New ADU Condo Laws Explained (2024)
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- เผยแพร่เมื่อ 6 ต.ค. 2024
- The average single-family house in California sold for over $834,000 in September (according to the California Association of Realtors), but the average Condo sold for $650,000. That's why the state of California is creating an environment where some homeowners will be able to sell their ADUs separately as condominium units.
But there's a lot to unpack there. Condos are very complicated and detailed and lots of people have been asking questions about the nitty gritty of how you convert an ADU into a condo. So in this video we interview Rafael Perez from the Casita Coalition to get all the detailed answers to your most common questions about AB 1033 and condo ADUs.
Interview with Rafael Perez, VP of the Board of the Casita Coalition
AB 1033 leginfo.legisl...
Separate Sale of ADUs
This is not legal advice. This is general information only. This is an evolving topic and you need to speak to licensed experts about your specific situation.
The thumbnail for this video is derived from a photo of an ADU by @InspiredADUsthis ADU is not a condo. It's just a sweet-looking ADU perfect for a thumbnail :)
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I hate to be negative, but the expense of turning a property into a condo will be very costly. It may work for a person who owns the original property without a mortgage. Also, the original owner becomes subject to the CCRS. What happens if the new owner of the ADU - Condo can't afford special assessments, etc. I own a condo in a very small HOA (4 units) and the diverse fiscal means of the owners have been challenging. I'll continue to live in my home and rent out my ADU, where i have complete cintrol over tenant seletion. Also, It is much easier to get rid of a dead beat tenant than a dead beat condo-owner. Unlike a co-op, HOA board can't reject the prospective buyer.
Yeah it’s important to be critical when it comes to figuring out what pencils. From experience in other states, we know people are going to find ways to make these work. So they will be happening, even if none of your properties make sense for it. We will talk about the common use cases later !
So u live in 1 out of the 4 units how is that working out
@@jonathanmunguia1030 it is fine. Each unit is situated so that they are private and share no common areas. All plumbing was designed so that the plumbing of one unit doesn't affect the other. I invested it soundproof construction as well.
My tenants are great. I tend to select tenants who do not plan to stay more than three years. Their rents are high but competitive. They need at least $20K to move-in. So, many people can't afford it.
What are HoA's like in California? Here in Florida they generally have a bad reputation because of obsessive rules, regulations, and cookie cutter properties. Some can also be flat out predatory.
Great content , it’s helping me make our decision on if we will build an ADU on our lot or not. Thanks 😊
Single family home owners have a choice, so awesome, more options always better. My wish was state more lenient on how to convert your lawn into parking or construction spaces would help my decision into convert into HOA condo. As of now I only want to stick with regular ADU attach to the original home and rent out much more better.
Great video I'm running into this now. Want to sell the ADU but Chase bank says I have to refi if making changes to the lot. My mortgage is 2.9% interest so I'm not going to refi. I'm sure many people will run into same issue.
Yes huge limitation. Have you asked about a partial lien release? Chase isn’t super innovative but free to ask
Thank you for the excellent work. Very helpful information.
Thanks for watching
You can read the full bill here: leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=202320240AB1033&showamends=false
The inclusion of a repurchase option in the context of accessory dwelling units (ADUs) sold by a qualified nonprofit corporation carries various pros and cons for the homeowner:
### Pros:
1. **Affordability Access**: Homeowners often gain access to these properties at below-market rates due to their affordability requirements, making homeownership more attainable for low- or moderate-income individuals and families.
2. **Stable Investment**: These properties can provide a stable housing solution in markets where prices might otherwise be prohibitively expensive. Homeowners benefit from the security of owning a home while potentially building equity over time.
3. **Support and Resources**: Buying from a qualified nonprofit corporation usually means the homeowner can access additional support, including homebuyer education and financial literacy programs, which can be invaluable for first-time buyers or lower-income families.
### Cons:
1. **Restrictions on Sale**: The repurchase option limits the homeowner’s ability to sell the property on the open market. This can be a disadvantage if property values have risen significantly, as the owner must first offer it back to the nonprofit, potentially at a lower price than could be obtained in a free market sale.
2. **Long-term Affordability Commitment**: The requirement to maintain affordability for 45 years means that the homeowner is part of a legal agreement that restricts the future sale price of the home. This can be seen as a negative if the homeowner’s financial situation improves significantly, and they wish to move into a non-affordable housing market.
3. **Potential Delays and Complications**: The process of selling the property can be more complex and take longer due to the need to adhere to the nonprofit's repurchase rights and the specifics of the affordability contract. This can complicate or delay plans if a homeowner needs to move due to life changes.
4. **Reduced Capital Gains**: Homeowners may realize less capital gain on the sale of their property compared to similar properties not subject to such agreements, because of the price restrictions imposed by the affordability requirements.
