Sellable ADUs 101
Welcome to Sellable ADUs 101, a quick guide from Hoadu Consulting to help homeowners and investors understand how to turn their ADUs into sellable, standalone assets. I’m Emre Turanalp, and in this guide, we’ll break down what ADU condo conversions are, who qualifies, and how to complete one from start to finish.
As you may have heard, ADUs can now be owned and sold independently as condominiums in California (AB1033).
ADU owners now have the opportunity to:
Sell a portion of their property (sell the ADU, keep the rest; or vice versa).
Increase the total sum of their property value and equity.
Fund their next deal by leveraging the appreciated appraisal values.
Pay down or even pay off their mortgage with proceeds from the sale.
Configure their estate planning per unit.
Gain financial security without leaving their home.
In order for an ADU to become a standalone asset, it must go through a subdivision process known as an ADU condominium conversion.
This process establishes both physical and legal boundaries between the existing primary unit(s) and ADU(s).
Who’s eligible for an ADU condominium conversion:
You must have a legal, permitted ADU.
Your city or county must have an active ADU sales ordinance in place. (Check here to see if yours does.)
Allowing the sale of ADUs depends on whether your local municipality has opted in. If you live within a city, that authority rests with your city government; if you live in an unincorporated area, it’s your county.
Each jurisdiction decides whether to adopt an ADU sales ordinance and how to integrate it into their local code. As a result, two neighboring cities might both allow ADU sales but have different procedures, timelines, or documentation requirements, as long as they align with the provisions of AB1033.
Because these steps can vary, it’s important to seek guidance from professionals who understand your city or county’s specific process.
Great - you have an ADU, and your jurisdiction has an active ADU sales ordinance in place:
So, whose help will you need for your ADU condo conversion?
A CID attorney
A land surveyor
A title company
And someone to coordinate the team and handle communication with the city
Here’s how to do an ADU condo conversion step-by-step:
If you have a mortgage (lien), get written consent from your loan servicer (lienholder) to record a condominium plan. Alternatively, you may refinance.
If you live in an HOA, get written consent from the board.
Obtain a preliminary title report from your title company.
Have your attorney and land surveyor coordinate to create a condominium plan and governing documents.
Have your land surveyor complete a boundary survey, including a tentative map (or a waiver), a parcel map, and a field survey.
Bundle everything and submit it to the city as an application, then get it signed off.
Once you have your separate addresses, record the final map and condominium plan with your county recorder to create the new parcels.
Notify your utility providers of the condominium creation.
Our little secret:
At Hoadu Consulting, we’re the first in California to offer end-to-end ADU condominium conversions for homeowners and investors. For properties with detached structures, we use a unique approach called a “site condo.” A site condo means that each condo owner holds title to both their land and their structure, unlike a conventional condo, where owners only own the airspace within their unit. This approach helps unit values stay aligned with comparable single-family homes. The “site condo” model is one of the key things that sets us apart from other providers. It’s also worth noting that the small associations we create (typically two to four units) usually have no HOA fees.
An ADU condo conversion is not a one-person job. We recognize the complexity and comprehensiveness of this process, and we encourage you to seek guidance from professionals with the right insight and experience. Every project comes with its own nuances depending on the jurisdiction, property profile, and configuration. Our team is fully equipped to handle end-to-end ADU condo conversions from start to finish.
If you’re thinking about splitting your ADU, reach out to us and let’s explore your property’s potential together.