What is AB 1033 ADU sale?

AB 1033 was the first law in California history to allow an ADU to be sold separately from the primary residence. The mechanics:

1. Condominium map — the parcel must be converted to a condominium via a subdivision map approved by the city (or a simpler condo conversion process where allowed).
2. HOA — the two units (primary + ADU) operate under a simple HOA or CC&Rs governing shared walls, utilities, and common maintenance.
3. City opt-in requirement — the law is permissive; each city must affirmatively opt in through its zoning code. LA opted in effective 2024. San Diego opted in 2024. Many Bay Area cities opted in 2024-2025. Most inland and rural cities have not.
4. Lender acceptance — Fannie Mae and Freddie Mac issued guidance in 2024 clarifying that AB 1033 condo-ADUs are eligible for conventional conforming loans. Most credit unions and major lenders now finance them.
5. Combining with SB 9 — a homeowner can do SB 9 urban lot split first (creating two separate parcels), then build an ADU on each, then use AB 1033 to condo-ize each parcel, resulting in up to four separately-saleable units from one original single-family lot.

AB 1033 economics (LA 2026 estimate):

• Condo conversion costs: $8,000-$25,000 (surveyor, CC&Rs, HOA setup, city fees).
• Resale premium: ADUs sold separately in LA neighborhoods typically clear $450,000-$900,000 as of Q1 2026, versus $200,000-$500,000 of "bundled" appraisal uplift.
• Tax implications: separate APN means separate property tax bill; capital gains treatment depends on whether the ADU was ever the primary residence.

What to verify before you build:

• Your city has opted in (check zoning code or contact city planning).
• Your lender finances AB 1033 condo-ADUs (most majors do in 2026; some smaller credit unions don't yet).
• Title insurance supports the condo split (underwriters charge a nominal fee for condo policies).

AskBaily's LA ADU scoping checks AB 1033 opt-in status and will flag whether your lot supports the eventual condo conversion.