What San Diego Homeowners Need to Know

Accessory Dwelling Units (ADUs) have become a cornerstone in California's strategy to address housing shortages and promote affordable living options. The enactment of Assembly Bill 1033 (AB 1033) in 2023 marks a significant shift in the potential for ADU ownership and sales. This legislation empowers local jurisdictions to permit the separate sale of ADUs, a departure from previous statewide restrictions. This article delves into the implications of AB 1033, its impact on ADU sales in California, and the progress of cities within Greater San Diego toward adopting supportive ordinances.

 Understanding AB 1033 and Its Implications

AB 1033, signed into law in October 2023, authorizes local governments to enact ordinances allowing the separate conveyance of ADUs from primary residences. This legislative change aims to enhance housing affordability and accessibility by enabling homeowners to sell ADUs as individual units, similar to condominiums. However, the implementation of this provision is contingent upon local jurisdictions opting in by adopting specific ordinances that align with AB 1033's framework.

Prior to AB 1033, state law prohibited the separate sale of ADUs from the main dwelling, limiting their use to rental units or accommodations for family members. The new legislation shifts this paradigm, granting local authorities the discretion to permit separate sales, thereby potentially increasing homeownership opportunities and diversifying housing options.

 The Process of Selling an ADU Under AB 1033

For homeowners interested in selling an ADU separately, the process involves several key steps, contingent upon local adoption of AB 1033 provisions:

1. Preliminary Assessment: Evaluate whether the local jurisdiction has adopted ordinances permitting the separate sale of ADUs.

2. Application and Documentation: Prepare necessary documentation, including property surveys and legal descriptions, to facilitate the subdivision of the property.

3. Compliance with Local Regulations: Ensure adherence to local zoning laws, building codes, and any specific requirements outlined in the adopted ordinances.

4. Public Report and Final Map: Submit a final subdivision map and obtain a public report, as required for condominium conversions.

5. Approval Process: Navigate the approval process with local planning departments and other relevant agencies.

6. Establishment of a Homeowners Association (HOA): If applicable, form an HOA to manage shared responsibilities and common areas.

7. Sales and Marketing: Once approvals are secured, proceed with marketing and selling the ADU as a separate property.

It's important to note that this process can be complex and may require professional assistance to ensure compliance with all legal and regulatory requirements.

 Progress in Greater San Diego Cities Toward Adopting AB 1033 Ordinances

As of November 2024, several cities within Greater San Diego are making strides toward adopting local ordinances in support of AB 1033. Here's an overview of their progress:

San Diego

The City of San Diego has been proactive in exploring the potential of AB 1033. In early 2024, the City Council initiated studies to assess the feasibility and impact of allowing separate ADU sales. Public workshops and stakeholder meetings have been conducted to gather input and address concerns. A draft ordinance is currently under review, with potential adoption anticipated in early 2025.

Encinitas

Encinitas has demonstrated a strong commitment to innovative housing solutions. The city has established a task force to evaluate AB 1033's implications and is in the process of drafting ordinances to permit separate ADU sales. Public hearings are scheduled for late 2024, with the goal of implementing new regulations by mid-2025.

Carlsbad

Carlsbad is in the preliminary stages of considering AB 1033 adoption. City planners are conducting impact assessments and engaging with community members to understand the potential benefits and challenges. While no formal ordinances have been proposed yet, discussions are ongoing, and developments are expected in 2025.

Oceanside

Oceanside has taken initial steps by commissioning studies to evaluate the feasibility of separate ADU sales. Community outreach programs are underway to educate residents and gather feedback. The city aims to draft ordinances in 2025, following comprehensive assessments and public consultations.

Chula Vista

Chula Vista is actively exploring the adoption of AB 1033 provisions. The city has formed a committee to study the potential impact on housing affordability and neighborhood dynamics. Preliminary reports are expected by the end of 2024, with ordinance drafting to follow based on findings and community input.

 Benefits and Considerations of AB 1033 Adoption

The adoption of AB 1033 by local jurisdictions offers several potential benefits:

- Increased Homeownership Opportunities: Allowing the separate sale of ADUs can provide more affordable entry points into the housing market for first-time buyers.

- Diversification of Housing Stock: Facilitates a range of housing options to meet diverse community needs.

- Economic Incentives for Homeowners: Enables property owners to capitalize on their investments by selling ADUs separately.

However, considerations must be addressed, including:

- Infrastructure and Services: Assessing the capacity of local infrastructure to support increased housing density.

- Community Impact: Evaluating how separate ADU sales may affect neighborhood character and dynamics.

- Regulatory Compliance: Ensuring that new ordinances align with state laws and effectively address local housing challenges.

My Perspectives as a Homeowner, Home Buyer, and Investor

The passage of AB 1033 introduces a transformative way to approach real estate in California, especially in markets like San Diego. By enabling the separate sale of Accessory Dwelling Units (ADUs), the legislation opens up exciting opportunities for various stakeholders.

 For Homeowners: Unlocking Potential

Homeowners gain a new way to monetize their properties. By selling an ADU independently, they can create an additional income stream, reduce financial strain, or reinvest in their primary property. This flexibility allows homeowners to tap into their property's full value while also contributing to solving California's housing shortage. Whether it’s a backyard unit or a garage conversion, homeowners can turn unused space into tangible equity.

 For Home Buyers: Affordable Options

For buyers struggling to enter San Diego’s high-cost housing market, AB 1033 provides a path to homeownership through ADUs. Purchasing an ADU offers a more affordable alternative to buying an entire property, making it an ideal option for first-time buyers or those looking to downsize. ADUs offer private, self-contained living spaces with the bonus of shared land ownership, fostering more inclusive housing opportunities in competitive markets.

 For Investors: Strategic Opportunities

Investors are uniquely positioned to capitalize on the independent ADU market. With the ability to buy or sell ADUs separately, they can diversify their portfolios and create innovative housing arrangements. The rise of tenants-in-common (TIC) agreements further streamlines investment opportunities, enabling more creative and profitable property arrangements in sought-after areas like San Diego.

The Bottom Line: 

AB 1033 isn’t just about selling ADUs—it’s about unlocking new possibilities for homeowners, buyers, and investors alike. This legislation reshapes how we think about housing in California, making real estate more accessible and profitable for all.

Wrap up

AB 1033 represents a significant development in California's housing policy, offering a pathway for the separate sale of ADUs and potentially transforming housing accessibility and affordability. The progress of cities within Greater San Diego toward adopting supportive ordinances reflects a growing recognition of the benefits associated with this legislative change. As these cities continue to evaluate and implement AB 1033 provisions, homeowners and prospective buyers should stay informed about local developments and participate in community discussions to shape the future of housing in their communities.