What Is AB 1033? The Law That Lets You Sell Your ADU

California Assembly Bill 1033, signed into law in October 2023, introduced a groundbreaking concept to the state’s housing landscape: the ability to sell an Accessory Dwelling Unit (ADU) as a separate condominium, independent from the primary residence on the same lot. For homeowners who have built — or are considering building — an ADU, this law fundamentally changes the financial equation.

Before AB 1033, an ADU was permanently tied to the primary home. You could rent it out, use it for family, or let it sit empty, but you could never sell it on its own. The property was one parcel, one title, one transaction. AB 1033 changes that by allowing local jurisdictions to opt in to a program that permits ADU owners to subdivide their property into separate condominium units — creating an independently sellable asset from what was previously just a backyard addition.

For Los Angeles homeowners, the question is not whether this law exists — it does. The question is when and how it will apply to you. This guide breaks down everything you need to know about AB 1033 in 2026, including which cities have adopted it, the conversion process, financial implications, and what you should be doing right now to prepare.

How AB 1033 Works: The ADU-to-Condo Conversion Process

AB 1033 does not automatically turn every ADU into a sellable condo. Instead, it creates a voluntary opt-in framework for local governments. Cities and counties must affirmatively adopt an ordinance allowing ADU condominium conversions within their jurisdiction. Once a city opts in, homeowners can begin the conversion process.

The conversion itself involves several key steps:

1. Property Survey and Condominium Map

A licensed surveyor must prepare a condominium plan that defines the boundaries of each unit — the primary residence and the ADU. This includes airspace boundaries, exclusive-use common areas (like a patio or yard section), and shared common areas. The survey must meet all local and state subdivision mapping requirements.

2. Civil Engineering and Compliance Review

A civil engineer evaluates the property to ensure both units meet current building codes, fire safety requirements, and utility separation standards. In many cases, this means the ADU must have separate utility connections — independent water, sewer, gas, and electrical meters. Properties where utilities are shared may require upgrades before conversion is approved.

3. CC&Rs and HOA Formation

Since the property is being converted to a condominium, the owner must create Covenants, Conditions, and Restrictions (CC&Rs) and establish a homeowners association (HOA), even if the “association” is just two units. The CC&Rs govern shared responsibilities — maintenance of common areas, insurance requirements, dispute resolution, and cost-sharing for items like roofing, driveways, and fencing. This legal framework is what allows two independent owners to coexist on one original parcel.

4. Separate Title and Deed Recording

Once the condominium map is approved and the CC&Rs are recorded, each unit receives its own Assessor’s Parcel Number (APN) and separate title. The ADU can then be sold, financed, and transferred independently — just like any other condominium on the market.

The entire process typically involves coordination between a surveyor, civil engineer, real estate attorney, and the local planning department. Early estimates suggest the conversion process costs between $15,000 and $40,000 depending on the complexity of the property and local requirements.

Cities That Have Adopted AB 1033

Since the law took effect on January 1, 2024, adoption has been gradual but accelerating. Several California cities have moved forward with ordinances enabling ADU condo conversions:

San Jose — The First Mover

San Jose became the first city in California to complete an AB 1033 conversion, with the initial transactions closing in August 2025. The city adopted its enabling ordinance in early 2024 and established a streamlined approval process. Early data from San Jose shows strong buyer interest, with converted ADUs selling at price points that make homeownership accessible to buyers who were previously priced out of the South Bay market. San Jose’s experience is now serving as a template for other jurisdictions considering adoption.

Santa Monica

Santa Monica adopted its AB 1033 ordinance in 2025, consistent with the city’s long-standing progressive housing policies. The city’s program includes specific design and sustainability standards for units eligible for conversion, reflecting Santa Monica’s emphasis on quality housing stock.

San Diego County

San Diego County’s unincorporated areas became eligible for AB 1033 conversions as of April 2026, making it one of the largest jurisdictions by land area to adopt the program. Several cities within the county are also developing their own ordinances.

Other Jurisdictions Watching Closely

Multiple cities across California — including Sacramento, Oakland, and Long Beach — have initiated studies or public comment periods related to AB 1033 adoption. The success of San Jose’s early conversions has significantly increased interest statewide.

Where Does Los Angeles Stand? City of LA and LA County Analysis

This is the question every Los Angeles homeowner wants answered. As of March 2026, neither the City of Los Angeles nor unincorporated LA County has adopted an AB 1033 ordinance. But that does not mean it is off the table.

