California SB 745: ADU Approval, Size, and Parking Rules

If you searched for California SB 745 expecting rules on accessory dwelling units, you’re in the wrong statute: SB 745 is the Drought-Resistant Buildings Act and has nothing to do with ADUs.¹ California ADU rules live in Government Code sections 66314 through 66333, and they set statewide standards that cities and counties have to follow when you apply to build an ADU, a junior ADU, or both on your residential lot. The rules cap fees, strip away most parking requirements, impose a 60-day approval clock, and bar local agencies from being more restrictive than the state. What follows is what those rules actually say.

Where the Rules Come From

The modern ADU framework grew out of several bills rather than a single statute. The 2020 overhaul came from AB 68, AB 881, and SB 13. Later bills expanded it: AB 976 (2023) permanently eliminated owner-occupancy requirements, AB 1033 (2023) opened a path to sell ADUs separately, and SB 1211 (2024) raised the number of ADUs allowed on multifamily lots. The provisions originally sat in Government Code Section 65852.2 and were renumbered across sections 66314 through 66333.²

State law is a floor. Cities and counties can be more permissive, but any local ordinance more restrictive than the state standards is void.

Ministerial Approval and the 60-Day Clock

If your application meets the objective development standards, the local agency has to approve it. No discretionary review. No public hearing. No design-review board deciding whether your project fits the neighborhood.²

Once a local agency receives a complete application, it has 60 days to approve or deny. Do nothing within that window and the application is deemed approved by operation of law.² That deadline is the enforcement teeth behind the ministerial standard.

How Many ADUs You Can Build

Single-Family Lots

On a lot with an existing or proposed single-family home, you can combine up to three units: one ADU converted from existing space (such as a garage), one junior ADU within the walls of the main house, and one newly constructed detached ADU.² Local agencies must allow all three to coexist where the lot can fit them.

Multifamily Lots

Multifamily properties get more. Inside an existing building, you can convert non-livable space (storage, laundry rooms) into at least one ADU, or up to 25% of the existing unit count, whichever is greater. On top of that, you can add up to eight detached ADUs on the lot, with the total number of detached ADUs capped at the number of existing units in the building.²

Size, Height, and Setbacks

A local ordinance cannot cap an ADU at less than 850 square feet for a one-bedroom unit, or less than 1,000 square feet for a unit with two or more bedrooms. Separately, no local rule on lot coverage, floor area ratio, or any other dimensional restriction can be applied to prevent at least an 800-square-foot ADU with four-foot side and rear setbacks.² That second rule stops cities from using indirect standards to shrink ADUs below a usable size.

Height limits depend on the type of ADU and where it sits:

16 feet is the base height for a detached ADU.
18 feet is allowed if the ADU is within a half-mile walking distance of a major transit stop or high-quality transit corridor, or if it sits on a lot with an existing or proposed multistory multifamily dwelling. An additional two feet is permitted to match the roof pitch of the primary home.

Local agencies cannot deny a two-story detached ADU that complies with these height allowances, even where the underlying zoning limits primary dwellings to one story.²

For new-construction ADUs, the maximum required setback is four feet from the side and rear lot lines. If you’re converting an existing structure like a garage into an ADU, no setback is required at all, even if the structure already sits on the property line.²

Parking

When parking is required at all, the maximum a local agency can demand is one space per ADU or one space per bedroom, whichever is fewer. Those spaces can be tandem on your driveway.

Local agencies cannot require any parking at all if the ADU meets any one of these conditions:

Within a half-mile walking distance of public transit.
Within an architecturally and historically significant historic district.
Created within the existing primary residence or an accessory structure.
Located where on-street parking permits are required but not offered to the ADU occupant.
Within one block of a car-share vehicle.

If you demolish or convert an existing garage, carport, or covered parking structure to build the ADU, the local agency cannot require you to replace the lost spaces.²

Impact Fees and Utility Connections

Local agencies, special districts, and water corporations cannot charge any impact fees on an ADU smaller than 750 square feet. For an ADU of 750 square feet or more, impact fees must be proportional to the ADU’s size relative to the primary dwelling.³ So an 800-square-foot ADU behind a 2,000-square-foot main house carries only 40% of a full-size dwelling’s impact fee.

