Can You Sell Adu Separately​?

Can You Sell Adu Separately​?

Accessory dwelling units (ADUs) have gained immense popularity across California as a practical solution for adding living space, generating rental income, or accommodating family members. 

However, one question that often arises among homeowners is whether an ADU can be sold separately from the primary residence. 

Can You Sell Adu Separately?

This blog will explore the legal, financial, and practical aspects of this topic, offering clarity for property owners considering this option.

What Are Accessory Dwelling Units?

ADUs, often referred to as granny flats or backyard cottages, are secondary residential units built on the same lot as a primary home. These units can be detached, attached, or converted from existing spaces such as garages.

ADUs offer several benefits:

  • Additional Housing: They help address California’s housing shortage by providing extra living spaces.
  • Rental Opportunities: Homeowners can rent out ADUs for supplemental income.
  • Family Flexibility: Ideal for multigenerational living or hosting guests.
  • Increased Property Value: A well-designed ADU can make a property more appealing to future buyers.

Despite these advantages, ADUs come with unique regulations that affect their ownership and saleability.

Can You Sell Adu Separately

Property Ownership and ADUs in California

In California, ADUs are generally considered part of the main property and do not have a separate deed or title. This means that they cannot be independently bought or sold like a standalone home.

However, recent legislation and certain circumstances can allow for exceptions. Understanding these scenarios is crucial for homeowners.

Legal Considerations for Selling an ADU

Senate Bill 9 (SB 9)

SB 9, enacted in California, allows for certain residential lots to be split into two parcels. This potentially creates opportunities for ADUs to be sold separately under specific conditions. Key requirements include:

  • The lot split must comply with local zoning laws.
  • Both parcels must meet minimum size requirements (typically no smaller than 1,200 square feet each).
  • The property owner must sign an affidavit stating they will occupy one of the properties as their primary residence for a designated period (often three years).

While SB 9 provides a pathway for separate ADU ownership, the process involves navigating complex legal and zoning requirements. Consulting with a knowledgeable professional is essential.

Condominium Conversions

In some cases, homeowners may convert their ADUs into condominiums, allowing them to be sold separately. This process involves:

  1. Subdividing the property.
  2. Creating separate utility connections and meters for the ADU.
  3. Ensuring compliance with local building codes and HOA regulations.

Condominium conversions require approval from local authorities and can be time-consuming and costly.

Financial Implications of Selling an ADU

Financial Implications of Selling an ADU

Selling an ADU separately can have significant financial ramifications. Homeowners should consider the following:

Property Taxes

Separating an ADU into its own parcel or condominium unit may result in reassessment of property taxes. Both the primary residence and the ADU could be taxed as individual properties, potentially increasing the overall tax burden.

Capital Gains Taxes

If the ADU is sold separately, homeowners may be subject to capital gains taxes. Understanding these implications requires careful tax planning.

Cost of Lot Splits or Conversions

The process of splitting a lot or converting an ADU into a condominium involves expenses such as:

  • Surveying and legal fees.
  • Utility separation costs.
  • Permitting and inspection fees.

These costs should be weighed against the potential financial return from selling the ADU.

Practical Challenges of Selling an ADU

Practical Challenges of Selling an ADU

Utility Connections

Many ADUs share utility connections with the primary residence. Separating these utilities is often required for a sale, which can be logistically complex and costly.

Access and Parking

Independent access and parking are critical considerations for potential buyers. If an ADU lacks a private entrance or sufficient parking, its marketability as a standalone unit may be limited.

Shared Maintenance Agreements

In cases where an ADU shares land or infrastructure with the main property, establishing maintenance agreements is necessary. These agreements outline responsibilities for shared spaces like driveways or yards, ensuring clarity for all parties involved.

Alternatives to Selling an ADU

If selling an ADU separately proves impractical, homeowners can explore other ways to utilize their unit:

Long-Term Rental

Renting out the ADU provides a steady income stream while retaining ownership of the property. This is a popular choice for many California homeowners.

Short-Term Rental

For properties in desirable locations, short-term rentals through platforms like Airbnb can generate significant income. Local regulations must be considered when pursuing this option.

Multigenerational Living

Using an ADU as a space for elderly parents or adult children can provide both financial and emotional benefits for families.

How Nestadu Supports Homeowners

How Nestadu Supports Homeowners

As a leading ADU builder in California, Nestadu specializes in creating units that not only meet homeowners’ needs but also comply with all legal and zoning requirements.

Whether you’re considering an ADU for rental income, family use, or future resale potential, we ensure every detail is carefully planned and executed.

Why Choose Nestadu?

  • Experienced Team: Our designers and contractors bring years of expertise to every project.
  • Compliance Assurance: We navigate California’s complex ADU regulations, ensuring your unit is built to code.
  • Tailored Solutions: Each ADU is customized to blend seamlessly with your property and neighborhood.

Conclusion

Selling an ADU separately involves navigating a web of legal, financial, and practical considerations. While it is possible in some cases, the process is often complex and may not be the best option for every homeowner.

Nestadu is here to guide you through every aspect of ADU ownership, from construction to understanding its long-term value. Contact us today to learn more about building a versatile and compliant ADU for your property.

Frequently Asked Questions About Selling an ADU

1. Can an ADU be sold separately in California?

A. Under most circumstances, ADUs cannot be sold separately. However, SB 9 and condominium conversions may allow for exceptions, depending on local laws.

2. What is the process for converting an ADU into a separate property?

A. The process involves lot splitting, utility separation, and compliance with local building and zoning regulations.

3. Are there tax implications when selling an ADU?

A. Yes, selling an ADU separately may result in property tax reassessments and capital gains taxes. Consulting a tax professional is recommended.

4. What alternatives exist if I can’t sell my ADU separately?

A. Homeowners can explore rental options, use the ADU for family living, or retain it as part of the overall property to increase resale value.

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Are you interested in a Custom or Prefab ADU?

What is the difference between Custom and Prefab ADUs?

Custom:
A Custom ADU is site-built on your property to meet your exact specifications. This option offers complete flexibility in design, materials, and layout to perfectly match your vision and the existing aesthetics of your property. Ideal for unique requirements and personalized finishes.

Prefab:
A Prefab ADU is a pre-designed, factory-built unit that is delivered fully assembled to your property. This option is typically faster and more cost-effective than custom builds, with a variety of design options to choose from. Perfect for those seeking a streamlined and efficient solution.

Based on the above, are you interested in a Custom or Prefab ADU?