California’s housing landscape is shifting again with the introduction of AB1033, a new law that allows cities to permit the separate sale of secondary housing units on residential lots. While these units were once limited to rentals or family use, homeowners may soon be able to treat them as standalone properties-if their city opts in.

This article breaks down what AB1033 means, how it could impact future home sales, and what California homeowners should know before making any decisions.

ADU Sales in California: What AB1033 Means

Assembly Bill 1033 was introduced by Assemblymember Phil Ting and signed into law by Governor Gavin Newsom in October 2023. The bill modifies how cities can treat ADUs by giving local governments the ability to allow homeowners to sell ADUs independently from their main residence-similar to how condominiums are sold.

Key details of AB1033:

• It does not apply statewide by default.
  
• Cities and counties must opt in to allow separate ADU sales.
  
• The law takes effect in January 2024, but implementation depends on local government action.
  

Essentially, AB1033 provides a legal pathway for local jurisdictions to treat an ADU as a separate unit on the property title, which can then be bought and sold independently. However, each city or county has the final say on whether this is allowed within its limits.

Why AB1033 is a Turning Point for ADU Owners

Historically, ADUs could only be rented out or used as extended family space. They were legally tied to the main residence and couldn’t be sold on their own. AB1033 introduces a shift in that dynamic.

Here’s what changes under AB1033:

• Separate Ownership: Homeowners may be able to sell their ADU as a standalone property, allowing for two owners on a previously single-owner lot.
  
• Equity Opportunities: Property owners could potentially realize value from their ADU by selling it instead of just renting.
  
• Flexibility for Families: Parents could gift or sell an ADU to a child, or aging parents could own a small home on their child’s property.
  
• Real Estate Supply: This could increase the number of available “starter homes” in urban areas.
  

By separating the ownership, AB1033 gives homeowners an alternative option for how they manage, finance, and benefit from their ADU. However, as promising as it sounds, it comes with conditions and challenges worth understanding.

Local Governments Hold the Key

One important feature of AB1033 is that it doesn’t automatically apply across all of California. Cities and counties must formally vote to adopt the policy and outline how it will work within their zoning laws and housing strategies.

What homeowners should know:

• Check with your city planning department to see if your area has opted in.
  
• Cities may introduce additional conditions, such as utility requirements or housing affordability rules.
  
• Implementation timelines can vary widely depending on local governance procedures.
  

At Nestadu, we keep up-to-date with local city ordinances and planning decisions so our clients can make informed choices based on real-time policy movements.

What are the Challenges with Selling an ADU Separately?

While AB1033 opens a door, it also introduces new complexities. Selling a detached or converted ADU as an individual property involves more than just listing it on the market.

Key considerations include:

• Subdivision and Parceling: Properties may need to be split legally, which involves title changes, legal agreements, and possible parcel creation.
  
• Financing Hurdles: Traditional mortgages may not yet be tailored for individually sold ADUs. Buyers and sellers may encounter issues with appraisals and lending.
  
• Utility Separation: Cities may require the ADU to have independent utilities (water, sewer, gas, electricity) for separate ownership.
  
• HOA or Neighborhood Restrictions: In some communities, homeowner association bylaws may not permit this kind of subdivision.
  
• Property Taxes and Insurance: New ownership structures can lead to reassessed property values and changes in insurance coverage.
  

In short, AB1033’s passage doesn’t guarantee a smooth path to selling an ADU. It’s crucial to plan carefully and work with professionals who understand the design, legal, and municipal requirements involved.

What This Could Mean for California’s Housing Future

AB1033 fits into California’s broader effort to make housing more accessible and flexible, especially in high-density and urban areas. The state has been encouraging ADU development for years, and this law adds another tool for addressing the housing crunch.

Potential long-term impacts:

• Increased Homeownership Access: Buyers priced out of traditional homes may find new opportunities in small, standalone ADUs.
  
• More Infill Development: Urban neighborhoods could become more diverse in terms of property types and ownership patterns.
  
• Support for Aging-in-Place: Seniors could sell their main home and move into an ADU on the same lot, allowing them to age near family.
  

While some critics worry about the strain on infrastructure and potential overdevelopment, others argue this model could increase housing stock without the environmental and financial cost of sprawl.

What to Expect if Your City Opts Into AB1033

Every city that adopts AB1033 must set up its own framework. This means different requirements, costs, and processes depending on where you live.

If your city does opt in, here’s a simple breakdown of what the process might look like:

1. City Council Approval of AB1033 adoption.
   
2. Drafting of Local Guidelines for subdivision, sale process, and compliance.
   
3. Homeowner Application for subdivision or legal separation of ADU.
   
4. Planning and Building Department Review, including inspections.
   
5. Title and Utility Updates, followed by final recording of documents.
   

This can take several months, and costs may vary depending on legal and construction-related adjustments needed.

How Nestadu Supports Homeowners in the AB1033 Era

At Nestadu, we specialize in building ADUs that feel like a natural extension of your home-but we also understand that our work doesn’t stop with construction. With the introduction of AB1033, we’re prepared to assist clients who are considering future resale of their units.

Our role includes:

• Helping you design and build an ADU that meets evolving municipal standards.
  
• Consulting with you on utility planning and subdivision considerations.
  
• Coordinating with surveyors, title companies, and local agencies if you’re preparing for a sale.
  
• Offering insight into city-specific AB1033 adoption and how it may impact your property.
  

Whether your goal is rental income, multigenerational living, or potential resale, we ensure your ADU is built for today-and ready for tomorrow.

Final Thoughts

AB1033 represents an important step in reshaping how California approaches property ownership, urban development, and housing supply. While not universally adopted (yet), the bill creates exciting new possibilities for homeowners and cities willing to explore this more flexible model.

However, with opportunity comes complexity. If you’re thinking about building an ADU with future sale potential-or you simply want to better understand what AB1033 could mean for your property-it’s wise to work with a team that understands both construction and compliance.

At Nestadu, we’re here to help Californians make confident decisions about their homes, families, and investments-one beautifully designed ADU at a time.