Historical Moment for Standalone ADU sale in California

July 7, 2026

By: Cristina Arneson-Cabrera

AB 1033 could reshape how California approaches homeownership and housing developments over the next several years.

AB 1033 is a California law signed by Governor Gavin Newsom on October 11, 2023, which essentially allows cities to adopt ordinances enabling the separate sale of ADU’s (accessory Dwelling Units) through condominium conversion under the Davis-Stirling Act.

This has opened a new stream of potential income for Frankenstein house hackers and parcel splitters.This allows for the separate sale of an Accessory Dwelling Units (ADUs) in unincorporated communities through a condominium conversion process. As of April 2026, the only three California jurisdictions that have participated are San Jose (first sale August 2025), Santa Monica (opted in early 2025), and unincorporated San Diego County (Opted in March 4, 2026). Essentially meaning all other areas still prohibit the sale of separate ADU’s.

The process requires a condominium map, CC&R’s, a condominium plan filing with a country recorder, and a creation of homeowner’s association. AB 1033 does not loosen construction standards, does not override local zoning, but merely changes what you can own and sell individually.

AB 1033 went into effect January 1, 2024, however since its inception as a law had not been utilized until the first ADU sale took place in San Jose in August 2025, becoming the first city in the state to complete implementation. The historic, first-ever standalone Accessory Dwelling Unit (ADU) sold for a whopping $530,000 dollars for a 749-square-foot, 2 bed/1bath unit.

Not to be confused with SB 9, which is a statewide law that allows eligible homeowners of single-family residence lots to build up 2-4 homes on an individual parcel depending on property size, local adopted ordinance and zoning for that particular area. While AB 1033, does not create development, it allows the separation and individual sale of units built on what was originally single-family parcel.

Why this matters for California homeowners…

While the first ADU sale does not inherently make a blanketed law state wide, if this proves to be successful in one city; more may adopt it. I am curious to see how viral San Jose’s historic ADU sale will influence buyer behaviors, and if it encourages other jurisdictions to adopt AB 1033 as well. Imagine the neighboring property in your single-family neighborhood building a stand-alone ADU, splitting their parcel and selling the rear half of their property while remaining in the front house. How would this change the landscape and character of where you live today? Are you aware of your cities anticipated timeline for review and implementation of AB 1033? We would love to hear your opinions below on how you think this could change communities statewide. Is this something you want happening next door to your home?