The Governor recently approved two Assembly bills regarding accessory dwelling units (ADUs): AB 976 and AB 1033.

The Planning and Zoning Law provides for the creation of ADUs by local ordinance, or, if a local agency (city or county) has not adopted an ordinance, by ministerial approval, in accordance with specified standards and conditions. Prior to AB 976, the law already required a local ordinance to mandate ADUs be either attached to or located within a primary dwelling or located on the same lot if detached from the primary dwelling. Local agencies could also require that ADUs be used for rental terms longer than 30 days. Beginning January 1, 2025, the prior law would have authorized local agencies to impose an owner-occupancy requirement on some ADUs. While local agencies will still be able to require rental terms of 30 days or longer, they will now be prohibited from imposing an owner-occupancy requirement on any ADU.

However, the biggest change is that local agencies will be allowed, but not required, to adopt ordinances permitting owners to convert their ADUs into condos that can be sold separately from the main dwelling. Each lot would need its own HOA to assess costs for shared property maintenance expenses.

The creation of these new condos on a lot would be subject to certain conditions. For example, the condos must be created pursuant to the Davis-Stirling Common Interest Development (CID) Act and in conformance with all applicable objective requirements of the Subdivision Map Act and a local subdivision ordinance. A qualifying safety inspection of the ADU must occur before the condo plan is recorded. A subdivision map or condo plan cannot be recorded without written evidence that each lienholder has consented. Lienholders can refuse to consent or require the satisfaction of terms and conditions.

The legislative goal is to create more home ownership and give owners more options for building on their property. However, the practical result will be additional burdens on HOAs. Fortunately, if the property or separate interest is in a planned development with an existing HOA, the owner cannot record a condo plan to create a new CID without the HOA's express written authorization, defined as HOA board approval at a duly noticed board meeting, and, if required by the HOA's governing documents, approval by the HOA's membership.

HOAs should be proactive in amending their governing documents to address this change in the ADU law, including by adding CC&R provisions requiring majority or greater approval for owners to convert ADUs into condominiums and prohibiting the owners of new “condo” ADUs from membership and attendant voting rights in the existing HOA.