California AB 1033: A First-Hand Guide to ADU Condo Conversions

As a California homeowner and housing professional, I’ve been closely following Assembly Bill 1033 (AB 1033) – a law enacted in 2023 that’s making waves in our state’s housing scene. In this post, I’ll walk you through what AB 1033 is all about, how it lets you sell an Accessory Dwelling Unit (ADU) as a separate condo, and what that means for folks like us with single-family homes, duplexes, and even multifamily properties. I’ll also share where this law is in effect today (hint: cities like San José and Santa Cruz are leading the way) and where it’s headed next. Along the way, I’ll keep it friendly, conversational, and packed with useful data, real examples, and first-hand insights from the field. Let’s dive in!

What Is AB 1033 and Why Is It a Big Deal?

AB 1033 is a California law (authored by Assemblymember Phil Ting) that, starting in 2024, gives cities the option to let homeowners sell an ADU separately from their main home. Before this, if you built a backyard ADU you could rent it out, but you generally couldn’t sell it on its own—it stayed legally tied to the primary residence. There was a narrow earlier exception that allowed certain nonprofits to sell ADUs for affordable housing, but for everyday homeowners, separate sale wasn’t on the table. AB 1033 changes that by allowing private homeowners, where locally approved, to “condo-ize” an ADU into its own ownership unit.

Here’s what that means in real life: you’re not splitting the property into two separate lots like a traditional subdivision or an SB 9 lot split. Instead, you record a condominium map that creates two (or more) condo units—one for the main home and one for the ADU—while the underlying land remains shared as common area. Each unit gets its own deed and title, which means it can be financed and sold independently, and the owners share a small HOA to manage any common elements like a driveway or shared yard. The upside is major: homeowners can unlock equity without selling the whole house, and buyers get a smaller, often more attainable homeownership option—something that matters in a state where affordability is a real obstacle.

A Brief History: From “ADUs Can’t Be Sold” to AB 1033

To appreciate AB 1033, it helps to know the backstory. For years, state law explicitly said: you can’t sell an ADU separate from the main house. ADUs were always meant to stay tied to the primary dwelling. This was meant to prevent random mini-home sales and maintain single-family zoning norms. In 2019, a law called AB 587 carved a tiny exception – if a qualified nonprofit affordable housing builder developed the ADU and met certain conditions (like a deed-restriction for low-income housing), then that ADU could be sold to an income-qualified buyer. But for the average homeowner who built an ADU for grandma or for rental income, separate sale was off-limits.

Fast forward to the early 2020s: California was embracing ADUs as a quick way to add housing. By 2022 and 2023, thousands of ADUs were being built (over 30,000 were permitted in 2022 alone statewide ), but they were almost all rentals. Surveys showed about 65% of ADUs were long-term rentals or housing family/friends, not owner-occupied units. So they weren’t moving the needle on homeownership. Phil Ting’s AB 1033 was introduced to change that. It sailed through the Legislature and was signed by the Governor on October 11, 2023, taking effect January 1, 2024. Essentially, AB 1033 said: we’re going to lift the ban on selling ADUs, and allow cities to let homeowners condo-convert their ADUs. It amends state code to empower local governments to approve these small condo subdivisions for ADUs in residential zones.

One important thing to note: AB 1033 doesn’t force any city to do this; it allows cities to opt in by passing a local ordinance. It’s a permissive law, not a mandate. That’s why the impact is rolling out city by city, as we’ll discuss next.

Where Is AB 1033 in Effect Today (Late 2025)?

Since AB 1033 kicked in at the state level, a number of forward-thinking cities jumped on board to implement it. The very first was San José – in fact, San José’s city council adopted an ordinance in 2024 to allow ADU condo conversions, making it the first city in California to opt in. By mid-2025, San José had even approved its first actual ADU condo conversion project, turning a backyard cottage into a saleable condo unit. At a ceremony in August 2025, San José’s mayor hailed it as “history in the making,” presenting the first ADU condo to receive official city certification. That first project (on Josefa Street, developed by a local builder) proved it could be done, and another project in the Cambrian Park area was close behind.