City of Los Angeles

The City of LA has been focused on implementing its sweeping ADU construction programs and processing the backlog of ADU permits that surged after state preemption laws loosened local restrictions. City planning staff have acknowledged AB 1033 in public meetings but have indicated that ADU production volume remains the priority before layering on a condo conversion program.

Several LA City Council members have expressed interest in AB 1033 adoption, particularly those representing districts in the San Fernando Valley and South LA where ADU construction has been highest. Industry observers expect the City of LA to begin formal consideration of an AB 1033 ordinance in late 2026 or 2027, likely after reviewing outcomes from San Jose and San Diego County.

Key factors that could accelerate adoption include:

• Successful conversion data from San Jose demonstrating market viability and no negative impacts on neighborhoods
• State legislative pressure — there is ongoing discussion in Sacramento about making AB 1033 mandatory statewide rather than opt-in
• Affordability metrics — if converted ADU condos prove to be a meaningful source of sub-$500,000 ownership housing in expensive markets
• Political will — upcoming LA City Council elections could shift priorities toward adoption

LA County (Unincorporated Areas)

LA County’s Department of Regional Planning has been more cautious. The county’s vast unincorporated areas present unique challenges — varying lot sizes, infrastructure limitations, and diverse community character. However, county staff have participated in informational sessions about AB 1033 implementation, and the Board of Supervisors has directed a feasibility study expected to conclude by mid-2026.

For homeowners in unincorporated LA County, the timeline is less certain than for City of LA residents, but the trajectory is clearly moving toward eventual adoption. Use our Zoning Lookup tool to confirm whether your property falls within the City of LA, unincorporated county, or another municipality — this determines which jurisdiction’s adoption timeline applies to you.

Financial Implications: Selling vs. Renting Your ADU

AB 1033 introduces a fundamentally new financial calculation for ADU owners. Let’s compare the two scenarios for a typical detached ADU in Los Angeles.

Scenario 1: ADU as Rental Property (Status Quo)

• Construction cost: $250,000 – $450,000 for a detached ADU in LA
• Monthly rental income: $2,000 – $3,500 depending on size, location, and finishes
• Annual gross income: $24,000 – $42,000
• Annual net income (after expenses, vacancy, maintenance): $18,000 – $32,000
• Simple payback period: 10 – 20 years
• Ongoing responsibilities: Landlord duties, tenant management, maintenance, potential rent control compliance

Scenario 2: ADU as Sellable Condo (Under AB 1033)

• Construction cost: $250,000 – $450,000
• Condo conversion cost: $15,000 – $40,000
• Total investment: $265,000 – $490,000
• Estimated sale price: $400,000 – $700,000 (based on comparable small condos in LA neighborhoods)
• Potential profit: $100,000 – $250,000+ (before taxes and transaction costs)
• Timeline to profit: Immediate upon sale (vs. 10-20 year payback for rentals)

The math becomes even more compelling when you factor in the time value of money. A lump-sum profit of $150,000 today is worth significantly more than $25,000 per year over 10 years when you account for inflation, opportunity cost, and the risks inherent in being a landlord.

Use our ADU Cost Calculator to estimate your specific construction costs and compare potential returns under both scenarios.

The Hybrid Approach

Many financial advisors suggest a hybrid strategy: rent the ADU for several years to generate income and build equity, then sell it as a condo once AB 1033 is adopted locally and the conversion market matures. This allows you to benefit from rental income now while preserving the option to sell later — potentially at a higher price as the market for ADU condos develops.

Requirements and Restrictions Under AB 1033

AB 1033 conversions are not unlimited. The law includes several important requirements and restrictions that homeowners must understand:

Owner-Occupancy Requirements

Under the original AB 1033 framework, the property owner must have occupied one of the units as their primary residence at the time the ADU was constructed or permitted. This is designed to prevent investor-driven speculation — the law is intended to benefit homeowners, not developers buying properties solely to build and flip ADUs. Local jurisdictions may impose additional or modified occupancy requirements in their enabling ordinances.

Size and Configuration Limits

Only ADUs that meet state-defined parameters are eligible for conversion:

• Detached ADUs up to 1,200 square feet are generally eligible
• Attached ADUs may be eligible depending on local ordinance specifics
• Junior ADUs (JADUs) — units under 500 square feet created within the existing home — are not eligible for AB 1033 conversion
• The ADU must have been legally permitted and built to code

Parking and Access

The condominium map must demonstrate that both units have adequate parking and independent access. While state ADU law has reduced parking requirements significantly (often to zero for ADUs near transit), the condo conversion may trigger additional review of access, egress, and parking adequacy — particularly from a fire safety and emergency access standpoint.

