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Posted almost 3 years ago

California ADU Basics

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The concept of converting a garage or building a ground up accessory dwelling unit (ADU) is outlandish in California if you asked a real estate professional five years ago. Even with the bordering states that have been doing this for years, California was resistant to this change. Let’s dig in on the California basics to ADU knowledge.

What Changed in 2020?

There was a significant change in January 2020 for California ADU legislation. ADU laws had been set in place since 2017 and the laws had been chopped down by cities within California over the three years it was set in place. The cities thought these new mother-in-law quarters/guest houses were going to create a bad name for the city. In 2020 the cities had their hands forced to abide by the California rules not the old city changes.

In 2020 Assembly Bill 68 (AB68) was changed to make it easier for property owners to build a second unit on their property, and owner-occupied properties to build a third unit on the lot. The bill gave a lot of older requirements the boot and opened it up for investors and homeowners to get their permits approved quicker and some strict guidelines reduced to make it easier to get the ADU established.

The Top Ten Changes:

  1. Faster ADU approval times from the cities, it was dropped from 120 days for approval to needing to give the homeowner or investor an approval by 60 days. (just know that some cities will drag their feet on this requirement due to current working remotely impacts).
  2. The setbacks (this is the distance between where the new ADU is going to be built and where the property line is established) for ADUs use to be 10 feet from the property line and now they are 4 feet from the property line.
  3. Cities and lawmakers started to impose that if a homeowner were to convert a garage to an ADU then the homeowner would have to provide more parking on the property for tenants. Now as long as the property is within a half mile from any public transit pickup or drop-off location the parking does not need to be replaced.
  4. Impact fees (fees that a city charges due to the area impact and environment impact) are significantly reduced if the ADU is built under 750sf and in most cases taken away completely. That means the building costs are going to be less expensive than they would be building greater than 750sf.
  5. The size of ADU is capped at 1200sf either new or converted ADU. The old laws stated the back unit was capped at 50% of the house square footage, and that means if the house was 1100sf then the ADU could only be 550sf. The city can make a requirement to cap the square feet at 800sf or below, and this will fit at least 2beds and 2baths. The height max that a city can cap an owner on is 16ft high and this is for building on top of a garage to the second floor.
  6. An owner-occupied home can have two ADUs built on it, one is the normal standards as above, and the second one can be a Junior ADU (JADU) with the size limit to be 500sf and an extra 150sf for egress. This has to be a conversion from a portion of the house that is attached to the main property (i.e., an attached garage, large closet that can be converted etc.).
  7. There are no specifics on lot coverage for a ADUs. If the house is 3000sf on a 6000sf lot as long as the parameters are met above, then the ADU will be approved. The lot does not need to be zoned any particular way to qualify for the ADU.
  8. HOAs cannot enforce a strict no ADU policy in their community, and the owner has to be granted an approval by the HOA to build.
  9. Homeowners can get an ADU approved or a landlord can do it as well, the old law use to be only owner-occupied properties.
  10. The cities may not require as a condition for approval of ADU plans, the correction of physical conditions that do not conform with current zoning standards.

These are a top ten list of things that the state laws changed to from the tight restrictions of cities changing the ADU laws to their preference. What does this mean, more people will be jumping into the market of ADUs and that is great news for investors and other ADUs builders to cash flow more. The more mother-in-law quarters there are then the better ability for the appraisals and sales to increase, this is what a homeowner performing an ADU builds want if they are going to refinance after it’s complete. These new laws will be set in place for 2020-2025 and that means there is a market for people to consistently grow their income and home value by adding an ADU.



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