California Updates ADU Laws with AB 1033 and AB 976

Assembly Bill 1033 (AB 1033) and Assembly Bill 976 (AB 976) which were both signed by Governor Newsom this week, may have substantial implications for Accessory Dwelling Units (ADUs), also known as “granny flats” throughout the state of California. Here’s a breakdown of the key provisions in these bills:

AB 1033 – ADUs Sold Separately

• What it Does:  AB 1033 enables property owners in select cities to construct ADUs on their property and sell them independently, akin to condominiums.
   
• The Workings: Owners building ADUs must notify local utilities about the creation and separate conveyance of these units.  A homeowners association must be established to manage the maintenance costs of shared spaces and the property’s exterior.  Property taxes for the primary residence and the ADU will be billed separately.
   
• The Goal: AB 1033 could increase what some refer to as gentle density in many cities – ie the development of single-family type units (e.g., ADUs, duplexes, etc.) within single-family zoned neighborhoods. Gentle density helps maintain the residential façade and aura of neighborhoods while assisting in the offsetting of the growing housing crisis.  The passing of AB 1033 could additionally provide more affordable for-sale housing opportunities for low-mid income first-time homeowners.

AB 976 – Removes Owner-Occupancy Requirement

• What it Does:  AB 976 will permanently extend the ability of property owners to build rental accessory dwelling units (ADUs) in addition to removing any owner-occupancy requirements.
   
• The Workings:  The Bill removes owner-occupancy requirements that prohibited ADU construction unless the owner lived in either the main house, or the ADU.  When owner-occupancy requirements were temporarily removed in 2017, ADU construction grew massively, resulting in thousands of new rental homes across California.
   
• The Goal:  This change allows ADUs to be used strictly for rental purposes, with the goal of expanding the rental housing market in California.  Additionally, removing owner-occupancy requirements could facilitate the process for owners to use loans or their home equity to add ADUs to their existing properties.
  

In Closing

• These legislative changes have the potential to substantially impact the housing landscape in California. While some critics argue that these laws may curtail the regulatory authority of local jurisdictions, proponents view them as critical for increasing housing supply and affordability.
  
  
• These laws aim to facilitate more accessible and cost-effective housing options for a wide spectrum of residents, from retirees looking to augment their income to young families aspiring to acquire their first home. With the passing of these two bills, California is slowly but surely taking steps toward addressing its housing challenges to foster a more promising future for its residents.