“Impact fee” here covers development fees and park fees, but it specifically excludes utility connection and capacity charges, which have their own rules.

If the ADU is created by converting existing space inside your home or an accessory structure, with no more than 150 square feet of expansion, the local agency cannot require a separate utility connection and cannot charge any connection or capacity fee. The ADU shares the existing connections with the main house.²

A newly built detached ADU that doesn’t qualify for the conversion exemption may need its own hookups. In that case, connection fees and capacity charges have to be proportionate to the burden the ADU actually places on the system. A separate electric meter alone typically runs $2,000 to $5,000 or more, with similar costs for water and sewer where required.

Junior ADUs

A junior ADU is a distinct category. It must sit entirely within the existing or proposed walls of a single-family home and cannot exceed 500 square feet.⁴ A JADU typically starts as a bedroom conversion with a separate exterior entrance, while keeping an interior connection to the main house.

Unlike a full ADU, a JADU requires the owner to live in either the main house or the JADU itself.⁴ A JADU does not need its own utility connection and does not trigger a new property address, because the interior connection to the primary residence stays in place. Those features make JADUs the cheapest entry point into ADU development.

Renting Out Your ADU

California imposes no rent cap or affordability requirement on ADUs. You can charge market rate. The one firm restriction is length of tenancy: ADUs built under the streamlined state standards must be rented for terms longer than 30 days, and local agencies can extend that to all ADUs by ordinance.² JADUs carry the same 30-day minimum. Short-term rental platforms like Airbnb are off the table for stays under 30 days.

Owner occupancy is no longer a requirement for ADUs. AB 976 permanently removed it in 2023, and local agencies cannot demand that you live on the property as a condition of building or keeping an ADU. JADUs remain the exception.² Local agencies also cannot impose deed restrictions beyond what the Government Code already allows, and homeowner associations cannot adopt or enforce rules that effectively prohibit ADU construction on residentially zoned lots.

Selling an ADU Separately

An ADU historically could not be sold apart from the main home. AB 1033, effective in 2023, authorized local governments to adopt ordinances allowing the primary dwelling and the ADU to be sold as separate condominiums. It isn’t automatic. Your city or county has to opt in, and the property has to go through a condominium conversion process. Where available, the pathway opens individual-buyer sales for ADU units.

Financing an ADU

Fannie Mae allows borrowers to use a HomeStyle Renovation loan to finance building or installing an ADU on a one-unit principal residence. The ADU must include independent living, sleeping, cooking, and bathroom space, with its own entrance that does not require going through the main house.⁵ Manufactured homes qualify. Properties with multiple ADUs, or two-to-four-unit dwellings, do not.

If you want to count projected ADU rental income toward qualifying for the mortgage, Fannie Mae permits it on a one-unit principal residence, limited to the rental income from one ADU, and capped at 30% of the borrower’s total qualifying income.⁶ The loan has to be a purchase or a limited cash-out refinance.

Property Tax and Capital Gains

Building an ADU will raise your property taxes, but under Proposition 13 only the value of the new construction is added to your existing assessed value. The assessor does not reassess the whole property. You’ll get a supplemental tax bill reflecting the assessed value of the new improvement, and ongoing annual tax goes up by roughly 1% of that new value plus any applicable local overrides.

When you sell, the ADU is part of your primary residence for capital gains purposes. The federal exclusion lets you exclude up to $250,000 in gain ($500,000 for married couples filing jointly) on the sale of your principal residence if you owned and lived in the home for at least two of the five years before the sale.⁷ If you rented out the ADU during any period after January 1, 2009, the IRS may allocate a portion of the gain to that “nonqualified use” period and tax it. The calculation is based on the ratio of rental time to total ownership, with certain exceptions for temporary absences and the final period of ownership.

1
California Legislative Information. SB-745 The Drought-Resistant Buildings Act
2
California Department of Housing and Community Development. Accessory Dwelling Unit Handbook
3
California Legislative Information. California Code Government Code 65852.2 – Accessory Dwelling Units
4
California Department of Housing and Community Development. Frequently Asked Questions – Junior Accessory Dwelling Units
5
Fannie Mae. Accessory Dwelling Units
6
Fannie Mae. Rental Income
7
Office of the Law Revision Counsel. 26 U.S. Code 121 – Exclusion of Gain From Sale of Principal Residence