Can You Sell an ADU in San Diego?

Current Status of ADU Sales in San Diego

In May 2025, San Diego’s Land Use & Housing Committee approved a draft ordinance enabling the sale of ADUs—often referred to as backyard homes or granny flats—as independent properties through a condominium plan. Final adoption by the City Council remains pending, with the first Council vote expected in early June 2025 and potential effectiveness around July 2025.

If approved, this ordinance will allow a separate conveyance of each Accessory Dwelling Unit from its corresponding Single Dwelling Unit, creating distinct individual properties. This significant policy change aims to enhance affordable housing initiatives by increasing starter-home availability, particularly benefiting first-time buyers in California’s high-cost housing market.

Key points to understand include:

• Currently, ADUs must remain legally tied to the primary dwelling’s title under existing zoning regulations, restricting separate sales.
• Structural connection to the primary dwelling is not required, but separate conveyance is currently prohibited.
• ADUs constructed with affordability covenants or using Housing-Commission funding will continue to be restricted from separate sales even after the ordinance is enacted, until their affordability restrictions expire.

The adoption of the proposed ordinance is expected to significantly expand homeownership opportunities, potentially offering units priced 40-60% below typical single-family residences in San Diego.

Monitor City Council and committee timelines closely to align your ADU strategy with next approval milestones.

Understanding San Diego’s Draft Ordinance for ADU Sales

San Diego’s 2025 draft ordinance significantly changes how homeowners can manage their Accessory Dwelling Units (ADUs), providing a path to separately sell these units through condominium mapping. This approach aims to expand housing options, particularly benefiting first-time buyers and improving housing affordability in a high-cost market. However, until finalized by the City Council, certain restrictions and nuances apply, especially regarding ADUs built with affordability covenants.

Where “Backyard Condo” Authority Sits in the Ordinance

San Diego’s draft ordinance establishes a new condominium structure for the sale of ADUs, explicitly allowing each Accessory Dwelling Unit (commonly called “granny flats”) to be conveyed as an individual unit independent of the primary Single Dwelling Unit, under §141.0302(f). Additionally, Section §141.0302(g) provides a nonprofit option using a tenancy-in-common arrangement, where ADUs or junior units can be sold under a 45-year affordability covenant, supporting affordable housing initiatives. The ordinance integrates existing city code sections §125.0431, §143.0815, and §144.0501 to ensure adherence to current tenant-protection, affordable-replacement, and condo conversion rules, primarily targeting ADUs in Single Dwelling Unit Zones and clarifying rules applicable to some multi-dwelling unit structures.

Key Steps for Condo Conversion

• Preliminary Assessment & Eligibility Check: Homeowners must first confirm their ADU has finalized permits and meets all required setbacks, height limits, and minimum room dimensions. They must also ensure there are no active deed restrictions or affordability covenants tied to the Accessory Dwelling Unit.
• Subdivision Mapping & Condo Plan Creation: The homeowner submits a condo conversion application, prepares a Condominium Map (or obtains a waiver under the Subdivision Map Act), drafts a Condominium Plan, and creates a condo declaration compliant with California’s Davis-Stirling Act. Additionally, homeowners must secure written consent from all lienholders.
• Code Compliance & Legal Documentation: Homeowners must document compliance with base zone development regulations—such as maximum lot coverage requirements—and local building codes. They must also record required Covenants, Conditions & Restrictions (CC&Rs), complete mandated inspections, and fulfill disclosure obligations outlined in §144.0501.
• Utility Coordination & Access: Homeowners assess if their ADU requires separate utility metering (water, sewer, electricity) or if shared meters are sufficient. Coordination with utility providers ensures either independent connections or properly recorded easements to facilitate the creation of fully independent properties.
• Public Report and Final Map Approval: Once all mapping and documentation are prepared, homeowners submit their materials to San Diego’s Development Services Department (DSD) planning division for review. After receiving the required Public Report, homeowners record the final Condominium Map, administratively formalizing the ADU as a legally separate standalone property.
• Optional Non-Profit Model: Under §141.0302(g), nonprofit organizations can establish a tenancy-in-common structure with a 45-year affordability covenant. This arrangement allows low/moderate-income buyers to purchase either the main residence or a subdivided junior unit, enhancing affordable housing opportunities on existing properties.

Study key ordinance sections—setbacks, CC&Rs, affordability covenants—to map out your conversion roadmap.

Checklist if Considering an ADU Condo Conversion

Considering converting your ADU into a standalone condominium involves careful planning and compliance with specific city guidelines. Following these steps closely will position you to successfully establish your ADU as an independent, marketable property.

