multi-family buildings. The changes to AB 2221 enable builders and developers to smoothly implement ADUs into thier designs, rather than having to make modifications after completion.

The bill also brings some technical changes that reduce permit counters from arbitrarily blocking ADUs. Previously, there were problematic terms like:

In Conclusion:

In Conclusion, residents all around California have more freedom regarding what they can do with adding ADU’s to thier property. Instead of merely renting them out, owners are now given the freedom to sell them, and the rules around how they are constructed have been loosened and made more transparent. The changing tides of California ADU laws are being welcomed by  homeowners and prospective buyers looking to enter the California housing market.