Not far behind San José, other cities enacted their own ordinances. Here’s a quick rundown of where AB 1033 is approved and active as of late 2025:

Santa Cruz (City)

Santa Cruz became one of the first coastal cities to embrace ADU condos. The City of Santa Cruz officially opted in by early 2025 (around January/February), enabling local homeowners to condo-map and sell their ADUs. This means if you own a home within Santa Cruz city limits (not county), you have a legal pathway now to split off your ADU as a condo. As of mid-2025, however, this was still so new that the city hadn’t actually received any conversion applications yet – sometimes policy runs ahead of market action. But the option is there, and Santa Cruz leaders see it as a way to reshape property ownership and affordability in their community over time.

Santa Monica

This city adopted its ordinance in late 2024. Santa Monica is often progressive on housing, and here they allowed ADU condos with some local tweaks (for example, Santa Monica only allows one ADU condo per property and still requires an HOA structure). By mid-2025, like Santa Cruz, Santa Monica officials reported they hadn’t yet seen applications come through , but they’ve laid the groundwork.

San Diego

San Diego’s City Council approved a package of ADU reforms in June 2025, which explicitly implemented AB 1033 in their municipal code. In other words, San Diegans can now subdivide an ADU as a condo unit. These changes were part of a big effort to boost housing while addressing safety and infrastructure concerns (25 different ADU rule tweaks at once!). The new ordinance took effect in summer 2025 for areas outside the Coastal Zone (with Coastal Commission approval needed by 2026 for the beach areas). So, San Diego homeowners are on the cusp of seeing ADU condos hit their market as well.

San Francisco

San Francisco, after some debate, passed its local ADU condo conversion ordinance in 2025, which took effect in July 2025. SF put some extra conditions on ADU conversions: for instance, the ADU’s building permit must be issued after May 2025, the property can’t have other units that are non-condos (to avoid loopholes in multifamily buildings), and the ADU generally has to be detached if it’s being added to a lot with an existing house. In short, San Francisco is proceeding carefully, but the door is now open there too.

Oakland

Oakland was an early adopter as well, with an ordinance in place by mid-2024 (Oakland often moves quickly on housing innovation). According to one source, Oakland even offers fast-track permits for ADU construction and sales, seeing this as a way to encourage more housing stock. By late 2024, Oakland’s program was implemented.

Encinitas, Chula Vista, Carlsbad (San Diego County cities)

Encinitas has adopted AB 1033 provisions (Encinitas is known for being ADU-friendly), fully implementing the program. Chula Vista and Carlsbad have been in the process of updating their local ordinances to align with the new state law as well. Carlsbad expected adoption by early 2025.

Others in the Pipeline

Berkeley is one notable city on deck – Berkeley officials were preparing an ordinance by late 2025 (around September). Los Angeles, the state’s largest city, had an ADU condo ordinance pending as of 2025 and was expected to implement it soon. Sacramento was also evaluating the change (with discussions in 2024). In essence, we anticipate that through 2026 and 2027, more cities – especially those with housing pressures – will hop on board. Many are watching the early adopters like San José and San Diego to see how these first ADU condo sales go. If they prove successful (or at least not problematic), expect a wave of other cities to follow suit in the next few years.

To sum up, as of today only a handful of California cities have fully approved ADU condo conversions. If you’re lucky to live in one of them, AB 1033 is immediately relevant to you. If not, don’t worry – the movement is spreading. Keep an ear out with your city’s planning department; local politics will determine when or if your community “opts in.” And remember, AB 1033 is very new – even in the cities that allow it, the uptake has been slow at first. Housing laws often take time to catch on in practice, so patience is key.

What Kinds of Properties Can Be Condo-Converted?

One of the most common questions I get is: “Can my property qualify for this? Is it only for single-family homes and their ADUs, or does it work for duplexes, triplexes, etc.?” Let’s clarify:

Single-Family Homes with ADUs

This is the classic scenario AB 1033 was designed for. If you have one primary house on a lot and you’ve added (or plan to add) an ADU – whether it’s a detached cottage, an attached addition, or a converted garage/basement – you can potentially split them into separate condo units. Multiple ADUs are also allowed; for example, if you managed to add two ADUs on your lot (some cities allow a detached ADU and a junior ADU, or two detached ADUs on larger lots), the law lets those be separate condos too. In fact, AB 1033 allows a local ordinance to cover “the separate conveyance of the primary dwelling unit and accessory dwelling unit or units” – plural. (Junior ADUs, however, are not eligible in any case – JADUs are excluded by the law , likely because they share too many systems with the main house.)

