CA bill would allow homeowners to sell ADU as condominium

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CALIFORNIA – Pending legislation Assembly Bill 1033 would allow homeowners with an accessory dwelling unit (ADU) to sell it separately as a condominium. CA Assemblymember and bill author Phil Ting (D-San Francisco) says this opens the door to affordable homeownership.

“The absence of available homes for purchase at rates affordable to moderate-income working families bars wealth building and housing stability for Californians harmed by historic discriminatory housing policies,” said Ting.

According to Ting, AB 1033 allows cities and counties the freedom to pursue homeownership programs. It would also create a path to wealth building for families by repealing the current law prohibiting the separate conveyance — transfer of ADUs.

Cheaper to build

An ADU is a secondary housing unit on a single-family residential lot typically between 600 and 1,200 square feet.

AB 1033 presumes that a reduced home size equates to a lower home price.

The Dwellito ADU cost calculator shows that a 620 square foot 1 bedroom, 1 bathroom detached ADU in San Bernardino county would cost between $217,600 ― $294,400 to construct.

Realtor.com lists the average home price in San Bernardino County at $509,000 – $326 per square foot.

The notes in AB 1033 states that a down payment of 20% and an interest rate of 7%, an ADU is affordable to a household earning approximately $62,000 a year. 

Opposition to AB 1033

Opponents of AB 1033 say that the sale of an ADU, without the proper parameters, could put homeowners at risk of violating federal loan terms. In addition, it fails to ensure consumer protection, risks homeowner’s equity, and creates title deficiencies. 

They also argue that some of the ways that ADUs could be sold would make the transaction ineligible for traditional financing.

“California must continue to increase homeownership opportunities but with laws that properly protect homeowners, communities, and potential new homeowners, which AB 1033 in its current form does not,” said the California Association of Realtors.

RELATED: Accessory Dwelling Unit grant for $40,000 gets $50 million in funding

Other ADU legislation

Ting also has two other ADU bills pending this session:

  • AB 932 – Directs CalHFA to explore ADU financing options to create more housing and report back to the Legislature by 2025; signed by Governor Gavin Newsom on September 8, 2023.
  • AB 976 – Removes requirement that ADUs be owner-occupied.

Newsom has until October 14th to act on AB 1033 and AB 976.

To read AB 1033 visit https://trackbill.com/bill/california-assembly-bill-1033-accessory-dwelling-units-local-ordinances-separate-sale-or-conveyance/2369724/

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