ADU - Accessory Dwelling Unit

What Is An ADU?

Key Features

• An ADU has its own entrance, separate from the main dwelling.
• An ADU includes a kitchen.
• An ADU includes a bathroom and sleeping area.

An ADU is a self-contained living space typically on a single-family residential lot but can be built on a multi-family residential lot.

ADUs (Accessory Dwelling Units) are also called granny units, in-law units, second dwelling units, backyard cottages, guest houses, carriage house, casitas, tiny house on wheels (THOWs), etc. ADUs do not have a specific type of design. An ADU can be a detached house, a garage conversion, a basement conversion, a conversion of part of an existing residence, or an addition to an existing residence.

Why ADUs Have Become Popular

In 2020, California passed laws that took effect January 1, 2021. These laws were intended to reduce restrictions on ADUs and make obtaining permits much quicker and less expensive. For many cities, these changes were very significant.

In 2023, legislation was enacted that limited jurisdictions from preventing ADUs because of unpermitted work on the property and limited front setback regulations. Any unpermitted work now has to be deemed a health and safety hazard in order to prohibit an ADU.

Automatic Approval

Cities/counties must permit specific categories of ADUs without applying any local development standards if proposed to be built on a single-family lot. ADUs eligible for this automatic approval include:

A JADU (junior ADU) can be created within the walls of a proposed or existing single-family residence and shall contain no more than 500 square feet. It may share central systems, including a basic kitchen utilizing small plug-in appliances, and may share a bathroom with the primary dwelling. JADUs present no additional stress on utility services or infrastructure because they simply repurpose existing space within the residence and do not expand the dwelling's planned occupancy.

Reduced Costs and Burdens for Developing ADUs

Cities/counties must generally approve an attached or detached ADU under 1,200 sq ft unless it adopts local development standards. California state law permits up to two detached ADUs per multi-family lot.

• ADU applications must be approved within 60 days without a hearing or discretionary review.
• No impact fees are required for ADUs under 750 sq ft; proportional fees apply to larger ADUs.
• For ADUs permitted by 2025, cities/counties cannot require the owner to live at the property.
• An ADU can be developed simultaneously as a primary dwelling under most of the same rules.
• A city/county must delay code enforcement on an unpermitted ADU to allow it to be legalized.
• Single-family HOAs must allow the development of ADUs, subject to reasonable standards.
• Single-family homeowners can also develop JADUs - units under 500 sqft within a residence.

Local standards have the following limitations:

• No minimum lot size requirement.
• No maximum unit size limit of less than 1,000 sq ft for a two-bedroom ADU.
• No required replacement parking when a parking garage is converted into an ADU.
• No required parking for an ADU, created through the conversion of existing space or located within a half-mile walking distance of a bus stop or other public transit.
• No height limit under 16 feet or side/rear setback requirements over 4 feet.
• No setback requirements for conversions/replacements of existing legal structures.
• Floor area ratio (FAR) and similar restrictions must be relaxed to allow the development of an 800 sq ft ADU.
• Design standards must be objective and are assessed by staff, not elected officials.

Benefits of ADUs:

• ADUs can provide a source of rental income for homeowners. Depreciation and capital gains of a rental property can provide tax-advantaged wealth building.
• ADUs enable extended families to be near one another while maintaining privacy.
• ADUs can enable seniors to age in place as they require more care.
• ADUs can provide as much living space as many newly built apartments and condominiums, and they’re suited well for couples, small families, friends, young people, and seniors.
• ADUs provide flexible living space. They can be used as a home office, a guest house, a music room, a gym, or a rental property.
• ADUs can provide personal outdoor living space.
• ADUs are a capital improvement that increases property values.
• ADUs are typically a more affordable type of home to construct because they do not require paying for land, major new infrastructure, structured parking, or elevators.
• ADUs are built with cost-effective wood frame construction, which is significantly less costly than homes in new multifamily infill buildings.
• ADUs can increase sustainable housing by providing smaller, energy efficient housing, requiring fewer resources.
• ADUs can typically be built with relaxed zoning requirements compared to a new house.
• ADUs can provide appropriately sized housing for the decreasing size¹ of U.S. households.
• ADUs can increase the supply of affordable housing city governments need.