The repurchase option, therefore, represents a trade-off between making housing more accessible for those who need it most and imposing certain limitations on the property's investment potential and the owner's flexibility.
Thank you Ryan, would be interesting to see cost estimates for the simplest HOA creation (e.g., detached ADU with separate water, gas & electric meters from Main house and where there is zero future annual HOA fee to newly created ADU/Condo as well as existing Main house). $2k to $5k? Perhaps you can provide a link or two to some of the firms that handle this work at scale in California? Of course, this will vary from city to county, but nice to know from an investor standpoint of what sort of cost to budget for future detached garage demolition to ADU construction to condo conversion. Really curious to see if this trend gets some tailwind for new housing opportunities in California.
Great questions for the next interview with a TX lawyer who does a lot of these
@@HowToADUwhen is the Texas interview
$500 a sqft is not unrealistic. The smaller the ADU the more the price per sq ft. $40000 pre development cost for a 525 sqft adu in Beaumont Ca
Confusing stuff, but can you do a follow up video breaking down how it could benefit a regular homeowner?
Sure will. As things develop we will track the real effect on normal homeowners
@@HowToADU Thanks!
Can’t find a good deal in SoCal on a rental property so I’m about to use my HELOC to build an ADU above my garage😁
Great content! I've seen relatively new hotels in my community go into foreclosure for less than the cost of construction. (Cambria Hotels Rohnert Park & Napa) With the interest in tiny homes, I would love to see even more equity-building opportunities come to the market by turning them into condo "minimums".
Oh that’s an interesting idea
I was told by the county of Riverside that I the minimum lot size is half acre, have you guys heard this? They are saying that an ADU must have at least 1/4 acre lot. Didn't sound right to me. Thank you.
For a condo map? That sounds odd but they can have a lot of latitude. If it’s for a plain old ADU that sounds crazy.
@@HowToADU I inquired about a 700sqft ADU, nothing crazy, my lot is plenty big, access on front and back, but they still said no. I am wondering if I should call again.
Decent interview. Can you cover what are the limits. Can you do it on a multi family unit? Can the city stop these? What’s the ball park cost or at least at am example cost? $50k or it is $150k start to finish?
We will definitely report on these questions as the rules develop. And people actually move projects through
@@HowToADU appreciate it.
It'll be up to your local ordinance ultimately. The state's language does allow MFH to do this:
"65852.2. (a) (1) A local agency may, by ordinance, provide for the creation of accessory dwelling units in areas zoned to allow single-family or multifamily dwelling residential use"
My local ordinance wants nothing to do with any new laws. Zero ADUs allowed until I went through a process to fight them.
Can you cover the cost of this on a condo conversion in San Diego from 1 or 2 examples. That’s a straight forward question that nobody usually answers.
My guess is the cost is not worth it. $100-150k for most owners.
@@TennisTD Not even remotely close... to set up the CC&R is $5,000-7,500. Odds are you already did a survey when you built the ADU, but if you need a new one that's $2-3k. You can hire someone to prepare the HOA budget for you or DIY - that's $2k. If you need civil engineer to prepare a new legal description that's $2-3k as well. I'm in LA area so San Diego should be comparable or a little bit cheaper.
Great video thanks do you have one about getting a lone to build a ADU?
Yes and you can book a free call with our sponsor renofi to learn about some of your options: loan.renofi.com/how-to-adu/
Can we combine this with SB9? I imagine if we do 2 new single family homes and 2 adus on a vacant lot i can now technically sell 3 of the units if i live in one?
Is a new ADU grant funded and approved for 2024, if so how do I apply and submit the application to
We interviewed the legislator behind the ADU grant about plans for the future here: th-cam.com/video/TZwaFKXrynw/w-d-xo.html
I can see a giant mess coming out of this. But so are you saying if I put an ADU on my property? Then I can charge them h o a fees
And then what about my property tax? Does it become less because iPhone less of the land even though the A. D u owner will be paying property taxes😮
So the land still belongs to home owner but the building is sold !?!
That’s how the condo regimes work. But “home owner” can be misleading g since the primary might be condo-ized as well
That is going to spike the prices on condo's. There will be no way out.
You think condos will get more expensive from more inventory?
@@HowToADU it's an investor's market. Unfortunately. You can make it the size of a shoe-box and it still be high.
Ryan who do we contact if our city is not complying with SB9 and setting up special rules which make it impossible to comply?
Contact HCD (Housing and Community Development) for state of California
Like Rafael said, HCD is a good contact authority (even though sb 9 isn’t strictly in their purview originally). I also sometimes use the YIMBY Law form to report specific projects because they might be able to help and they coordinate a lot of this info for cleanup bills.
@@HowToADU Come Jan. 1, AB 1485 may help give HCD more teeth to do something about cities that aren't complying with state housing laws!
Try to buy insurance!
California is crazy right now for home insurance. Do you have a story to share?