Example: Let’s say you own a single-family home in San José and built a backyard ADU in 2021. Now San José’s law is in effect, so you file for a condo map. Once approved, your 3-bed/2-bath ADU becomes Unit #2 with its own address and deed, and you can sell it. In one real San José project, the owner’s main house (5 beds, ~2,900 sq ft) was listed around $3+ million, while the new detached ADU (~1,200 sq ft, 3 beds) was expected to sell for just under $1.6 million. That’s still not cheap, but it’s roughly half the price of the big home – illustrating how an ADU condo can be a more affordable alternative in high-cost neighborhoods.

Duplexes and Multi-Unit Properties

AB 1033’s provisions can also apply if you have a multi-unit property and then add ADUs to it. For instance, imagine a duplex (two units on one lot) where you build a detached ADU in the yard. Under the new law, you could potentially condo-ize the whole setup: each of the original duplex units becomes a condo and the ADU becomes a third condo. However, this gets trickier because standard condo conversion laws for existing duplex/triplex units might also come into play (cities often have separate rules or caps on converting old duplexes to condos to protect renters).

The Casita Coalition, which sponsored AB 1033, notes that ADUs on multifamily properties are eligible for condo conversion under the law. In practice, some cities might restrict scenarios to avoid loopholes – for example, San Francisco’s version doesn’t allow an ADU-to-condo if the lot already had multiple rental units that weren’t condos. So, if you own a fourplex and add an ADU, SF would say no – you can’t turn that ADU into the building’s fifth condo unless the other four were already condos. But in a city without such a restriction, a multi-unit owner could use AB 1033 to create condo ownership opportunities for any new ADUs they build, maybe even alongside converting the existing units through normal channels. The key is checking your local ordinance details.

Townhomes: The term townhome can be confusing because it describes a style of construction (usually attached homes in a row) but the ownership structure could be condo or single-family (in a Planned Unit Development). If you own a townhome that is already a separate legal unit (e.g. you have your own lot or condo parcel), AB 1033 isn’t very relevant – you can already sell your townhome (you own it!). Adding an ADU to a townhome is rare and would likely fall under HOA rules. However, if you somehow added an ADU to your townhome unit (say, converting an attached garage to a JADU), you cannot spin that off separately – you don’t have the right to split a condo into two condos without the whole HOA’s approval (that’s outside the scope of AB 1033).

On the other hand, consider a scenario where a developer owns a property zoned for, say, four units (like a fourplex) and decides to build four townhome-style units plus ADUs for each in a single lot. They could potentially map each pair of main-unit+ADU as two condos under AB 1033, ending up with 8 condos (4 main, 4 ADU). This is an advanced use-case and would depend on local ordinances and creative planning, but it shows that AB 1033 can work in multi-unit contexts – it’s not limited to the stereotypical “one house, one ADU” setup. In summary, single-family homes with ADUs are the primary target, but duplex and multifamily owners can also take advantage if local rules permit, especially to sell new ADU units on their properties. Always verify local eligibility, because some cities might impose unit caps or require the ADU to be detached, etc., for multi-unit parcels.

How the ADU-to-Condo Conversion Process Works

So, what does it actually take to go from having an ADU in your yard to having a sellable condo unit? I won’t sugarcoat it – this is not a casual weekend DIY; it’s a multi-step legal and bureaucratic process. But it’s quite doable with the right help. Here’s a step-by-step overview in plain language:

Check Your City’s Ordinance & Eligibility

First, confirm that your city (or county, if in an unincorporated area) has adopted AB 1033 provisions. If not, you might be out of luck until they do. If yes, read up on any specific local requirements. For example, does your city require the ADU to be new construction? Any owner-occupancy rules? Lot size minimum? Most cities follow the state’s basic framework, but some add tweaks. Make sure your property meets any baseline conditions (some cities might require the property be in a residential zone, have no outstanding code violations, etc. – usually standard stuff).