Cons of ADUs:

• The financial cost of building an ADU isn't always justified by the potential rental income nor by the resale value.
• The cost of a mortgage to build an ADU is typically higher than a mortgage to buy an existing house.
• An ADU will affect what changes you can make to your main house. Rental laws could change, affecting the rent you can receive. ADU zoning laws could change, affecting your use of your ADU.
• Your property may not have enough space to build the ADU you want to build.
• Although ADUs have relaxed parking requirements, more people living on the property will need more parking space.
• ADUs can reduce both your privacy and your neighbor's privacy.
• Unfortunately, some people do not hesitate to complain about their neighbors' activities or their neighbors' aesthetic choices. Your ADU is likely to receive at least some criticism. Your plans may be reasonable, but many people want to restrict what other people do even though they don't want to be restricted themselves.
• Your neighbors may believe your ADU reduces the value of their own property.
• ADUs require ongoing maintenance and taxes.
• Managing a rental property requires additional time: record keeping, complying with rental laws, responding to tenants, and possibly increased maintenance.
• When you want to sell your property, some buyers will not want an ADU near them.

Preapproved ADU Vendor List

The City of San Jose has a list of vendors who have plans for ADUs that the city has preapproved. The list currently has 20 vendors, most having multiple preapproved plans.

Cost Of Building An ADU

The cost of building a residence can vary dramatically. Typically kitchens and bathrooms have the highest cost per sq. ft. of all of the rooms in a residence. A smaller self-contained living space will typically have more of its floor space allocated to these higher cost rooms and could thus easily have a higher building cost per sq. ft. A very rough estimate of the cost of building a residence in Silicon Valley is $400 per sq.ft., but it can often exceed that significantly.

Many of the vendors who have plans preapproved by the City of San Jose, list starting prices. As an example, information from abodu's website (2/28/2024) is posted below. Contact them for their current information.

When considering building an ADU, think first about what you hope to achieve. Your goals may be better met by simply buying a new house that meets those needs. However, it is possible that the only way to meet your goals, is through an independent detached home.

Major Cost Factors

• ADU type: A detached ADU will typically require more labor and materials, being less able to share existing utilities and structure. A detached ADU typically costs more.
• Prefabricated ADUs can be less costly and quicker to build.
• Architectural plans, engineering reports, and inspections are typically 10-15% of the total cost.
• When local building contractors are busy, they raise the rates they charge. When they want more work, they typically reduce their rates.

ADU Video - seminar presenting ADU examples

(about 45 minute presentation + 30 minute Q&A)

New and Recent Laws

AB 1033 (10/11/2023) Modifies regulations on the separate sale of an ADU and main dwelling.

AB 976 (10/11/2023) Eliminates 2025 sunset of law allowing non-owner occupancy of an ADU.

AB 434 (10/11/2023) All California cities and municipalities must have a pre-approved ADU plan scheme in place by January 1, 2025.

SB 9 (9/16/2021) Allows homeowners to split their single-family lot into two separate lots. Permits building up to two units on each of the newly created lots. Additional information about SB 9 on JulianaLee.com

More Information About ADUs

• California Association of Realtors: Accessory Dwelling Unit Quick Guide
• California Department of Housing and Community Development Accessory Dwelling Units Booklet
• San Jose - Accessory Dwelling Units (ADUS)
• Palo Alto Summary Guide to ADUs and Junior ADUs
• California government code section 65852.2 contains regulations regarding ADUs and JADUs.
• Palo Alto Municipal Code 18.09 Accessory Dwelling Units and Junior Accessory Dwelling Units
• Cal HFA ADU Grant Program

Footnotes:

1.) Table HH-4. Households by Size, United State Census Bureau