Real Estate Tips: New Legislation AB 1033 AKA Selling ADU's Like Condo's
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Effective as of October 11, 2023, Assemblyman Phil Ting (D-San Francisco) drafted the Assembly Bill (AB) 1033 Separate Sale or Conveyance of ADUs (accessory dwelling unit) will now allow property owners in participating cities to construct an ADU on their land and sell it separately, following the same rules that apply to condominiums. It gives homeowners more options for building on their property, and “the hope is, it would create more homeownership,” said Ting.
As with new condominiums, homeowners building ADUs must notify the local utilities, including water, sewer, gas and electric, of the creation and separate conveyance of the unit. Each property will also have to form a homeowners association to assess dues to cover the cost of caring for the property’s exterior and shared spaces, such as the driveway, a pool or a common roof.
Similar to condominiums on one property, the home and the ADU will have two different property taxes, Ting said. He says he believes that many of the initial ADUs going through this process will be sold to the family members or close friends of the homeowner.
Selling ADUs as condominiums is having success in places such as Oregon, Texas and Seattle.
When Seattle removed regulatory barriers that discouraged property owners from constructing ADUs in 2019, the city issued nearly 1,000 ADU permits, more than four times the number permitted in 2018, according to a report released in March.
The report also found that in 2022, the city permitted 437 attached ADUs and 551 detached ADUs, which it referred to as backyard cottages. Just under half were on sites with multiple ADUs and one-third were part of a development that included a new single-family residence.
Included in the report were sample sales for neighbor residential parcels with detached ADUs, reporting that a unit of more than 1,000 square feet sold for an average of anywhere between $500,000 to $800,000.
If you have additional questions about this, or are wondering what the process would look like for you to create or sell an ADU on your property, let’s connect. I’d be happy to support you on your real estate journey.
Sources: Los Angeles Times
