AB 1033: Can You Sell Your Sacramento ADU as a Separate Property?

What Is AB 1033?

California Assembly Bill 1033 was signed into law on October 11, 2023, and took effect January 1, 2024. It is one of the most significant changes to ADU law in years — not because it makes building easier, but because it changes what you can do with an ADU once it is built. Before AB 1033, your ADU was permanently tied to your primary home. You could rent it, but you could not sell it as a separate piece of real estate. AB 1033 removes that restriction at the state level, allowing cities and counties to pass local ordinances that permit an ADU to be sold separately from the main house — structured as a condominium, with its own title and its own deed. The first ADU condo sale under this law was recorded in San Jose in August 2025, marking a genuine milestone for California housing. Sacramento is among the cities that have moved to allow this, meaning local homeowners now have a new option for unlocking the value of their ADU.

How It Works: ADU as a Condo

The mechanism AB 1033 uses is condominium conversion. Rather than splitting the lot into two separate parcels (which would require a standard subdivision), the law allows the primary home and the ADU to become two units within a single common interest development — similar to how two condos in the same building have separate owners but share a building and common areas. Once converted, the ADU gets its own title, its own address, and its own property tax assessment. The new owner of the ADU becomes a co-member of a small homeowners association (HOA) that governs shared elements like the driveway, landscaping, and any shared utility connections. The primary homeowner retains full ownership of the main house and the land. This is genuinely new territory. It creates a category of housing — the micro-condo ADU — that did not exist in California before 2024.

Who Can Use AB 1033?

Not every ADU qualifies for separate sale. The law has clear eligibility requirements that homeowners should understand before investing time or money in the conversion process.

• Your city or county must have adopted an AB 1033 opt-in ordinance — Sacramento is among the participating cities
• The ADU must have been built with a valid building permit and received a final inspection (unpermitted ADUs are not eligible)
• The ADU must function as an independent dwelling unit with its own entrance, utilities, and living systems
• If you have an existing mortgage, your lender must consent to the division before the condominium plan can be recorded
• Junior ADUs (JADUs) are generally not eligible — they share walls and systems with the primary home and do not meet the independence requirements

Which ADU Types Are the Best Candidates?

Detached ADUs are the strongest candidates for AB 1033 conversion. They already function as fully independent structures with separate entrances, and they are easiest to equip with separate utility meters. Attached ADUs may qualify if they have structural separation, an independent entrance, and can be set up with independent utilities — but the process is more complex. Junior ADUs (JADUs), which are contained within the walls of the primary home and often share plumbing or interior access, are generally excluded from AB 1033. The law is designed for units that can truly stand alone as separate homes, and most JADUs do not meet that threshold. If you are planning to build a new ADU with a future AB 1033 sale in mind, a detached unit with fully independent systems is the right choice from the start.

The Step-by-Step Conversion Process

Converting an ADU to a separately sellable condominium unit typically takes three to six months and involves several professionals: a real estate attorney, a licensed land surveyor, and a title company. Here is the general sequence of steps.

• Step 1 — Confirm city participation: Verify that Sacramento has an active AB 1033 ordinance and request the city's checklist from the Community Development Department
• Step 2 — Separate utilities: Install independent meters for electricity, gas, and water. The ADU must be able to operate entirely independently from the main house
• Step 3 — Condominium mapping: Hire a licensed surveyor to prepare a condominium plan that legally defines the ADU unit boundaries within the shared lot
• Step 4 — Draft CC&Rs and HOA documents: Work with a real estate attorney to create the covenants, conditions, and restrictions (CC&Rs) that govern the relationship between the two units, plus the HOA governing documents
• Step 5 — Get lender consent: If you have a mortgage, submit the condominium plan to your lender and obtain written consent before recording anything
• Step 6 — City approval: Submit the condominium plan to the city for review and approval under the Subdivision Map Act
• Step 7 — Record the title: Once approved, the condominium plan is recorded with the Sacramento County Recorder. The ADU now has its own legal title and can be listed for sale

How to Design an ADU for Future AB 1033 Sale

If you are building a new ADU today and want to keep the option of selling it separately in the future, design decisions made during construction will save you significant money and headaches later. The key principle is to build for independence from day one.

• Separate utility meters: Install independent electric, gas, and water meters during construction — retrofitting these later can cost $5,000 to $15,000
• Dedicated electrical panel: Give the ADU its own panel, not a sub-panel off the main house
• Independent HVAC and water heater: Avoid shared systems that would complicate ownership boundaries
• Private entrance with no shared hallways: The ADU should be accessible without passing through any part of the primary home
• Dedicated parking space: Even if not required by code, a designated parking spot makes the ADU more sellable
• Private outdoor space: A small patio or yard area exclusive to the ADU adds significant buyer appeal
• Separate address: Work with the city to assign the ADU its own street address during the permit process

The Financial Case for Selling Your ADU

The financial math behind AB 1033 is compelling for the right homeowner. In Sacramento, a well-built 700 to 900 square foot detached ADU might sell as a condo for $280,000 to $420,000 depending on location, finishes, and the neighborhood. Construction costs for that same unit typically run $180,000 to $320,000. After conversion costs, the profit margin can be meaningful — especially in higher-demand neighborhoods like East Sacramento, Midtown, or Land Park. For homeowners who built an ADU primarily for rental income and later decide they no longer want to be landlords, AB 1033 offers an exit strategy that was not available before. You can sell the ADU, pay off any remaining construction loan, and walk away with cash — while keeping your primary home. For homeowners who want to downsize, the math works differently: sell the primary home, keep the ADU for yourself, and use the proceeds from the larger home sale to fund retirement or other goals. The ADU becomes a right-sized, low-maintenance home at a fraction of the cost of buying a new property.

Challenges and Honest Limitations

AB 1033 is a genuinely useful law, but it is worth being clear-eyed about its current limitations. The market for ADU condos is new and thin. Buyers, appraisers, and lenders are still figuring out how to value and finance these units. As of mid-2026, relatively few lenders have developed specific mortgage products for AB 1033 ADU purchases, which can limit the buyer pool. The HOA requirement adds ongoing complexity. Even a two-unit HOA requires governing documents, shared insurance, maintenance agreements, and a process for resolving disputes. If you and the ADU buyer disagree about driveway maintenance or a shared fence, the CC&Rs are your only recourse short of litigation. Finally, the conversion process itself requires professional help. This is not a DIY project. You will need a real estate attorney familiar with the Davis-Stirling Common Interest Development Act, a licensed surveyor, and a title company experienced with condominium plans. Budget the time and money accordingly before committing to the process.

What This Means for Sacramento Homeowners Right Now

AB 1033 is most relevant to two groups of Sacramento homeowners today. The first group is those who already have a permitted, detached ADU and are considering their options — whether to keep renting it, sell it separately, or sell the whole property. For this group, it is worth having a conversation with a real estate attorney and a local ADU-experienced real estate agent to understand what your ADU might sell for as a condo and whether the conversion process makes financial sense. The second group is homeowners who are planning to build an ADU in the next one to two years. For this group, the advice is simple: build for independence. Spend the extra money on separate utility meters, a dedicated electrical panel, and a private entrance. These features cost relatively little during construction and open up the AB 1033 option later — whether you end up using it or not. If you are in either group and want to connect with Sacramento ADU builders who understand the design requirements for AB 1033-ready units, our directory is a good place to start. Look for builders with experience in detached ADU construction and ask specifically about separate utility metering during your initial consultations.