ADU January 9, 2023

Accessory Dwelling Units (ADUs)


Accessory Dwelling Units (ADUs), also known as granny flats or in-law units, are secondary living units on a single-family residential lot. In California, ADUs have gained popularity in recent years as a way to provide additional rental income. Other considerations are housing for aging family members. For others, it is as a way for homeowners to age in place. ADUs are subject to various laws and regulations at the state and local levels.

California State Law

In California, it is generally allowed to build an accessory dwelling unit (ADU) in most residential areas, as long as certain requirements are met. These include having enough space on the property for the ADU. ADU must also comply with all building codes and zoning regulations. It is important to check with your local city or county for any additional requirements or restrictions on ADUs, such as size limits or owner occupancy requirements.

One advantage of building an ADU is the possibility of earning extra rental income. However, it is important to be aware of any local ordinances or homeowner association rules that may prohibit using an ADU as a rental property. In California, ADUs must also be registered with the local jurisdiction and follow the same rules and regulations as other rental properties, including having a valid rental agreement and paying any applicable taxes.

Another benefit of ADUs is the ability to provide housing for aging family members or other loved ones, allowing seniors to age in place while still maintaining their independence, and providing a more affordable housing option for family members who may not be able to afford to rent or buy their own home.

New ADU laws for 2023

In California, three bills (SB 897, AB 2221, and AB 916) have led to a number of changes to ADU laws that make them more favorable for construction in the state. These changes include allowing for the construction of 2-story ADUs, new state financing programs, no longer requiring front setbacks, and more.

Some specific changes include:

  • Detached ADUs can now include a detached garage.  Some local agencies are required to issue demolition permits for detached garages to be replaced with ADUs.
  • “Objective standards” are now more clearly defined. Local agencies are prohibited from denying a permit due to the correction of non-conforming zoning conditions, building code violations, or unpermitted structures.
  • If a permit is denied, the agency must provide a list of objective reasons in writing and suggest ways to remedy those issues. Front setbacks can no longer be used to preclude the construction of a statewide exemption ADU.
  • The construction of ADUs will no longer trigger a “Group R” occupancy change, and will not require the installation of fire sprinklers in the existing primary dwelling. There are also broader, simpler “no parking requirements” in place.
  • If an unpermitted ADU was built before 2018, it may now be easier to legalize it.
  • Cities and counties are prohibited from requiring a public hearing in order to add one or two bedrooms to an existing dwelling unit.

Talk to a professional

These are so called “Clean up” Bills, to help clarify. So, let me be clear, AB 2221 now requires all cities to allow at least a 16 ft height limit for ADUs. Cities can allow higher, but they cannot restrict you from building your ADU any lower. What’s most interesting about this bill, is that there are added scenarios in which cities are required to allow you to build higher as well. There is a lot of information on the internet and things are still changing. Why, because even before the pandemic, we were and still are in a housing crisis.


There are several options for financing the construction of ADUs in California. One option is to use personal savings or to take out a loan. Another option is to use government programs, such as the California Homebuyer’s Down Payment Assistance Program or the Accessory Dwelling Unit Loan Program. There are also various grants and incentives available at the state and local levels to encourage the construction of ADUs.

Link to the CALHFA website:

ADU Grant Program
The ADU Grant provided up to $40,000 towards pre-development and non-reoccurring closing costs associated with the construction of the ADU. Predevelopment costs include site prep, architectural designs, permits, soil tests, impact fees, property survey, and energy reports


Unfortunately, all funds for the Accessory Dwelling Unit Grant program were fully reserved as of 12/09/2022.  CalHFA are keeping grant program information available to help borrowers and lenders as they continue to process grants in their pipeline. I am hoping that the State replenish this, as soon as possible, as funds were just exhausted.

Stay tuned

The potential expenses involved in building an Accessory Dwelling Unit (ADU) in California must be taken into consideration. These expenses may include design and construction costs, as well as fees and permits. It is also necessary to budget for ongoing expenses such as utilities and maintenance. While an ADU can be an excellent source of rental income, a place for loved ones to live, or allow homeowners to stay in their home as they age, it is essential to carefully consider the laws, regulations, and costs involved in building and maintaining an ADU. To avoid any issues, it is recommended to consult with a qualified professional to ensure that the ADU meets all necessary requirements.

Be My Guest

Please join me at ABODU’s Open House, Feb 2, 2023 from 5pm to 730pm, in Redwood City. Click below and reserve your seat today: 1st Thursdays – Bay Area Open House.

Space is limited, so reserve your seat today: eventbrite

Hope to see you there!

As always, if you find this information helpful and see value please share. I am a wealth of information, but my main goal is to represent in your real estate transaction.

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Jan 9, 2023