Can You Sell Your ADU in California? Understanding AB 1033 and What Comes Next

Accessory Dwelling Units (ADUs)—those small homes tucked into backyards, garages, or converted basements—have long been known as “granny flats” or “rental units” in California. But a new California law, AB 1033, is flipping that narrative.

If you’re a homeowner looking to tap into your property’s value, or a buyer trying to break into the market without stretching your budget, AB 1033 could change everything. For the first time, cities in California can now let homeowners sell ADUs as separate condominiums, transforming them from long-term rentals into individually owned homes.

Let’s break it down and see what this means for you.

What is AB 1033?

In the ongoing effort to address California’s housing shortage, Assembly Bill 1033 (AB 1033) marks a notable policy shift. Effective January 1, 2024, AB 1033 allows cities and counties in California to opt into a program that lets homeowners sell their Accessory Dwelling Units (ADUs) as separate condominiums, independent from the primary residence.

Previously, homeowners could build and rent out ADUs but not sell them separately. AB 1033 removes that restriction—but only if a local jurisdiction passes its own ordinance to opt in. For homeowners and prospective buyers alike, this law introduces new opportunities in how small-scale housing is developed, owned, and transferred.

How Does AB 1033 Work?

Unlike many statewide housing laws, AB 1033 is enabling legislation—which means it doesn’t take effect automatically across California. Instead, it gives cities and counties the authority to opt in by adopting a local ordinance. Only once that happens can property owners in that jurisdiction legally sell ADUs as separate condominiums.

Here’s a step-by-step overview of what the process generally involves once a jurisdiction has opted into AB 1033:

1. Local Ordinance Adoption

The first requirement is that your city or county must pass its own law or zoning amendment to allow for the separate sale of ADUs under AB 1033. If your jurisdiction hasn’t opted in, you cannot proceed, even if your ADU meets all physical and legal requirements.

2. Prepare for Subdivision: Condominium Mapping

Once local approval is in place, the property must go through the condominium mapping process as required by the California Subdivision Map Act. This process legally divides a single parcel into multiple ownership units (condominiums) while retaining common ownership of shared areas.

There are two types of maps:

• Parcel Map – for lots being divided into four or fewer units (most common for ADUs)
• Tentative and Final Maps – required for five or more units

This step typically involves a licensed surveyor or civil engineer, and requires city review and approval through the planning or public works department.

3. Establish Separate Utility Connections

To be considered a legally separate unit, the ADU must have:

• Its own water, sewer, and electricity service
• Independent utility meters
• A clearly identifiable address

This ensures that each unit can be independently owned, billed, and maintained without relying on the main home’s infrastructure.

4. Form a Homeowners’ Association (HOA) or Maintenance Agreement

Because both the main home and the ADU will remain on the same lot (just under separate ownership), the owner is required to:

• Create an HOA or other legal entity
• Draft and record Covenants, Conditions & Restrictions (CC&Rs) or a maintenance agreement

This governing document outlines responsibilities for shared areas like:

• Driveways
• Roofs or exterior walls (in attached ADUs)
• Landscaping or fences
• Insurance and repairs

It helps avoid disputes and ensures long-term upkeep of the property.

5. Obtain Lender Consent

If your property is still under a mortgage, you must obtain written consent from the lender(s) before recording the condo map and completing the subdivision. Most lenders will require:

• Updated appraisal
• Review of proposed CC&Rs or HOA terms
• Possibly, refinancing or partial lien release

This step ensures the lender’s interest is protected, as dividing the property affects the collateral securing the loan.

6. Pass Inspection and Demonstrate Code Compliance

The ADU must be fully permitted, built to code, and pass all required inspections. This typically includes:

• Certificate of Occupancy
• Structural and safety inspections
• Proof of fire, health, and zoning compliance

Cities may require additional documentation to verify that the ADU is safe and legally habitable as a standalone property.

7. Record the Condominium Map and Sell

Once all conditions are met, the condo map is recorded with the county, officially creating two legal property titles: one for the main home, one for the ADU. Each unit can then be:

• Financed independently
• Transferred via a deed
• Listed and sold on the open market

At this point, the ADU becomes a fully independent, ownership-ready housing unit, just like any other condo.

 

Who Stands to Gain from AB 1033?

As AB 1033 rolls out across California, it presents a meaningful shift in how housing is created, transferred, and owned. The groups poised to benefit most are homeowners, prospective homebuyers, and builders, each of whom can leverage this legislation in unique ways.

For homeowners, AB 1033 offers an unprecedented level of flexibility. A permitted ADU is no longer just a rental income source—it can now become a fully independent, sellable asset. For those approaching retirement, this could mean downsizing into the ADU while selling the main home, or vice versa, freeing up capital to support long-term goals. In multigenerational households, the law also allows families to formalize shared living arrangements by giving adult children or aging parents the option to own their own space on the same lot.

From the perspective of prospective buyers, the ability to purchase a detached or converted ADU as a standalone property is a major development. These units are generally smaller and more affordable than traditional single-family homes, which means they can serve as entry points into homeownership for individuals and families who would otherwise remain priced out. Because ADUs are located in established neighborhoods, this also allows buyers to access quality housing in areas where new construction is limited.

AB 1033 in tackles both housing supply and affordability. It’s no longer just about renting an ADU, it’s about unlocking options—for the homeowner, for the buyer, and for the community. This law opens the door to smaller, more accessible for-sale housing, especially in places where zoning limits larger developments.h e conversion process is not prohibitively complex for builders. If you’re already building code-compliant ADUs, transitioning them into condos under AB 1033 is entirely feasible. It’s just one more tool in the toolbox to deliver housing efficiently

For builders and developers, this could usher in a new category of projects: smaller, for-sale housing units that function more like condominiums than rentals. As more jurisdictions opt in, designing ADUs with future conversion in mind could become a smart strategy—especially in urban areas where land is scarce but demand for ownership is high.

 

A Legislation with Transformative Potential

By authorizing the separate sale of ADUs, AB 1033 reshapes how homeowners can use their property, how buyers can enter the market, and how builders can innovate. It signals a broader shift toward flexible, small-scale housing solutions that prioritize accessibility and long-term sustainability.

Here at Builders Now, we remain at the forefront of California’s evolving housing policies. Whether you’re a homeowner exploring options, a buyer looking for your first property, or a developer navigating new regulations, our team is here to help you build smarter, plan ahead, and stay informed.

👉 Curious about how to make the most of your property? Contact Builders Now for a personalized consultation. We’re here to help you move forward with confidence.

What’s Next: City Adoption and San Diego’s Turning Point

The real impact of AB 1033 lies not just in the law itself, but in how cities choose to adopt and implement it. In Part 2 of this series, we’ll explore:

• Which cities have opted into AB 1033 and how they’re applying it on the ground
• The growing interest in cities like San José, Oakland, and Santa Cruz
• Why San Diego is at a pivotal moment, especially as it amends its ADU Bonus Program and evaluates integrating AB 1033 into its broader housing strategy

If you’re a homeowner, buyer, or builder in San Diego—or any city watching this policy unfold—Part 2 of this series will offer the practical insights you need to plan ahead. Tune in!