Have a Completed, Permitted ADU (or Plan to Build One)

You need an actual ADU to sell! If you already have a permitted ADU on your lot, great – AB 1033 is essentially giving you a new exit strategy for that unit. If you don’t have one yet, you’ll need to build it first (or be in the process of building it). The law requires that an ADU must have a certificate of occupancy (final sign-off) before it can undergo the condo mapping. In practice, that means you can’t legally map and sell an unbuilt or unfinished ADU. For developers, this has meant they must finish construction and then go through mapping, which can tie up capital while the new units sit vacant. For a homeowner, if you’re building now, just know you’ll need to finish and pass inspections on the ADU first, then do the split.

Hire Your Professionals (Surveyor, Engineer, Attorney)

This is not a one-person job. You’ll need a licensed land surveyor or civil engineer to create a Parcel Map (Condo Map) of your property, delineating the new condo units and common area. You’ll also want a real estate attorney to draft the CC&Rs and HOA bylaws – the documents that govern the new two-unit condominium (even if it’s just you and the buyer, you technically form a mini-HOA). A title company can be handy too, to handle notification of your mortgage lender and eventual recording of documents. At this stage, you’ll work out things like: How will the lot be divided on paper? Which portions are exclusive-use for each unit (e.g. the ADU’s structure and maybe a yard area) and which are common area (perhaps a shared driveway)? The professionals will map all that out. This step does involve out-of-pocket costs – I’ll detail costs later, but expect survey and legal fees in the tens of thousands.

City Application for Parcel Map Approval

With your map and documents drafted, you’ll formally apply to the city to approve the subdivision (since legally, you are subdividing the property, just as condos rather than fee-simple lots). Many cities treat this as a Tentative Parcel Map process through the Planning or Public Works department. For example, San José requires submitting an “AB 1033 Parcel Map” application to Public Works, along with an ADU Condominium Checklist of conditions to meet. Santa Cruz similarly has you go through Planning/Public Works for the condo map approval. Because of state law streamlining, these maps may often be approved ministerially (without a big public hearing), but the timeline can still be a few months for staff to review, ensure all requirements are met (such as separate utility metering, fire safety, etc.), and get it ready for sign-off. The city will check that your situation meets the law’s conditions – for instance, one condition in all cases is that you cannot have rented out the ADU short-term (it can’t be a vacation rental) and any eviction of tenants to enable the ADU is a no-no (these are anti-displacement safeguards often written into the ordinance). If all looks good, the city will approve your parcel map.

Secure Lender Consent (if Mortgaged)

If you have a mortgage on your property, this step is crucial and can be a hurdle. Your bank has a lien on the whole property, so you can’t just carve it up without their blessing (otherwise their collateral is affected). Typically, one of two things needs to happen: (a) the lender signs off on an agreement to recognize the new parcels (sometimes called a consent to subdivision or parcel map) – basically assuring their lien will attach to both the new condo units proportionally, or (b) you refinance or clear the loan. Many homeowners will try for (a) to avoid having to pay off the mortgage immediately. If you have significant equity and a cooperative lender, they might agree. If the lender balks, you may need to find new financing. Once the ADU is its own unit, each unit can indeed carry its own mortgage – that’s the beauty of separate titles. But to get there, you might need to refinance into two loans or a partial release arrangement. This is one reason a lot of the early ADU condo projects in San José were done by developers who paid cash or had commercial financing that they could settle at sale – it sidesteps the mortgage consent issue. For a homeowner, it’s wise to talk to your lender early to see what’s possible. Some folks ultimately use part of the ADU sale proceeds to pay off the original mortgage – essentially ending up with no mortgage on the main house afterwards.

Pass Final Inspections & Requirements

Before everything is made official, you’ll need to ensure the ADU (and main house) meet all applicable building and safety codes as independent units. If you built to code, this should be fine – you likely already had final inspections for your ADU’s occupancy permit. The city might do a brief inspection again as part of the condo map to verify things like each unit has proper fire separation, independent utility connections, etc. You’ll also need to get certain paperwork in order: for example, many cities require that the ADU have its own address (no longer “123 Main St Unit B” but maybe “123-A Main St.” or “125 Main St.”) for clarity. Utilities may need notification so they can account for separate service (separate meters for water, power, gas are strongly recommended if you’re selling the unit ). And you’ll draft the final Condo Plan and CC&Rs ready for recordation. This stage is basically crossing t’s and dotting i’s before the split is official.

