Basement conversion
If you want to understand what all the buzz around California Accessory Dwelling Units (or ADUs) is about, you have to start with the state’s housing shortage. California has long suffered from a lack of housing, particularly affordable housing. This is especially true in and around its larger metropolitan hubs and coastal communities, where restrictive zoning laws have kept neighborhoods from evolving to meet the demands of a growing population.
While some form of ADU provisions have been around since the 1980s, very few cities and counties were voluntarily allowing these units—often called in-law units or granny flats—to be built. San Francisco was one of the early adopters of local ADU legislation with its densely populated lots and its recognition that additional housing could and was being craved out of spaces like garages and basements, often without the benefit of building permits.
Over the past decade, with the state’s housing shortage becoming harder and harder to ignore, there was a swelling of consensus that safe, permitted ADU housing was desperately needed throughout the state, and that the local jurisdictions themselves were often the ones standing in the way. This consensus paved the way for the passage of California ADU laws in 2016 and again in 2019 that mandated local jurisdictions to allow ADUs that meet certain requirements. Combined with the mainstream popularity of home renovations and real estate investing, ADUs became an overnight sensation.
What’s Allowed Under State Law?
As of January 1, 2020, California property owners have multiple options for adding ADUs to their properties under California ADU law. There is one set of options for single-family homes and another set of options for multi-family properties. Local jurisdictions can choose to be more generous than these state-mandated options, but they cannot offer less.
Single-family properties
If you own a single-family home, your options for creating an ADU include the following:
- Build a new unit, either attached to your home or as a freestanding structure
- Convert an existing non-habitable part of your home, such as a garage, basement, or permitted accessory structure into a separate unit
- Convert an existing habitable part of your home into a so-called Junior ADU with its own separate entrance, cooking facility, and, potentially, its own bathroom. Although, this can be shared with the primary dwelling if desired.
Multi-family properties
On multi-family properties, defined as 2 or more units, your options for creating ADUs include:
- Convert existing, non-habitable portions of the building into one or more ADUs (one for every four existing units, with all properties being allowed at least one).
- Build up to two new detached units on the lot (space permitting)
Learn more about multi-family ADUs, including how to convert or add them.
Size Requirements
The minimum size for most ADU units is 220 sq.ft., but most people will want to build something larger for maximum return on investment. Local jurisdictions must allow at least an 800 sq.ft. studio or 1-bedroom ADU, and a 1,000 sq.ft. 2-bedroom+ ADU. If a local jurisdiction does not have a maximum square footage, the state maximum of 1,200 sq.ft. applies.
Newly constructed ADUs can have a height of up to 16 feet. This is generally not enough to build a 2-story unit, so some local jurisdictions are already allowing ADUs to be built taller, but 16 feet is all that local jurisdictions are required to allow.
Junior ADUs
Junior ADUs (sometimes called a JADU) are a special classification of unit available only on single-family lots. They must be created from an existing portion of the primary structure and can only be up to 500 sq.ft. in size. Junior ADUs that do not have their own bathroom can be as small as 150 sq.ft. This option provides homeowners with some flexibility if they plan on using the ADU for a family member or someone they don’t mind sharing a bathroom with. If your ADU is permitted as a Junior ADU, owner-occupancy will be required in either the primary house or the JADU.
Setback Requirements
Newly built ADUs must be at least 4 feet from the side and rear yard property lines. Previously, local jurisdictions could require a much larger setback, which made fewer lots feasible for California Accessory Dwelling Units. Furthermore, if you have an existing permitted structure that sits on the lot line, such as a detached garage, you may be able to convert the structure into a California Accessory Dwelling Unit and maintain this existing zero-lot line. A land survey will be required by your local jurisdiction along with your ADU plans and application.
Parking Requirements
Another past restriction to ADU development, parking requirements have now been loosened under state law. Additional parking is not required when adding an ADU if your property is located within one-half mile of a public transit stop.
Owner-Occupancy Requirements
Prior to 2020, some local jurisdictions were also trying to limit California Accessory Dwelling Units by requiring that the property owner treat either the ADU or the primary dwelling as their principal place of residence. Under the current state law, local jurisdictions cannot impose such requirements until 2025.
