On September 28, 2021 Governor Gavin Newsom approved Assembly Bill (AB) 345 to authorize local agencies to allow accessory dwelling units (ADUs) to be sold separately from the main residence.

This is a change to a 2019 law, which currently gives local governments the authority to allow ADUs to be sold separately when a qualified buyer purchases a property which is:

  • created by a nonprofit (such as Habitat for Humanity); and
  • part of a recorded tenancy in common (TIC) agreement.

Under AB 345, local governments are now required to allow ADUs to be conveyed separately. Further, for these types of TIC agreements recorded on or after December 31, 2021, each agreement needs to include information on:

  • how the property is delineated for the exclusive use of the ADU buyer;
  • the ADU purchaser’s financial responsibility for taxes, insurance, utilities, maintenance and improvements to the property; and
  • procedures for dispute resolution between the ADU purchaser and the other owners under to the TIC agreement.

The additions made to this particular law are meant to make it easier for non-profit organizations to sell ADUs to low- and moderate-income homebuyers. The new law also requires cities to add language in legal agreements to make the language more comprehensible to homebuyers.

By removing the requirement for local agencies to first pass local ordinances, nonprofits will be able to expand their reach and more units will become available for first-time homebuyers.

Related article:

Much ADU about accessory dwelling units

A healthy housing market

ADUs are an important piece in solving California’s housing shortage. The government’s recognition of this with new legislation is an important step in the right direction. There has been a 30% year-to-year increase in ADU production, according to the Department of Housing and Community Development.

ADUs have many benefits, including:

  • they are more low cost than traditional housing options;
  • they offer stable rental income;
  • and they can increase property values.

A major contributing factor to creating these ADUs is the easing of zoning restrictions. Loosening zoning laws allows for more spaces for living – while also keeping construction in areas where it’s beneficial and most in demand. ADUs allow more units to be added to suburban neighborhoods, where zoning changes are met with the most resistance from not-in-my-backyard (NIMBY) advocates. Now, with the ability to create more homeowners, ADUs have gained yet another benefit.

The amendments to this bill are a step towards creating a much healthier housing market – with less restrictive zoning regulations and the creation of more housing.