AB 1033: can you sell your ADU as a condo?

For as long as ADUs have existed, the rule was simple. You could build one and rent it, but you could not sell it on its own. AB 1033 changed that for cities that choose to allow it, and San Jose became the first city in California to actually complete one of these conversions. If your lot qualifies, that backyard unit can become something you sell, not just something you rent.

What the law actually does

AB 1033 took effect in January 2024. It does not force anything on anyone. It gives cities the option to opt in and allow an accessory dwelling unit to be sold separately, the same way you would sell a condominium, apart from the main house. San Jose opted in effective July 18, 2024, and by August 2025 it had completed the first ADU-to-condo conversion in the state.

Why it changes the math on your property

For decades an ADU was a one-way decision. You kept it and you rented it. AB 1033 turns that single door into three. If your lot qualifies, the same unit can be kept, rented, or sold on its own. That reshapes the whole question of what to do with a property, because now the backyard unit can be an asset you cash out instead of a tenant you manage.

The conditions that have to line up first

This is the part that gets skipped, and it matters. AB 1033 is not automatic, and nobody honest will tell you "you can sell your ADU as a condo" as a blanket statement. Three things have to be true.

• Your city has to have opted in. San Jose has. Many cities still have not, and the option means nothing until they do.
• Your lot has to qualify for the ADU in the first place, under the normal rules for setbacks, size, and lot coverage.
• Selling separately means a real condominium process, with a condo map, an HOA structure, and the CC&Rs that come with it. It is a genuine subdivision of ownership, not a switch you flip.

Why this is worth understanding now

San Jose being first in the state is a real edge for owners here. The exit options on a backyard unit are wider than almost anywhere else in California, which changes whether building one even makes sense in the first place. The owners who know this are making better decisions about their land than the ones who still think an ADU is only ever a rental.

Sources: City of San Jose and CapRadio reporting on the first AB 1033 conversion (2024 to 2025). General information, not legal advice. Whether a specific parcel qualifies depends on its facts and the local jurisdiction.