• Confirm Eligibility: Ensure your Accessory Dwelling Unit (and any additional junior unit) has finalized permits, meets Rear Yard and Street Side Yard Setback requirements, and has no active affordability restrictions or deed covenants. The ordinance primarily applies to ADUs in Single Dwelling Unit Zones, though limited applications may exist for units within an existing multiple-dwelling unit structure.
• Engage Professional Services: Hire a land surveyor and a condo attorney to guide you through the condo mapping process, create the necessary condominium structure documents (including CC&Rs), and obtain written lender consent enabling the separate sale of your ADU as an independent property.
• Budget Planning: Plan to allocate approximately $15K–$25K+ for professional services including legal fees, condominium mapping, preparation of HOA documents, and lender sign-offs—expenses essential to fulfilling basic requirements, common requirements, and minimum submittal requirements set by city planning departments.
• Utility Coordination: Decide whether your ADU will have separate utility connections or if shared meters supported by formal recorded easements will suffice for water, sewer, and power. Ensure your plan aligns with applicable development standards and any conditions from a City-issued Coastal Development Permit if the property lies within a coastal zone.
• Prepare Legal and City-Required Disclosures: For ADUs occupied by tenants, specifically prepare required notices and condition reports in compliance with §144.0501. This step helps protect tenant rights and prevents disputes between homeowners during the division of units.
• Filing and Approval Process: Submit the completed subdivision mapping and condo declaration documentation to San Diego’s Development Services Department (DSD) for review. After obtaining approval and a Public Report from DSD, record the finalized Condominium Map to officially establish the ADU as a legally conveyable standalone property. The overall framework enabling ADU condo conversions depends on the ordinance’s legislative adoption by the City Council, rather than approval of individual projects.

Verify permit status, set aside mapping and legal fees, and coordinate utility plans before submitting your application.

Legislative Timeline & Next Steps for San Diego ADU Ordinance

San Diego’s draft ordinance would enable the separate sale of an Accessory Dwelling Unit (ADU) or a Junior Accessory Dwelling Unit (JADU) by treating each on-site dwelling unit as a standalone property under a new condominium structure. Upon City Council’s adoption—anticipated by July 2025—homeowners could convert existing permitted backyard homes and potentially additional units into independent properties. The ordinance primarily targets units in Single Dwelling Unit Zones, while applicability in multi-dwelling unit structures is less certain and may require additional clarification.

This local adoption aligns with California’s AB 1033, empowering planning departments to authorize separate ADU sales, expanding affordable housing initiatives, providing pathways for first-time homeowners, increasing access to affordable homes, and helping relieve housing pressures in California’s high-cost housing market.

Until the ordinance takes effect, ADUs must remain on the same legal title as the primary dwelling and cannot be separately conveyed.

Big Picture: The Future of ADU Sales in San Diego

ADU condo sales can help fill the “missing-middle” in California’s high-cost housing market by converting properties with single-family homes into multiple individual units, each Accessory Dwelling Unit becoming a separate individual property. This approach increases housing stock, provides opportunities for affordable homes to first-time homeowners, and promotes greater housing density with minimal environmental impacts.

Potential Benefits

• Starter-Home Supply: ADUs priced approximately 40–60% below entry-level traditional homes significantly expand housing availability.
• Equity & Flexibility: Owners gain opportunities for rental income and flexible resale options, maximizing the return on investment for homeowners.
• Sustainable Development: Smaller backyard homes naturally align with applicable development standards and San Diego’s Climate Action Plan goals.

Challenges & Constraints

• Financing & HOA Formation: Establishing a condominium structure and securing lender approvals involves considerable complexity and costs, estimated at $15K–$25K.
• Neighborhood Concerns: Potential community pushback could arise over fears of “lot splits by stealth” and debates about compliance with Street Side Yard Setbacks.
• Administrative Capacity: San Diego’s Development Services Department (DSD) must manage increased demand for condo conversion applications alongside routine processing of construction permits.
• Fire-Hazard Restrictions (inferred): Additional setback requirements or regulations typically applicable in high-risk fire zones could further restrict potential ADU conversions into independent, multi-unit properties.

Overall, designating each ADU as a standalone property creates promising new paths for homeowners and individual buyers, but achieving successful implementation relies heavily on meticulous zoning alignment, effective city planning, and supportive community engagement.

Legal Considerations for Selling ADUs in San Diego

San Diego has not yet finalized the ordinance permitting the sale of ADUs as standalone properties, but understanding the complexities involved will be essential once the rules take effect. Selling your ADU separately will require careful navigation of zoning restrictions, detailed legal frameworks, and deed considerations to ensure compliance with city regulations and state laws. Preparing now to understand these critical requirements can help homeowners smoothly manage future ADU condo conversions, avoid potential legal hurdles, and fully leverage the benefits of this upcoming policy change.

