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To increase affordable housing in California, Governor Newsom signed legislation that encourages homeowners to convert their garages into living spaces and build small dwelling units in their back yards as low-income rentals. January 1, 2020, new laws went into affect voiding restrictions in planned developments that would prevent the construction of granny flats and the conversion of garages into rental units. (Civ. Code § 4751.) Following is a summary of key points.

Defined. An “Accessory Dwelling Unit” (ADU) means an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. It includes permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family or multifamily dwelling is situated. (Govt. Code § 65852.2(j)(1).) If there is an existing primary dwelling, the total floor area of an attached accessory dwelling unit shall not exceed 50 percent of the existing primary dwelling. (Govt. Code § 65852.2(a)(1)(D)(iv).) If it's detached, it cannot exceed 1,200 square feet. (Govt. Code § 65852.2(a)(1)(D)(v).)

A “Junior Accessory Dwelling Unit” (JADU) means a unit that is no more than 500 square feet in size and contained entirely within a single-family residence. A JADU can include separate sanitation facilities, or may share sanitation facilities with the existing structure. (Govt. Code § 65852.22(h)(1).)

ADU Conversion to Condominium. Beginning January 1, 2024, local agencies are authorized to adopt a local ordinance to allow the separate conveyance of the primary dwelling unit and accessory dwelling unit or units as condominiums. (Govt. Code § 65852.2.) Before an owner can convert an ADU to a condominium, he/she must obtain written authorization from the association, i.e., approval by the board at a duly noticed board meeting and, if needed pursuant to the existing association’s governing documents, membership approval of the existing association. (Govt. Code § 65852.2(a)(10)(G).)

Recommendation. Associations should amend their governing documents (either CC&Rs or Architectural Standards, or both) to require both board and membership approval before an owner could convert an ADU into a condominium.

Architectural Review. Associations cannot impose restrictions that would "unreasonably increase the cost to construct, effectively prohibit the construction of, or extinguish the ability to otherwise construct, an accessory dwelling unit or junior accessory dwelling unit." (Civ. Code § 4751(b).)

Garage Conversions. The legislation authorizes garage, carport and covered parking conversions into ADUs that can be rented. (Govt. Code § 65852.2(a)(1)(D)(iii).) Attached garages can be converted into JADUs as well, subject to size limitations.  Garage conversions must only be allowed in property zoned for single family residential use (typically fully detached residences and zero lot line properties) and in planned unit developments, but can still be prohibited in property zoned for multifamily residential use (typically condominium properties, whether multistory stacked or townhouse style construction). Zoning requirements for any development should be confirmed with the appropriate municipality (city or county).

Parking. Local agencies cannot impose parking requirements for JADUs (Govt. Code § 65852.22(b)(1)) reduce or eliminate parking requirements for any accessory dwelling unit located within its jurisdiction (Govt. Code § 65852.2(a)(1)(B)(ii)). Most associations already have parking problems. ADUs and JADUs will exacerbate the problem. Associations that require cars be parked in garages cannot use the requirement to stop garage conversions. (Govt. Code § 65852.2(a)(1)(D)(xi).) The bill voids any restrictions that would prevent the construction of ADUs. (Civ. Code § 4751.)

Rules Enforcement. Associations can continue to enforce garage parking requirements, but only against those who do not convert them into ADUs. This will create rules enforcement problems for associations. Owners will not take kindly that some must follow parking rules while others are exempt.

Three Per Lot. While the law limits one JADU for each residential lot zoned for single-family residences (Govt. Code § 65852.22(a)(1)), the statute is unclear on the number of ADUs that are permitted on the same lot and the requirements vary for multi-family residential lots. It may be possible to have a garage converted to a JADU, part of the interior of the residence converted to an ADU and a detached ADU in the back yard.

Expedited Approvals. The bill expedites the approval process. Local agencies will be required to process applications within 60 days of their submission. (Govt. Code § 65852.2(b).) Some applications can receive ministerial approval. (Govt. Code § 65852.2(e).) That means they can be approved without a hearing notwithstanding any local ordinance regulating the issuance of variances or special use permits.

Fees Limited. In addition to streamlining applications, permit fees will be limited. Agencies cannot treat ADUs as a new residential use for purposes of calculating connection fees or capacity charges for utilities, including water and sewer service, nor can they require the applicant to install a new or separate utility connection directly between the accessory dwelling unit and the utility or impose a related connection fee or capacity charge. (Govt. Code § 65852.2(f).)

Increased Parking. When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit or converted to an accessory dwelling unit, local agencies cannot require that those off-street parking spaces be replaced.  (Govt. Code § 65852.2(a)(1)(D)(xi).) In other words, parking is pushed to the streets. In addition, if owners want to create additional parking on their lots, the bill allows for parking in setback areas. That means more vehicles can be parked on a lot and parked closer to neighboring houses.
Setback Requirements. Association setback requirements that would prevent the construction of backyard ADUs will be voided. Setbacks will be reduced to "no more than four feet from the side and rear lot lines." (Govt. Code § 65852.2(a)(1)(D)(vii).)
View Restrictions. The bill does not address view restrictions. Can an association block the construction of ADUs that violate view restrictions? The bill's broad language striking down any restrictions that prevent the construction of ADUs arguably includes view restrictions. The issue is unsettled and will need resolution either by subsequent legislation or by the courts.
Owner Occupancy. The law prohibits a requirement of owner occupy in the ADU (Govt. Code § 65852.2(a)(6).), but permits a requirement of owner occupancy in a single family residence in which there is a JADU. (Govt. Code § 65852.22(a)(2).) Accordingly, associations should be able to adopt this restriction as well.
Rental Period. The law allows (and in some cases requires) local agencies to impose a restriction that ADUs be rented for terms longer than 30 days. (Govt. Code § 65852.2(a)(6) and Govt. Code § 65852.2(e)(4).) That means associations should include ADU rental restrictions in their rules even if no such restriction is found in their CC&Rs. 
Property Values. Higher density created by ADUs means additional vehicles on streets. In addition to parking problems and rules enforcement issues, the influx of ADU renters will burden amenities such as pools, clubhouses, tennis courts, etc. This could change neighborhood aesthetics and could drive down property values.
Additional Information. For more information, see the California Department of Housing and Community Development's Handbook on Accessory Dwelling Units (July 2022).
Recommendation: The statute allows associations to adopt restrictions so long as they do not unreasonably increase the cost of ADUs. Boards should to work with legal counsel to prepare ADU rules and then go through the normal procedure for adopting rules for ADUs and JADUs.
 Lot Splits. Senate Bill 9 requires a city or county to ministerially approve duplex units and/or the or the subdivision of one lot into two lots, in spite of contrary residential zoning (i.e., R1) requirements. This could lead to up to four homes where one currently sits. Fortunately, the bill does not apply to common interest developments. In a letter dated August 30, 2021 to the Senate Journal, Senator Atkins, the author of the bill, clarifies, “SB 9 would not override CID or HOA restrictions. Specifically, SB 9 is silent on the issue, meaning the bill contains no provisions that supersede HOA or CID governing documents. As we have seen with other housing legislation, SB 9 would have to contain an explicit and proactive provision to override those rules. This bill does not.”  (See August 30, 2021 letter.)

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