Build an ADU — and Sell It as a Condo

Big news for homeowners in San Francisco. The Board of Supervisors has voted to opt in to state law AB 1033, which enables the conversion of Accessory Dwelling Units (ADUs) into condominiums, allowing them to be sold separately from the primary residence. This means the ADU becomes its own legal property, with its own address, property taxes, and buyer.

Passed in October 2023 with an effective date of January 2024, AB 1033 was designed to increase inventory and lower the bar to home ownership. While it applies to the entire state, local ordinances must opt in for it to take effect. San Jose was apparently the first community to officially adopt AB 1033, and Los Angeles, San Diego City and County, Berkeley, and Sacramento have also done so. With San Francisco’s ruling, applications to construct the ADUs must have been submitted after May 1, 2025, to be eligible.

An ADU (Accessory Dwelling Unit) is a secondary residential unit built on the same lot as a primary home. It’s a self-contained living space with its own kitchen, bathroom, and entrance. They can be detached units, such as in a backyard, or converted spaces within an existing home, like attics or garages. ADUs can be created by owners of single family homes or condos in buildings with fewer than four units.

So what does AB 1033 mean for you?

🏡 Key Benefits for Homeowners

• Unlock equity
  Sell your ADU without having to sell your entire property. Great for funding retirement, reinvestment, or paying off your mortgage.

• Support homeownership
  Create a more affordable ownership option in your neighborhood — ideal for first-time buyers, young professionals, or extended family.

• Increase property value
  Your lot can now legally host two for-sale homes instead of one — increasing resale potential or long-term flexibility.

• Maintain your primary residence
  Keep living in your home while selling the ADU — unlike a traditional duplex split where you give up part of the main house.

🛠️ What You Need to Do

1. Ensure your ADU meets condo sale requirements

   • Must comply with local zoning and building codes

   • Must have separate utilities (water, sewer, electricity, gas)

   • Must have its own legal address

2. Subdivision process

   • You'll go through a condo map process under California’s Subdivision Map Act

   • This legally splits the lot into two ownership entities (like a townhouse or stacked condo building)

3. Create a legal structure for shared responsibilities

   • A Homeowners Association (HOA) is required for any shared property elements (driveway, roof, landscaping, etc.)

   • CC&Rs (Covenants, Conditions & Restrictions) must be filed outlining responsibilities

4. Adjust financing & insurance

   • Separate title, taxes, and insurance policies are required

   • Talk to your mortgage lender: you may need to refinance or amend your loan before splitting title

5. Sell the ADU

   • Market and sell it like any other condo — buyers will secure their own financing, inspection, and insurance

📈 Example Use Cases

• Aging in place: Build an ADU for yourself, then downsize and sell the main home.

• Family wealth-building: Build and sell the ADU to a family member or child.

• Long-term strategy: Build the ADU, rent for a few years, then sell when the market is favorable.

⚠️ Considerations

• One-time setup costs: Mapping, legal, and utility separation require some upfront investment.

• Ongoing coordination: As with any condo, you and the ADU owner will share responsibilities for any common areas.

• Financing requirements: Buyers may face slightly higher lending scrutiny since these are still relatively new product types.

📌 Bottom Line

AB 1033 can give you a powerful new tool: the ability to monetize your property by selling an ADU as a separate condo — without sacrificing your primary residence. It's one of the most flexible and homeowner-friendly pathways to housing creation California has ever allowed.

AI was used in generating this story, but it was edited and reviewed by a human.