FAQ AB 1033 –Separate Sale or Conveyance of ADUs
Q) What does AB 1033 propose to do?
The current law permits accessory dwelling units (ADUs) to be sold or conveyed separately from a primary residence in 2024.
A) AB 1033 mandates local jurisdictions to establish an ordinance that allows for the separate conveyance of accessory dwelling units from a primary residence with no limitations.
Allows Any Form of Conveyance:
AB 1033 does not limit how the ADU may be conveyed.
This could permit many different forms of ownership, including, but not limited to, timeshares. Tenants in Common ownership models, lot splits, or fractional ownership cannot require owner occupancy.
Q) Does Not Ensure the Creation of Ownership Units:
A) AB 1033 would prohibit local governments from mandating owner occupancy requirements within local ordinances.
AB 1033 effectively allows an ADU to be sold to anyone, including large REITs and corporate investors like Blackstone and Invitation Homes, dramatically reducing homeownership opportunities statewide.
Risks Consumer Protection:
AB 1033 is open-ended and does not constrain how a conveyance may be done. It could trigger significant title issues that inhibit a seller’s ability to sell their property.
Furthermore, primary homes and ADUs conveyed under AB 1033 will, in most cases, not be eligible for conventional, FHA, and VA financing programs, harming seniors, veterans, and low-income families.
Jeopardizes SB 9 Against Rapid Neighborhood Change:
AB 1033 jeopardizes many of the protections established within SB 9, which help to preserve neighborhoods while increasing homeownership opportunities. It also opens the door for speculative ADU developers to gentrify and transform neighborhoods rapidly with limited local input.
Q) Isn’t AB 1033 meant to help create condominium conversions to expand homeownership opportunities?
A) AB 1033 does not mention condominiums or other common interest developments. As stated above, there are no limits or guardrails about how the ADU may be sold or conveyed.
It must facilitate the conversion of a single-family home with an ADU to a joint interest development and address the many complexities, requirements, and standards of condo development and conversion requirements contained in existing law.
Q) Isn’t AB 1033 meant to help create condominium conversions to expand homeownership opportunities?
A) Nowhere does AB 1033 mention condominiums or other common interest developments.
As stated above, there are no limits or guardrails about how the ADU may be sold or conveyed. The law must facilitate the conversion of a single-family home with an ADU to a joint-interest development and address the many complexities, requirements, and standards of condo development and conversion contained in existing law.
Q) Will AB 1033 Complicate Mortgage and Title?
A) AB 1033 does not state or address condominium or common interest developments.
Therefore, the guidelines for lenders around converting properties to condos are not applicable.
AB 1033 focuses on ADUs and the ordinance allowing the sale or conveyance of an ADU from the primary residence to a third party.
ADUs must meet different building and safety standards than new construction or remodeling.
Common interest development forms of ownership. However, AB 1033 remains silent on condos, common interest developments, or conversion ownership models.
Instead, AB 1033 requires local governments to allow ADUs to be sold or conveyed to a third party, separate from the primary residence, without any constraint, guidance, or limitations.
Suppose the bill sought to streamline common interest development conversions or development. In that case, it must be drafted to facilitate that form of ownership guided by proper consumer protections and consistent with the laws governing common interest developments and the Subdivision Map Act.
Q) Could Ab 1033 Be Amended to Fix the Concerns In the March 9th Version?
A) Yes. CAR. Is prepared and has expressed a willingness to work with the Author to help achieve the objective of converting, establishing, and streamlining two-unit common interest developments, but only with proper consumer and homeowner protections that are consistent with the various existing laws governing common interest developments and lot split.
