AB 1033: Selling Your ADU as a Condo Changes Everything

California's AB 1033 lets you sell an ADU separately as a condo. Instead of holding for rental income, you can build and sell. But the law is opt-in for cities, and the process is not simple.

Which Cities Have Opted In

About 15 cities have formally adopted AB 1033 ordinances as of mid-2025. The major ones: Los Angeles, San Diego, Sacramento, Fresno, Riverside, Long Beach. Cities like San Francisco, Oakland, and San Jose have not opted in yet.

If your target area hasn't adopted the ordinance, you cannot sell the ADU separately.

What Condo-ization Costs

Survey and engineering: $3,000-$7,000. Planning application and city fees: $2,000-$5,000. Construction upgrades (fire walls, utility meters): $20,000-$50,000. Legal and title: $1,000-$3,000. Total: $25,000-$65,000.

The process takes 6-12 months depending on city backlog and complexity.

The Math

Assume a primary house worth $800,000. The ADU, once condo-ized, sells separately for $350,000. If you sold the property as a single lot with an ADU, comps put the value at about $1.05 million. Selling separately, the combined sales equal $1.15 million. Difference: $100,000 gross.

Subtract condo-ization costs averaging $40,000. Net profit bump: $60,000. Factor in carrying costs, time delays, capital gains on two sales instead of one, and the risk of denial.

When It Makes Sense

In high-demand markets with strong condo pricing premiums. When your ADU is fully independent with separate entrance and utilities. When the city has a streamlined approval process. When you plan to repeat the strategy across multiple properties.

When to Skip It

If your city hasn't opted in. If the ADU needs heavy upgrades or utility splits. If you need a fast turnaround or have thin margins.

In hot opt-in markets with proper due diligence, condo-izing an ADU can add meaningful profit. Elsewhere, stick to traditional ADU rental or whole-lot strategies.