Impact Fees
Impact fees are how cities or counties account for increased population density and strain on infrastructure. Prior to 2020, these fees could be quite costly, making ADUs infeasible for many Californians. Now, local jurisdictions are prohibited from assessing impact fees on ADUs that are up to 749 sq.ft. in size, and can only charge such fees on units larger than this in proportion to the square footage over 749 sq.ft.
Homeowners Associations
Another past enemy of ADU development, HOAs can no longer prohibit or unreasonably restrict the development of California Accessory Dwelling Units that meet all state-mandated guidelines. Some design aesthetic elements can still be enforced, but the choice of whether or not to allow ADUs in the neighborhood is no longer up to the associations.
What Are the Biggest Challenges That Still Exist?
Unpermitted Units
Before state law forced the hands of local jurisdictions to streamline ADU approval, many property owners opted to build illegal units, that is, without the proper permits. Today, there are believed to be tens of thousands of such units throughout California, and they present many risks to both the occupants and the property owners. Getting these units properly permitted is now possible through the California ADU law, but it is not a straightforward or consistent process.
Property owners have to provide a full set of architectural drawings to their local jurisdiction and submit an application as if they were building a new ADU. In order for such plans to be approved, a whole litany of build code-related issues may first need to be addressed (see the next section for some examples). A few jurisdictions are making the process a bit clearer by offering so-called amnesty programs to property owners who come forward looking to legalize their California accessory dwelling units, but these are more of the exception than the norm.
Building Codes
Whether you are looking to legalize a unit or convert existing space into an ADU, it is likely that at least some of the current conditions are not up to the code standards for your property. Examples of frequently seen code violations include:
- Not meeting the minimum ceiling height requirement
- Improper drainage or waterproofing
- Insufficient means of ingress/egress
- Improperly sized or placed windows
- Improperly installed electrical or plumbing
- Lack of permanent heating
- Lack of deadbolt on main entry door
Adapt Dwellings is one of the few ADU designers that have a full-time building inspector on staff to help our clients assess their properties and understand the feasibility of adding or legalizing an ADU in such spaces.
Fire Sprinklers
While state ADU law says that local jurisdictions cannot require an ADU to be sprinklered if the primary structure does not require sprinklers, many local jurisdictions are using a provision in the fire code to say otherwise. These jurisdictions argue that when a building undergoes a change in occupancy rating as the result of adding an ADU, that fire sprinklers can then be required not only for the new unit, but potentially the entire building. This change in occupancy rating is typically seen when adding an ADU to a duplex.
Utilities
Another area where the legislative intent of state ADU law seems to be getting thwarted by local municipalities is utilities, particularly electricity. While many people read state ADU law as allowing an ADU to share utilities with the primary structure, the reality on the ground is quite different. Most utility companies are requiring separate electric meters if the ADU is to be issued its own address. The additional cost and time delay for getting these installed is currently one of the big hinderances facing property owners undergoing ADU projects. Whether it’s electrical, gas, water, or sewar, you need to make sure your existing capacity is adequate to serve the ADU as well. On many older properties, this is not always the case. Another benefit of starting with a feasibility study is to uncover these additional upgrades and get a fuller perspective of the estimated project costs.
Financing
Perhaps the number one challenge we hear from property owners is, “how am I going to pay for this?” ADUs are not yet fully recognized as potential income-generating rental units by lenders. This means, when applying for a loan, they will not take this rental income into consideration as part of the qualification process. The current options for financing an ADU tend to focus on home equity lines of credit and cash-out refinancing, which are not options that everyone can qualify for. Some state and local programs aimed at helping lower-income property owners get financing are beginning to pop up, but we believe the industry needs some new lending products specifically designed to help property owners add ADUs.
Becoming a Landlord
Last but not least, it should be mentioned that if you plan on renting out your ADU once complete, you will be taking on many responsibilities as a landlord. Keeping your unit safe and your tenants happy is just the beginning. Becoming educated on state and local rent control and eviction laws is a crucial step to ensure you do not get yourself into legal trouble. While not for everyone, we are advocates for any property owner making the jump to providing rental housing in their community. Our affiliated company, Edrington & Associates, provides a full scope of real estate services to help rental property owners succeed.
Getting Help from ADU Experts
Building an ADU in California has undoubtedly become easier in the past few years, but it is a far cry from a DIY endeavor. As with any development project, it pays to get started with local experts who can save you time and money by helping you step-by-step through the process and ensure you do it right the first time.