Record the Condo Map and Legal Docs

Now comes the moment of truth – the parcel map, condo declaration, and CC&Rs get recorded with the County Recorder’s Office. Upon recordation, the single parcel is legally split into two (or more) condo parcels. The County Assessor will issue separate APNs (Assessor’s Parcel Numbers) for the ADU unit and the main unit. Congratulations, you’ve just created a new property! At this point, you’ll also finalize the structure of the HOA (for two units it’s often a very simple HOA, but you may need to establish a bank account for it, insurance, etc., as required by the CC&Rs). Each unit is now eligible for its own title insurance policy and its own mortgage like any condo would.

Sell (or Refinance) the ADU Condo

With the ADU officially a condo unit, you can list it for sale just as you would any home. Buyers can get a loan to purchase it – notably, conventional mortgage financing becomes available for that ADU now that it’s a separate legal unit. Early evidence suggests buyers are interested: smaller homes at lower price points fill a niche. In fact, in Seattle (which has a similar concept), a majority of newly built ADUs are being sold rather than rented because there’s high demand from buyers who’ve been priced out of standalone houses. When you sell the ADU condo, you pay off any portion of the loan tied to that unit (if you haven’t already), and voilà – you’ve realized the equity. Alternatively, you might choose not to sell to a stranger; some people consider selling or gifting the ADU condo to a family member – e.g. transferring it to an adult child, so they can afford to own a home and live near family. The law allows that flexibility. Even if you don’t sell immediately, you’ve now got the option and a lot more financial flexibility. Your main house and ADU each have their own value.

Throughout this process, expect a few layers of approval: city sign-off, and in some cases county sign-off (some counties require an extra approval for new condo maps after the city, though usually it’s straightforward). From start to finish, the conversion process can take several months. One developer in San José mentioned it took about six months just for the mapping and approval steps after the units were built. For a homeowner doing this the first time, plan on maybe 6-12 months total for the conversion process, assuming your ADU is already built. There’s paperwork and waiting at each step, but having good professionals can speed it up.

How Long Does It Take and How Much Does It Cost?

Timeline: As noted, roughly half a year to a year for the conversion itself is a fair estimate in these early days. If you still need to build the ADU, factor that in separately (building an ADU can take 6-12 months or more including design, permits, and construction). The conversion timeline can vary by city – some cities might process parcel maps quicker than others. Since AB 1033 projects are small (often just splitting one lot into two condos), they should be faster than a typical large subdivision. But you may still need to wait on scheduling (surveying, title company, city reviews, maybe planning commission if required, etc.). I’d say expect ~6 months and be pleasantly surprised if it’s 3-4 months in best case. And don’t be too shocked if it’s 9+ months, especially if lender negotiations or any curveballs pop up.

Cost: Let’s talk dollars. There are a few categories of costs to consider:

Professional Fees

Surveyor/engineer to do the map, attorney to do the legal docs, possibly an architect or draftsperson to draw condo plans, and title company fees. In California, subdividing a lot under the Subdivision Map Act is not cheap. For a full SB 9 lot split, folks often spend $50k–$75k on surveys, maps, city fees, etc., and AB 1033 is similar. In fact, one analysis noted “AB-1033 is even more expensive. It costs the same $50-75k… to split a lot plus the extra expense to hire legal counsel to create and maintain an HOA.”. So, budget perhaps $60k or more for the conversion process all-in. If you already had an ADU, that’s your main cost; if you still need to build the ADU, remember the average ADU in CA can cost $280k-$300k to build (that’s an average; yours could be less for a small studio, or more for a high-end unit). It’s a serious investment, so AB 1033 isn’t a “get rich quick” scheme – it’s more about long-term asset strategy.

