The Real ADU Change Isn't How Many — It's What Counts

Nov 2

Two ADU bills were signed this week, and the way they are being summarized online is wrong in a way that will make you sound uninformed if you repeat it.

The headline going around is "California now lets you build two ADUs." That is not quite the change, and the actual change is more interesting.

What AB 956 actually does

AB 956, from Assemblymember Sharon Quirk-Silva, increases the number of detached, new-construction ADUs that a local agency is required to ministerially approve on a single-family lot from one to two. Ministerially means the city checks your plans against objective standards and approves — no discretionary review, no hearing, no neighbor appeal.

There is a tradeoff written into it: once two detached ADUs are built on the lot, the city is no longer required to also approve a junior ADU there.

It also broadens the existing protections against restrictive covenants so they apply to lots zoned to allow single-family residential use, not only lots zoned exclusively for it. That is a technical-sounding change that will matter to a surprising number of owners in mixed-zoning pockets of the Valley.

Why "two ADUs" is the wrong headline

Count the doors under the old rules: primary house, one detached ADU, one junior ADU. Three units.

Count the doors under the new rules: primary house, two detached ADUs. Three units.

The door count did not move. What moved is the quality of the third door.

A junior ADU has to be carved out of the existing house and is capped well below what a standalone unit can be. It is a bedroom with a kitchenette and its own entrance. It rents accordingly, it appraises accordingly, and plenty of owners looked at the cost of cutting up their own floor plan and decided it was not worth it.

A second detached unit in the back is a different asset. It is a real apartment. It rents like one. So the correct way to describe AB 956 is not "you can build more" — it is "the unit you were already allowed to build can now be a real unit." That is a better change than the headline version, and saying it that way tells people you actually read the bill.

SB 1117 is the one with money in it

Quieter bill, bigger check.

SB 1117, from Senator Sabrina Cervantes, changes how local agencies calculate development impact fees on an ADU. The fee is now based only on the interior livable area in excess of 750 square feet. Previously, fees on an ADU over 750 feet were calculated proportionally to the primary dwelling's square footage.

Run that on a real unit. A 1,000-square-foot ADU used to get its fees computed off a proportional formula tied to the main house. Going forward, the fee calculation looks at 250 square feet — the amount above the threshold.

I am deliberately not putting a dollar figure on that, because impact fees vary enormously between jurisdictions and anyone quoting you one number across Los Angeles is making it up. But directionally, on a mid-size ADU in a city with meaningful fees, this is not a rounding error. It is one of the larger single line items in an ADU budget getting substantially cut.

When

Both were signed September 29 and, absent an urgency clause, take effect January 1, 2027. I would still confirm the date with your city's planning counter before you build a schedule around it — implementation timing at the local level has a way of diverging from the statute, and I would rather you check than take my word for it.

Who should care

Owners of single-family lots with real backyard depth, especially in the Valley, where lot sizes still support a detached unit without destroying the yard. Small investors who have been running SFR-plus-ADU as a strategy and have been annoyed that the second unit had to be a JADU. Anyone selling a single-family property who has been describing "ADU potential" vaguely in their marketing and can now describe it specifically.

And honestly: anyone who looked at an ADU two years ago, got a fee quote, and quietly abandoned the idea. The number you were quoted may not be the number anymore.

The multifamily angle

Two things here for the apartment owners I work with.

The first is competitive. A single-family lot with two real detached units behind the house is a three-door income property, and it competes for the same investor dollar as a small apartment building — often at a lower entry price, with easier financing and, if the units are new construction, without the rent control exposure. Every year the state makes that conversion easier, the buyer pool for two-to-four unit product gets a little more choice. If you own small multifamily and you are planning an exit in the next few years, that is a slow-moving pressure on your buyer set worth knowing about.

The second is opportunistic. ADUs on multifamily-zoned parcels run on their own statutory track — generally conversion of non-livable space plus a limited number of detached units — and these two bills are written around single-family lots. I have not verified whether SB 1117's fee calculation reaches ADUs on a multifamily parcel, so I am not going to claim that it does. But if you own an apartment property with surplus land, a dead rear yard, or a parking field you do not fully use, that is a question worth putting to your city directly. I have seen owners add two or three doors to a stabilized building on land they were already paying taxes on, and it is one of the few real value-add moves left that does not require touching an existing tenant.

The practical next step

If you own a lot you have wondered about, the useful exercise is not "can I build an ADU" — almost everyone can. It is what the finished unit rents for, what it costs all-in including fees, and what it does to the value of the property as a whole. Those three numbers together tell you whether to do it. Any one of them alone tells you nothing.

I run that math for owners regularly and I am happy to run it for you. No charge and no pitch attached to it.

General information, not legal advice. Local ADU rules layer on top of state law and vary by city — confirm specifics with your planning department.