California ADU Laws Made Easier: New Legislation Streamlines Development
California ADU Laws Made Easier in 2023 and Beyond
California is making it easier than ever to build and sell accessory dwelling units (ADUs). In 2023, several new laws went into effect that streamline the permitting process, relax height restrictions, and provide more flexibility for homeowners. And in 2024, a new law will allow homeowners to sell their ADUs separately from their primary residences.
Here is a summary of the key changes:
2023 changes:
- Height restrictions: Previously, ADUs were limited to 16 feet in height. In 2023, attached ADUs can be up to 25 feet tall, or as tall as the main house, whichever is lower. ADUs within a half-mile of public transit or on a property with a multi-family dwelling can now be up to 18 feet tall.
- Permit review: In 2020, California required permitting offices to approve or deny ADU permits within 60 days. However, many offices were simply denying applications after the deadline passed. The new law requires permitting offices to provide a detailed list of reasons for denial and instructions on how to remedy any deficiencies.
- Front setback: If an 800-square-foot ADU encroaches on the front setback, your local jurisdiction can no longer deny your application. This is helpful for homeowners with limited backyard space.
2024 changes:
- Selling ADUs separately: Starting January 1, 2024, homeowners in California will be able to sell their ADUs separately from their primary residences. This is a significant change, as previously only a limited number of ADUs could be sold separately, and those sales were subject to strict restrictions.
- Previously, while an ADU cannot be sold as a condo, some homeowners have sold ADUs separately by creating a Tenancy in Common, which requires more paperwork and is harder to finance than a condo. In a TIC, each owner owns a share in an entity that owns both the house and the ADU.
- Note that a condo ADU does not have to be attached to the house, in fact, in places that allow them, detached condo ADUs are more common. Cities now have the choice of amending their zoning ordinance to remove the restriction on separate sale of an ADU and allow ADU condos. Since ADUs are much smaller than a regular house, this would help create more starter homes for sale.
Other notable changes:
- Unpermitted work: You can now build an ADU on a property with unpermitted work, unless it’s a health and safety hazard.
- Fire sprinklers: Fire sprinklers are no longer required in the main house when building an ADU.
- JADU bathrooms: You no longer need to include a bathroom in an attached JADU (junior accessory dwelling unit) if the bathroom in the main house is accessible to the JADU.
- Demolition permits: Cities can no longer withhold demolition permits for garages and other structures that are being demolished to build an ADU.
- CalHFA working group: A new law requires CalHFA to create a working group to develop recommendations for making it easier for homeowners to qualify for ADU construction loans.
Fannie Mae Announces New Policy to Reduce Down Payment Requirements for Multifamily Homes
In addition to the new California ADU laws that make it easier to build and sell ADUs, Fannie Mae has announced a new policy that will significantly reduce down payment requirements for owner-occupied 2-, 3-, and 4-unit homes. Starting on the weekend following November 18, 2023, the down payment for these properties will be 5%, down from 15-25%.
This policy shift is a major win for aspiring investors in multifamily residences. It allows them to blend the advantages of property investment with homeownership perks, such as the ability to live in one unit and rent out the others to generate income. By reducing the down payment barrier, Fannie Mae has made it possible for more people to afford these properties and achieve their financial goals.
The new Fannie Mae policy is particularly relevant to the California ADU market. Many homeowners in California are considering building or selling ADUs, and the Fannie Mae policy makes it more affordable to purchase a multifamily property that includes an ADU.
For example, a homeowner who wants to build an ADU on their property could use the Fannie Mae policy to purchase a duplex or triplex. The homeowner could then live in one unit and rent out the other units to generate income.
The Fannie Mae policy also makes it more affordable for investors to purchase multifamily properties in California. Investors can use the policy to purchase properties with ADUs that they can rent out to tenants.
Overall, the new Fannie Mae policy is a positive development for the California housing market. It makes it more affordable for people to own multifamily properties, which can help to increase the supply of housing and make it more affordable for everyone.
What does this mean for you?
If you are a homeowner in California, you now have more options than ever before when it comes to building and selling ADUs. With the new laws in place, the process is faster, easier, and more affordable. If you have been considering building or selling an ADU, now is the time to start planning your project.
Learn More – https://alfredtwu.medium.com/2023-california-accessory-dwelling-unit-legislation-info-for-local-staff-commissioners-and-59494bd820da and https://static1.squarespace.com/static/5f2c2d67c58236227115e0de/t/648201ee240da7728e37b0bd/1686241774928/AB+1033+%28Ting%29-+Affordable+Homeownership+Units+Factsheet-4-updated.pdf
Here are some tips for getting started:
- Do your research. Learn about the new ADU laws and requirements in your area.
- Contact your local planning department. They can help you determine if your property is eligible for an ADU and can provide information on the permitting process.
- Get pre-approved for a loan. This will give you an idea of how much you can afford to borrow and will help you to streamline the construction process.
- Hire a qualified contractor. Building an ADU is a complex project, so it is important to hire a contractor who has experience with this type of construction.
- Market your ADU. If you are planning to sell your ADU, start marketing it early. There is a high demand for ADUs in California, so yours is likely to sell quickly.
California is leading the way in making ADUs more accessible and affordable for homeowners. With the new laws in place, there is no better time to build or sell an ADU.
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- Invest in your future with an ADU! Contact us today to learn more about buying land and homes with ADUs in California.
- Schedule a free consultation with one of our experienced real estate agents to discuss your goals and how we can help you achieve them.
- We have a proven track record of success helping clients buy and sell land and homes with ADUs in California.
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