City/Permit Fees

Within that $50-75k, a chunk goes to city fees. You’ll likely have to pay for the parcel map application, plan checking, and mapping fees. Some cities might also charge park fees or school fees for creating a new dwelling unit (though since the unit physically existed already as an ADU, some fees might have been paid at ADU building permit time). It’s very locale-specific. For instance, a city could require paying any backlogged impact fees that ADUs were exempt from if you convert to condo (ADUs under 750 sq ft are fee-exempt by state law; if you turn it condo, unclear if any fee recapture occurs – most likely not, but keep ears open locally).

Financing Costs

If you have to refinance or take on a bridge loan to shuffle things with your lender, include those costs (loan fees, possibly higher interest for a period, etc.). If you end up paying off a mortgage to do the split, that’s a huge cost but also it means you’re debt-free on that property afterwards. Some homeowners might treat it as selling part of property to eliminate debt on the rest, which can be financially freeing.

HOA Ongoing Costs

Once done, you’ll have an HOA (even if it’s just two units). Maintaining an HOA has minimal cost – possibly an annual corporate filing or, if you hire a management company for two units (you probably wouldn’t), that’d be extra. Mostly, you and the other unit owner will share insurance for common areas and any shared utility bills, etc. It’s wise to have a solid HOA reserve for big common expenses (e.g., if a shared driveway needs repair in 10 years, both chip in). But that’s not an upfront conversion cost, just a consideration.

Given the costs, you might wonder: Is it worth it? It depends on your situation. If your ADU could fetch a high price that far exceeds the conversion costs, then yes, it can be lucrative. If your ADU is modest and in a lower-value market, selling it might not even cover the conversion costs plus what it could rent for – in such cases, holding and renting might be better. Each homeowner should run the numbers (possibly with a real estate agent or financial advisor). The law simply provides the option; it doesn’t guarantee that every ADU owner should do it. Many won’t, and that’s okay – but it’s great to have the choice now.

Design and Planning Considerations for Would-Be ADU Condo Sellers

If you’re in the design phase for an ADU, or considering building one with the intention to sell it, there are a few extra things to keep in mind. I’ve advised a few friends on this, and here’s what I suggest:

Aim for a Detached ADU if Possible

While not strictly required everywhere, a detached unit makes the condo scenario cleaner. You’ll have a freestanding unit that feels like a small house – very appealing to buyers. Some cities (like San Francisco) actually require the ADU be detached to convert it , especially if the main building has other units. But even if not required, detached means fewer shared elements. If your ADU is attached (say, a basement apartment or an addition), you’ll be sharing walls and systems – you can still condo them, but you’ll have to delineate maintenance responsibilities in the CC&Rs (e.g., who maintains the roof of an attached ADU, especially if it’s structurally connected to the main house? Usually both parties via the HOA). Detached simplifies that: each structure is separate.

Provide Separate Utility Connections

Plan to have separate meters for water, electricity, and gas (if gas) for the ADU. It’s often optional to separately meter an ADU when building, but for a condo sale it’s highly desirable or even required. Separate meters mean the new owner can have accounts with utilities in their name. If you only have one water meter for the whole property, you’ll have to figure out a sharing arrangement in the HOA, which isn’t as attractive. So, if you’re building new, spending a bit more to run dedicated utility lines/meters to the ADU will pay off later.

Think About Parking and Access

Does your ADU have its own parking spot or driveway access? Under state ADU laws, cities often can’t require extra parking if you’re near transit, etc., so your ADU might not have a designated parking spot. But for a future condo buyer, parking is a quality-of-life factor. If you can provide a driveway or carve out a space, do it. Clearly assign in the condo map which parking spot (if any) goes with which unit. Same with access: ensure there’s a straightforward, legally defined path of travel for the ADU unit from the street (an easement or walkway that will be in common or exclusive use). This might mean adding a side gate or path so the ADU owner isn’t walking through the main house’s backyard awkwardly. Plan for privacy between the units too – fencing or landscaping can help delineate spaces.

Quality and Size of ADU

Marketability matters. A well-designed, nicely finished ADU will obviously attract better offers. Features like in-unit laundry, a small private yard or patio, and extra storage space can make an ADU much more appealing as a condo. Remember, you’re competing with condos and townhouses on the market, so consider what helps it stand out. Also note that by law ADUs max out at 1,200 sq. ft. in most cases (that’s the state cap). Most ADUs are smaller (500-800 sq. ft on average). A two-bedroom ADU condo might be easier to sell than a studio, depending on your area’s demand. In San José’s first conversion, the ADU was ~1,200 sq. ft with 3 bedrooms – quite spacious. That likely made it attractive even at $1.6M. If your ADU is tiny, the pool of buyers might be a bit more limited (single person or couple, likely).

