Much Ado about ADUs

If you haven’t brushed up on the rules around ADU’s lately, there have been recent changes at the State level that have made it a lot easier to get one approved, so if you have ever thought about building an ADU or getting an existing one permitted, now may be a good time to take another look.  

Under California SB 543, size definitions, fee limits, and timelines for permitting and completeness-review rules have become State law. While our local planning departments are in the process of updating their ADU regulations with the newly mandated changes, there may be some uncertainty until their updates are complete, but if a city/county sits on its ADU ordinance or ignores HCD’s findings, their ordinance can be wiped out and State default law governs.

Certain things remain unchanged, such as the prohibition on short-term rentals of ADU’s, which most local rules already require be longer than 30 days. And rental income from an ADU can still be used to help you qualify for a mortgage. In order to be eligible, the property must have a single-family home with an ADU (no multi-unit), and income used will be 75% of the current or projected rents.  

Many of the new State rules were implemented to cut fees and streamline processes, mandating that jurisdictions have specific 15-day completeness checks, with deadlines and limits on appeal rights. For coastal sites, the application must be processed on a clear 60-day clock, with appeals to the Coastal Commission eliminated entirely. And in counties where a state of emergency was declared on or after Feb 1, 2025, a detached ADU can be lived in before the rebuilt main house if it meets conditions.

For smaller ADUs (≤ 750 sq ft) and JADUs (≤ 500 sq ft), impact and school fees have been disallowed by state law. If a JADU has its own bath, there is no longer an owner-occupancy requirement. And you can now legally combine detached and converted ADUs or JADUs on one lot, subject to existing rules.

In spite of all these changes made, there have been surprisingly few applications submitted, so to help make the process less overwhelming, Santa Cruz County is one of five counties in the State that have rolled out an ADU Incentives Program in partnership with non-profit Hello Housing through their subsidiary Hello ADU for homeowners who are ready to move forward, but may lack the knowledge or confidence. Free feasibility and project management support is available, paid for by the County for homeowners who live in the Unincorporated Areas. 

For details you can go to https://www.helloadu.org/free-service-eligibility and click on the section for Santa Cruz County to get started. And as always, my team and I are available to help along the way with questions such as what you could expect for rents, or a likely price you might get by splitting off and selling the ADU at a later date.