Utility Separation

As noted above, separate utility metering is typically required for condo conversion. If your ADU shares water, gas, or electrical service with the primary home, you will likely need to install separate meters and service connections before conversion. This is one of the most significant cost factors in the conversion process.

How AB 1033 Changes the ADU Investment Calculus

Before AB 1033, building an ADU was primarily a rental income play. You invested $250,000 to $450,000 and hoped to earn it back over a decade or more through monthly rents. The exit strategy was limited — you could only sell the ADU as part of the entire property.

AB 1033 transforms the ADU into a flexible financial asset with multiple exit strategies:

• Rent it for steady monthly income
• Sell it as an independent condo for a lump-sum profit
• Use it for family housing and sell later when circumstances change
• Leverage it — a separately titled condo can potentially be used as collateral for financing
• Estate planning — leave the primary home to one heir and the ADU condo to another

This flexibility makes ADU construction a significantly more attractive investment than it was even two years ago. The downside risk is lower (you have a sale option if renting doesn’t work out), and the upside potential is higher (sale prices for condos typically exceed the capitalized value of rental income).

For homeowners who were on the fence about building an ADU, AB 1033 may tip the balance. Check your property’s ADU eligibility to see what you can build and start evaluating the numbers.

What Los Angeles Homeowners Should Do Now: Building “Condo-Ready”

Even though the City of LA and LA County have not yet adopted AB 1033, smart homeowners are already preparing. If you are building or planning an ADU, here is how to make it “condo-ready” so you can take advantage of AB 1033 as soon as it becomes available in your jurisdiction.

1. Install Separate Utility Meters from Day One

This is the single most impactful step. Having separate water, gas, electric, and sewer connections from the start avoids the most expensive retrofit in the conversion process. The incremental cost during construction is a fraction of what it costs to retrofit later.

2. Design with Independent Access

Ensure your ADU has its own street-facing entrance or clear, dedicated pathway from the street. Avoid designs where the ADU entrance requires walking through the primary home’s private yard or past bedroom windows. Good access design supports both condo conversion and better rental outcomes.

3. Build a Detached Unit If Possible

Detached ADUs are the simplest to convert to condominiums because the physical separation is already clear. Attached ADUs can work but require more complex condominium mapping. If your lot and budget allow it, detached is the way to go for condo-readiness.

4. Exceed Minimum Specifications

Condo buyers expect a different level of finish and functionality than renters. Consider building to a slightly higher specification — better insulation, sound separation, quality fixtures, dedicated laundry — to maximize resale value when the time comes.

5. Maintain Impeccable Permit Records

A legally permitted, fully inspected ADU is a prerequisite for AB 1033 conversion. Keep all permits, inspection records, certificates of occupancy, and plans organized and accessible. Any unpermitted work will need to be resolved before conversion. Check your property’s current permit status with our Property Info tool.

6. Consult with a Real Estate Attorney

If you are seriously considering a future AB 1033 conversion, a brief consultation with a real estate attorney experienced in condominium conversions can help you identify any property-specific issues early. Topics to discuss include lot configuration, easements, CC&R drafting considerations, and title implications.

7. Monitor Your City’s Legislative Calendar

Stay informed about when your local jurisdiction begins considering AB 1033 adoption. Attend planning commission meetings, sign up for city newsletters, and watch for public comment periods. Being an early mover once adoption happens can give you a significant market advantage.

The Bottom Line: AB 1033 Is Coming to Los Angeles

The trajectory is clear. AB 1033 has moved from concept to law to implementation in just over two years. San Jose has proven that ADU condo conversions work in practice. San Diego County has expanded the model to a major Southern California jurisdiction. State legislators are discussing making the program mandatory rather than opt-in.

It is not a question of whether Los Angeles will adopt AB 1033 — it is a question of when. And when it does, homeowners who built their ADUs with conversion in mind will be positioned to unlock significant value from their properties.

Whether you are planning to build a new ADU, currently constructing one, or already renting one out, AB 1033 deserves a central place in your strategic thinking. The homeowners who act on this information now — building condo-ready, understanding the process, and preparing their properties — will be the ones who benefit most when Los Angeles opens the door.