HOA Setup

Prepare to educate your buyer (and yourself) on how a 2-unit HOA will work. It’s not scary – essentially, you’ll both share insurance for common areas and have some rules to follow (like any condo). It’s wise to keep the CC&Rs as straightforward as possible. Typically, each owner is responsible for their unit’s interior and structure, and the two of you share responsibility for the overall parcel’s common elements. If you’re planning early, you might avoid too many shared systems. For example, if the ADU can have its own roof separate from the main house roof, that’s ideal (detached unit, separate roof = each owner maintains their own). If the ADU is above a garage that also serves the main home, then that roof is a shared element – little things like that. Design choices can reduce entanglement.

Resale Value and Comps

If you’re designing with selling in mind, talk to a real estate professional about what features could boost value and how much similar small homes or condos sell for in your area. We’re in new territory – not many ADU condos have sold yet in California (there’s literally been a handful by 2025). But you can look at sales of small cottages or guest houses, or even condos in duplex conversions, to gauge pricing. The KQED article noted that in Seattle, ADU condos sold for about half the price of a new detached home in the same city. That suggests buyers expect a discount for the smaller size and shared nature. Also, condos tend to be valued a bit lower than single-family homes in general – one source estimates around 10-15% lower, all else equal. So, converting your property to condos (main house becomes a condo too) might slightly reduce the value of the main house portion compared to if it remained a standalone home. Keep that in mind: you might sell the ADU for a good price, but your main home as a condo might appraise a tad less. Ideally, the combined value of the two condos exceeds the value of the unified property pre-split (that’s the profit motive!). But it’s not a given – do the math and perhaps get a professional appraisal or opinion before committing.

San José and Santa Cruz: Ground Zero for ADU Condos (Examples)

Let me share a bit more about what’s happening on the ground in two places I know well: San José (in the South Bay) and Santa Cruz on the coast, since these were mentioned as examples.

San José Today

As of late 2025, San José has proven to be the trailblazer. After adopting AB 1033’s framework in 2024 , they saw immediate interest – but interestingly, mostly from developers rather than everyday homeowners. Why? Probably because developers are always looking for new ways to maximize a property’s value. If they can build a house + ADU and sell both separately, that’s potentially more revenue. We saw the first two projects by developers: one near downtown (which got city certification as the first ADU condo) , and another by Bob Hughes (a local builder) in suburban Cambrian Park, which as of August 2025 was weeks away from final map approval. Hughes’ project built a large ADU and a large main house on a corner lot, effectively two new homes, one of which is legally an “ADU condo.” He already found a buyer for the ADU at ~$1.6M. The main house is over $3M.

These price points reflect San José’s market – high, but note the ADU is roughly 53% of the main house’s price. That aligns with the trends we mentioned (ADU condos around half the cost of big homes). San José’s city staff have noted that conversions haven’t been flooding in – just a couple applications – likely due to the complexity and caution from homeowners. They also observed exactly what we discussed: if a homeowner has a big mortgage, they may hesitate, because splitting off the ADU could slightly devalue the main house (now a condo) and the bank might not be happy. But as pioneers like AlphaX (the developer on Josefa St.) show proof of concept, the city is hopeful more will follow. The Casita Coalition (a housing advocacy group) is heavily promoting this as a way to add affordable ownership housing and keep families in California (for example, selling an ADU to an adult child so they can afford to live locally). The vibe in San José is optimistic, with the mayor even saying he hopes “other cities follow San José’s lead”.

Santa Cruz Today

The City of Santa Cruz jumped in early 2025 and, as a smaller city, is proud to be ahead of many bigger municipalities. As of now, no one has completed a condo conversion there yet (it’s only been an option for a short time), but the city has a process in place. A local Santa Cruz realtor blog summed up the process nicely from a homeowner’s perspective – it’s “not as simple as putting up a For Sale sign”; you’ve got to do the survey, map, CC&Rs, city approvals, etc., much like I outlined. The reasons Santa Cruz is excited include creating more affordable “starter” homes for locals (teachers, service workers, young families) who can’t afford a regular house in town.

