AB 1033: Selling adu as a condominium
California's Assembly Bill 1033 (AB 1033) provides homeowners a statutory right to sell an ADU located on a single family residence lot as a condominium. Depending upon the size of a single family lot, this law will permit multiple condominiums to be sold as separate legal interests.
Background of AB 1033
Assembly Bill 1033, enacted in California, amends the state's law regarding ADUs, commonly known as "granny flats" or "in-law units." Specifically, AB 1033 provides homeowners with more flexibility to add livable spaces to their property, including the potential for these units to be conveyed as separate property condominiums. This legislation aims to address housing shortages across the state by leveraging underutilized residential properties.
Scope and Statutory Requirements
Under AB 1033, homeowners wishing to convert an ADU into a condominium unit must comply with specific statutory requirements, which aim to ensure that these conversions do not undermine local zoning laws, housing standards, or the rights of homeowners and tenants.
Planning and Zoning Compliance: Initially, you must ensure that your ADU conversion aligns with local planning and zoning ordinances. While AB 1033 provides for such conversions at the state level, local governments may have additional requirements or restrictions. Therefore, it is important to check with your local building authority to ensure that your plans conform to the local requirements.
Submission of a Condominium Plan: You will need to prepare and submit a detailed condominium plan to the relevant authority, typically the local planning department. This plan should include a comprehensive layout of the property, distinguishing the primary residence from the ADU, shared utilities and amenities, and the proposed division of the property.
Compliance with the Davis-Stirling Common Interest Development Act: Given that the conversion involves creating a condominium, adherence to the Davis-Stirling Act is a necessity. This Act governs the creation and operation of common interest developments in California. Among other things, it requires the establishment of a homeowners' association (HOA), drafting of governing documents, and ensuring financial stability for common area maintenance and repair. [Please see the Davis-Stirling Act for detailed requirements].
Health, Safety, and Building Standards Compliance: Besides planning and zoning, ensuring that the ADU meets all relevant health, safety, and building standards is critical. This might involve undergoing inspections and obtaining certifications attesting to the ADU's compliance with building codes and standards.
Potential Considerations and Hurdles
Financing and Insurance: Converting an ADU into a condominium unit may impact your financing options and insurance premiums. Lenders and insurers may have specific requirements or considerations for condominiums, which can differ significantly from those for single-family residences.
HOA Management: Establishing and managing an HOA can be complicated. It involves drafting bylaws, setting up financial management structures, and ongoing administration—areas where legal assistance might be beneficial.
Market Considerations: It's essential to consider how the conversion might affect the property's marketability and value. This includes understanding the demand for condominiums in your area and how an ADU converted into a condominium might be perceived.
In conclusion, while AB 1033 offers a viable path for homeowners to maximize the utility and potential of their properties, careful consideration of the legal, financial, and practical implications is crucial. Our law firm is experienced in all aspects of zoning and land use in California. In addition, we have extensive HOA formation, interpretation and management experience. If you are considering maximizing the financial potential of your single family home investment by selling ADUs as condominiums, please do not hesitate to contact our firm, we are available to discuss your options and provide legal guidance.