Accessory Dwelling Units (ADUs) are popping up like mushrooms in San Francisco and throughout the country. What’s not to love about creating more safe, decent housing in densely populated areas? From basement and garage conversions to free-standing backyard structures, ADUs are here to stay. They come with roses…and thorns.
Where are all these ADUs Coming From?
On January 1, 2021 the California Health and Safety Code (HSC) created a law requiring cities and counties to develop plans to incentivize and promote the creation of ADUs with affordable rents to offer to very-low to moderate-income households. One such program is the Cal HFA Accessory Dwelling Unit Grand Program. CalHFA provides grants to assist homeowners with the significant costs associated with pre-developing an ADU. A variety of similar assistance programs are now available throughout the state.
What is Considered an ADU?
Accessory Dwelling Units take many forms:
- Detached structure built on the same lot as a primary home (the most expensive to build).
- Junior Accessory Dwelling Unit (JADU) – a living space of 150-500 sq ft which may share bathing facilities with a primary dwelling.
- Garage conversion (sometimes considered a JADU).
- Basement conversion – (Also a JADU if under 500 sq ft, and does allow for an additional exterior ADU).
- Multi-Family ADUs – units added to multi-family properties such as duplexes, triplexes and larger multi-unit buildings. Can include converted carports and storage areas. This was by far the most common type of ADU in California in 2017-2018.
- Legalization of unauthorized unit – formerly non-permitted housing upgraded to pass habitability inspection.
Are ADUs Good for Tenants?
Yes and no. Consider the roses…there are great things about renting an ADU. They provide desperately needed housing during these times of acute housing shortages, particularly in dense urban areas. An ADU can be a convenient place to rent, offering privacy, safety and affordability to renters. ADUs in multi-family properties provide a built-in community. Small-space ADUs with affordable rents help stabilize low-income households in neighborhoods close to goods and services, as well as jobs and education.
What’s the Downside of Renting an ADU?
ADUs can be bundled with some considerable thorns when tenants encounter problems. Here are just a few:
- Landlords may cut corners and create owner-built spaces with building code violations. Issues with drainage, uninspected electrical and plumbing work, heating and cooling problems, and inadequate locks, egress and ceiling heights are typical concerns.
- Some multi-family property landlords remove amenities such as laundry rooms and carports to construct new ADU units. Existing tenants could find themselves lacking amenities they expected to have as part of their leasing agreement. Landlords must provide “just cause” for removing such amenities, or adjust the rent.
- In the race to create newly de-regulated ADUs, some landlords may choose to remodel or enlarge existing ADUs to justify raising rents to exorbitant levels.
- ADUs are often built to house aging parents, adult children or caregivers. If you are a tenant without personal ties to the landlord, remember you will be living in close proximity and this relationship may be very different from offsite management. Make sure you are comfortable from the start.
ADUS and Rent Control
Plenty of homeowners and multi-family landlords are eager to boost passive income by creating new ADUs and laughing all the way to the bank. Under the Costa-Hawkins Rental Housing Act, most single-family homes are exempt from any form of rent control. If a landlord moves into their newly built ADU and rents out their former primary residence to you, the primary residence would become subject to rent control.
Newly built ADUs are exempt from state rent control for at least 15 years. This provides a cushion for landlords to recoup their investment over a period of time. Tenants should be aware of looming potential rate hikes, from which there would be limited protection.
ADUs and Eviction
San Francisco and Oakland have strong tenant protections. However, eviction protection is not available to:
- Units where a tenant shares a bathroom or kitchen facility (such as some JADUs)
- Single-family owner-occupied residences, including a unit in which the owner-occupant rents no more than 2 units or bedrooms, including an ADU.
The Changing Landscape of ADUs
The race to provide more housing is bringing rapid nationwide changes to formerly rigid regulation of ADU construction. ADU skeptics may be neighborhood associations, “historic neighborhoods” and private homeowner associations who cast doubt on the ADU movement as a route to better housing options for low-income households. Nonetheless the floodgates are open and ADUs are here with their roses and thorns.
Tenants of ADUs should remain alert to their rights and responsibilities, and contact a competent pro-tenant attorney if problems arise.