Santa Cruz’s median home prices are very high, and many locals get priced out by Silicon Valley transplants or investors. An ADU condo might be, say, $500k-$600k instead of $1.2M for a whole house – still pricey, but a big difference. Santa Cruz also sees multi-generational potential: families could keep aging parents or grown kids nearby by giving them the ADU as a condo to own. The catch, as that blog notes, is that it requires “time, money, and legal work” and uptake might be slow. Plus, only the city jurisdiction has it – if you live in the county just outside city limits, you currently cannot do it until the county itself adopts a similar ordinance. If Santa Cruz city sees success, perhaps Santa Cruz County will follow, but that’s speculation. For now, Santa Cruz homeowners within city boundaries have a new opportunity to consider. I haven’t seen example sales yet in Santa Cruz to report on (maybe in 2026 we will), but I expect interest will grow as word spreads. Santa Cruz tends to be innovative in housing (they pioneered ADU programs 20 years ago), so they’re a key place to watch for how this plays out in a smaller community context versus a big city.

Conclusion: A New Frontier for Homeowners, But Not Without Challenges

From my first-hand perspective, California’s AB 1033 is an exciting new tool in the homeowner toolkit. It’s not often that a law comes along creating an entirely new class of property – in this case, turning formerly non-saleable backyard homes into condo units that can be bought and sold. This opens up possibilities for unlocking equity, creating more affordable ownership housing, and even helping family or community members to own a home who couldn’t otherwise.

However, as we’ve discussed, it’s not a trivial process. If you’re a homeowner thinking of doing this, go in with eyes open: you’ll need patience, some money upfront, and the right professional guidance. You’ll have to weigh the financial pros and cons (Will the sale price minus costs be worth it? Or do you value having full control of your property more than the cash?). Also, consider the relationship with whoever buys the ADU – you’ll be neighbors sharing a fence or driveway, and essentially business partners in a tiny two-person HOA. Most folks will be fine with that, but it’s a dynamic shift from having a renter ADU (where you’re the sole landlord) to having a co-owner next door.

From a housing standpoint, I believe AB 1033 could gradually help create pockets of more attainable housing. It won’t solve the housing crisis overnight – nothing that creates a few thousand units a year will move the needle drastically in a state of 40 million people. But it’s part of the solution mix. It’s like planting seeds: if even a fraction of the 65,000+ ADUs already built in California were eventually sold to new owners , that’s thousands of new homeowners who otherwise might not have had a chance. And as an owner, selling an ADU might give you the financial freedom to stay in your primary home longer (pay off that mortgage, boost your retirement fund, etc.).

In the next few years, I anticipate we’ll see more cities opting in as they watch the pioneers. We’ll also likely see some adjustments – perhaps the state will provide more guidance, or lenders will develop better protocols for these split situations. Who knows, if adoption remains sluggish, the legislature might even consider making it a default statewide permission down the line. For now though, it’s an opt-in experiment, one that you and I are witnessing unfold in real time.

If you’re in a city that has embraced AB 1033 and you have an ADU, I’d say: educate yourself (hopefully this guide is a start!), run the numbers, and talk to your city’s planning department. They can tell you the local steps and put you in touch with needed resources (San José, for example, has an “ADU Condominium Checklist” and contact emails set up to help guide residents ). And of course, consult with real estate professionals who understand this new process.

Personally, I’m excited to see where this goes. As a housing advocate, I love the creativity in finding new ways to give people a foothold in homeownership. As a homeowner, I’m intrigued by the flexibility it offers – it’s always nice to have more options. AB 1033 is still in its early days, so we’ll learn more as the first few dozen conversions happen. I’ll be keeping an eye on the market and perhaps updating with new insights as they come.

Have questions or thoughts about ADU condo conversions? Feel free to reach out or comment. This is a brand-new frontier, and the more we all share information, the better we can make use of this opportunity. Thanks for reading, and happy housing adventures!

Senior Friendly Homes in Silicon Valley South