How AB1033 Transforms ADU Ownership in San Diego

Residential Real Estate

June 25, 2024

In October 2023, California passed AB1033, a state law designed to promote affordable homeownership. This legislation allows Accessory Dwelling Units (ADUs) to be converted into condominiums, contingent on local governments enacting ordinances to permit such conversions. As a result, ADUs could potentially be sold as individual units, much like traditional condominiums.

This blog post will explore what AB1033 entails and how it impacts homeowners in San Diego and potential buyers in the city.

The San Diego housing market has been challenging, making homeownership nearly impossible due to high costs. AB1033 aims to address the lack of affordable housing by opening new opportunities. Here is a detailed analysis of this important legislation.

What is AB1033?

AB1033 is a California statute governing the conversion of ADUs into condominiums for resale, contingent upon the approval of each city through the development and implementation of specific ordinances. This law seeks to help prospective homeowners by allowing builders to sell tiny homes as separate units, enhancing the housing stock.

Benefits of AB1033

Expanded Homeownership Opportunities – This change enables more individuals to qualify for homeownership.
Boosted Property Values – The addition of another saleable unit through ADUs can potentially increase property values.
Alleviates Housing Shortages – Developing more units of affordable housing helps tackle the housing shortage.
Flexibility for Property Owners – Property owners can lease or sell their ADUs, generating income either way.
Environmental Advantages – Promotes minimal space utilization, thereby positively impacting the community.

Potential Downside of AB1033

While AB1033 offers several benefits, there are some potential downsides:

Increased Property Taxes – Selling ADUs as separate units may lead to higher property taxes for homeowners.
Community Impact – The increased density could strain local infrastructure and services.
Regulatory Complexity – Depending on local ordinances and building codes, homeowners may face complex regulations and approval processes.

How does AB1033 affect homeowners and buyers?

For homeowners, AB1033 offers a lucrative opportunity to enhance property value and generate additional income. By converting ADUs into condominiums, homeowners can either sell these units to offset construction costs or generate rental income.

For prospective buyers, AB1033 opens new, more affordable pathways to homeownership. With the high cost of housing in San Diego, being able to purchase a smaller, separate unit like an ADU can make homeownership more accessible.

Balancing the effects of AB1033 involves increasing equity in housing by providing more affordable units, potentially stabilizing housing prices through a greater supply, and requiring local governments to balance the benefits of increased housing with the potential impacts on community resources and infrastructure.

Implementing AB1033

To take advantage of AB1033, homeowners need to:

Check Local Ordinances – Verify if local government has adopted ordinances allowing ADU-to-condominium conversions.
Consult with a Legal Expert – Understand the specific requirements and legal implications.
Apply for Necessary Permits and Approvals – Submit detailed plans and applications to the local planning department, ensuring compliance with local building codes and zoning regulations.
Complete the Legal Conversion – Follow the legal process, including obtaining necessary inspections and certifications.
List and Sell the Converted ADU – Once the conversion is complete, list the ADU for sale as an individual condominium unit.

AB1033 represents a significant shift in California’s housing policy, promoting affordable homeownership by allowing ADUs to be sold as individual units. This law offers various benefits and requires careful consideration and legal guidance for successful implementation.

What does this mean for San Diego?

At this time, most cities in San Diego County have not adopted local ordinances regarding AB1033. However, the legislation is still new, so stay tuned for updated information as this new law unfolds.

Need Legal Advice?

We can help you understand your options and explore how AB1033 can benefit you. Contact us today for a consultation at (619) 546-7880. Our intake specialist will collect the essential information needed to assess your matter.

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