In California, you generally cannot sell your ADU separately from the main house. The default rule under state law is that an accessory dwelling unit can be rented on its own but not sold on its own. A 2024 law, AB 1033, created one narrow exception: if your city or county has passed a local ordinance allowing it, you can convert the main home and the ADU into separate condominium units and sell them independently. Without that local ordinance, a standalone ADU sale is not legally possible.
The Default Rule in California
Government Code Section 65852.2 states plainly that an ADU “may be rented separate from the primary residence, but may not be sold or otherwise conveyed separate from the primary residence.”1California Legislative Information. California Government Code 65852.2 In other words, the ADU is treated like any other improvement to the property. It raises what the whole parcel is worth, but it is not its own piece of real estate.
If this is the rule in your area, selling means selling the whole property, with the ADU’s value folded into the overall appraisal. No special legal steps are required beyond a normal residential sale.
AB 1033: The One Exception
AB 1033 took effect on January 1, 2024. It authorizes local agencies to adopt ordinances allowing homeowners to convert a primary dwelling and its ADU into separate condominium units that can then be sold independently.2California Legislative Information. AB-1033 Accessory Dwelling Units: Local Ordinances: Separate Sale or Conveyance The word “authorize” is doing the work in that sentence. The law does not give homeowners an automatic right to sell their ADU separately. It gives cities and counties permission to allow it if they pass their own ordinance.
The conversion creates a common interest development under the Davis-Stirling Common Interest Development Act, the same framework that governs traditional California condominiums.3California Legislative Information. California Government Code 65852.2 – Section: Paragraph (a)(10) A separately sold ADU is not a standalone house on its own parcel. It is a condominium unit sharing a lot with the primary residence, with shared common areas and the legal obligations that come with condo ownership.
Does Your City or County Allow It?
This is the first thing to find out, because the answer decides whether anything else in this article matters. Adoption has been slow. As of early 2026, very few California jurisdictions have finalized ordinances permitting separate ADU sales under AB 1033. San Diego County approved its implementing ordinance with an effective date of April 4, 2026. Most cities are still evaluating the policy, drafting guidance, or have not taken it up at all.
Call your local planning department before spending any money on legal work, surveyors, or conversion plans. If your jurisdiction has not adopted an AB 1033 ordinance, a separate sale is not legally possible, regardless of what state law permits elsewhere.
What the Condominium Conversion Actually Requires
If your city does allow it, state law lays out several concrete requirements. None are quick, and none are cheap. Expect months of work and several thousand dollars in legal, surveying, and filing fees.
Safety Inspection
Before any condominium plan can be recorded, the ADU must pass a safety inspection. The law accepts either a certificate of occupancy from the local agency or a housing quality standards report from a HUD-certified building inspector.4California Legislative Information. California Government Code 65852.2 – Section: Paragraph (a)(10)(C) An ADU that was built with proper permits and passed its final inspection during construction should be in reasonable shape here. An unpermitted or partially permitted ADU is a harder problem.
Subdivision Map and Condominium Plan
The condominium must comply with the Subdivision Map Act and any local subdivision ordinance.5California Legislative Information. California Government Code 65852.2 – Section: Paragraph (a)(10)(B) In practice, that means hiring a licensed surveyor, preparing a condominium plan that defines the boundaries of each unit and the common areas, and filing that plan with the county recorder. You will also need governing documents (CC&Rs) under the Davis-Stirling Act. Those documents set the rules for shared maintenance, insurance, and dispute resolution between the owner of the primary residence and the owner of the ADU.
Lender Consent
If there is a mortgage on the property, the lender must consent in writing before the subdivision map or condominium plan can be recorded. The statute is blunt about this: a lienholder “may refuse to give consent.”6California Legislative Information. California Government Code 65852.2 – Section: Paragraph (a)(10)(D) There is no override. If the lender says no, the conversion stops. The written consent must include the lienholder’s signature, a legal description of the property, and the identities of all parties with an interest in the property, and it must be recorded with the county recorder.
This is where many homeowners will stop. A standard mortgage contains a due-on-sale clause that lets the lender demand full repayment if the property’s ownership structure changes. Splitting one property into two condominium units changes the collateral securing the loan. Lenders have little reason to consent unless the borrower pays off the existing mortgage or negotiates new loan terms, and the statute gives them full discretion to refuse or attach conditions.
HOA Approval
If the property already sits inside a planned development with a homeowners association, the HOA must give express written authorization before you can record a condominium plan. That requires board approval at a properly noticed meeting, and possibly a membership vote depending on what the HOA’s governing documents say.2California Legislative Information. AB-1033 Accessory Dwelling Units: Local Ordinances: Separate Sale or Conveyance
Utility Metering
Whether the ADU already has its own utility hookups depends on how it was built. State law generally does not let local agencies require a new or separate utility connection for certain smaller ADUs, particularly those converted from existing space inside a home. For larger or newly constructed detached ADUs, local agencies and utility providers may require independent connections, with fees proportionate to the ADU’s size or plumbing fixture count.7California Legislative Information. California Government Code 65852.2 If you are planning a separate sale, independent metering becomes a practical necessity even where it is not strictly required. A buyer taking title to a condominium unit expects to receive and pay their own bills.
Selling the Whole Property Instead
For most California homeowners, selling the entire property with the ADU included is the only path available, and it will remain the most common one even as more cities adopt AB 1033 ordinances. The sale itself works like any other residential transaction, but an ADU brings in a few tax issues that a plain single-family sale does not.
Section 121 Exclusion When the ADU Was Rented
Federal law lets you exclude up to $250,000 in capital gains from the sale of a primary residence ($500,000 for married couples filing jointly), provided you owned and lived in the home for at least two of the five years before the sale.8Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain from Sale of Principal Residence If the ADU is a separate dwelling unit that you rented out rather than used as part of your personal residence, IRS regulations require you to split the gain between the residential portion and the rental portion. Only the gain from the portion you actually lived in qualifies for the exclusion.9eCFR. 26 CFR 1.121-1 – Exclusion of Gain from Sale or Exchange of a Principal Residence The IRS regulations use a close example: a taxpayer who converts part of a townhouse into a rental apartment must allocate gain between the main residence portion and the rental unit. A detached rental ADU works the same way.
Depreciation Recapture
If you claimed depreciation deductions on a rental ADU, and the IRS expects you to have done so, you will face depreciation recapture at sale. The portion of your gain attributable to prior depreciation deductions is taxed at a maximum federal rate of 25%, which is typically higher than the long-term capital gains rate most taxpayers pay. Recapture applies whether you sell the ADU separately or sell the entire property. When selling the whole property, you report the ADU’s depreciable portion and the land separately, allocating the sale price based on fair market value.10Internal Revenue Service. Instructions for Form 4797
California Property Tax on the Buyer
Under Proposition 13, building an ADU does not trigger a full reassessment of your existing home. The county assessor estimates the value of the new ADU (usually based on construction cost) and adds that figure to the current assessed value. Your primary home’s assessed value stays at its existing Prop 13 basis. When the entire property later sells, however, the buyer’s property taxes will be based on the full purchase price, because the sale triggers a complete change-in-ownership reassessment. That matters for how a buyer evaluates the property, even though it is their tax bill and not yours.