Zoning Laws Affecting ADUs

San Diego’s zoning regulations permit Accessory Dwelling Units in Single Dwelling Unit Zones, Multiple-Dwelling Unit Zone areas, and within the Coastal Overlay Zone. General setback, height, and Street Side Yard Setbacks regulations significantly influence the placement and conversion of and1 Accessory Dwelling Units or and Junior Accessory Dwelling Units into individual properties. Additionally, inferred stricter setbacks might apply in high fire-risk areas. Compliance with parking and maximum lot coverage requirements remains mandatory when converting on-site dwelling units into additional units.

Legal Frameworks for Selling ADUs

California’s AB 1033 provides local planning departments authority to approve the separate sale of each Accessory Dwelling Unit through a structured condominium process. Homeowners undertaking a condo conversion must carefully draft a condominium plan, obtain explicit lienholder consent, and comply fully with both state and local requirements. Tenant protections, including required condition disclosures per §144.0501, apply during conversions, ensuring occupants’ rights are clearly addressed.

Deed and Title Complexities

Obtaining a preliminary title report is essential to reveal any hidden easements, covenants, or restrictions potentially affecting an ADU sale. When converting to a condominium, each divided unit becomes a distinct legal parcel, requiring new deed issuance and potentially necessitating HOA formation. Lienholder consent is mandatory before recording the final condo declaration. Furthermore, Affordable Housing covenants or deed restrictions may delay or prevent the separate conveyance of ADUs until the expiration of affordability periods.

Conduct a thorough title report and confirm zoning compliance before initiating a condo conversion.

Market Evaluation for ADUs in San Diego

San Diego’s proposed ordinance, anticipated to become effective around July 2025, would enable homeowners to sell ADUs as separate condominiums, significantly impacting the local real estate landscape. Evaluating the market conditions and understanding real estate trends, pricing strategies, and buyer preferences is essential to successfully positioning your ADU once the ordinance is adopted. By preparing ahead and aligning your selling strategy with San Diego’s evolving market dynamics, you’ll ensure your ADU is both attractive and financially viable for buyers.

Current Real Estate Trends in San Diego

San Diego’s housing supply remains constrained within California’s high-cost housing market and ongoing housing crisis, significantly driving the appeal of Accessory Dwelling Units as affordable homes. Primarily, neighborhoods zoned as Single Dwelling Unit Zones are seeing increased ADU interest. However, Multiple-Dwelling Unit Zone areas also contribute notably to higher-density housing, incrementally expanding overall housing supply to mitigate the region’s housing shortage.

Pricing Strategies for ADUs

Typical ADU construction costs average approximately $350–$450 per square foot, inclusive of construction permits and standard finishes—though precise costs vary by project. Competitive pricing strategies should rely on a thorough comparative market analysis of recently sold homes for sale nearby. Leveraging city-approved preapproved plans or turnkey ADU solutions can significantly streamline the construction project, enabling sellers to maximize property appeal and enhance affordability for first-time homeowners.

Benchmark recent ADU and “backyard condo” sales to price competitively and appeal to first-time buyers.

The Selling Process for Your ADU in San Diego

While San Diego’s ordinance allowing separate ADU sales as condominiums has not yet been finalized—anticipated around July 2025—it’s essential to begin familiarizing yourself now with the future selling process. Understanding the city’s specific regulatory requirements, including zoning standards and condominium conversion procedures, will enable you to effectively navigate preparations when the ordinance takes effect. By being proactive, you’ll be ready to promptly position your ADU competitively in San Diego’s evolving real estate market once separate ADU sales become legally permitted.

Preparing the ADU for Sale

Confirm your Accessory Dwelling Unit has all required construction permits, fully complies with zoning requirements—including setback regulations (Street Side Yard Setbacks), height limits, and maximum lot coverage requirements—and is tied to the primary parcel’s legal title until permitted to sell separately. Complete any needed repairs, professionally stage the space (including any non-habitable spaces), organize all detailed plans or ADU plans, and prepare necessary disclosures and tenant notices before marketing to individual buyers.

Listing and Marketing Strategies

Utilize online platforms and real estate marketing channels to effectively showcase your ADU property as an affordable housing option within California’s high-cost housing market. Highlight appealing features such as separate entrances, rental income potential, and proximity to transit or local amenities—information which can typically be verified via the city planning office website. Invest in professional photography, virtual tours, and open houses to effectively present these options for buyers.

Negotiating with Potential Buyers

Price competitively by comparing similar homes for sale, clearly address buyer concerns regarding utility arrangements and separate conveyance options, and transparently explain potential complexities around financing an ADU conversion condominium. Emphasize the ADU’s strong rental income potential and overall flexibility for homeowners, helping buyers appreciate its value as both a residence and an investment for homeowners.

Highlight features like separate entrances and rental income projections to differentiate your listing.

Role of Real Estate Professionals in ADU Sales

Successfully selling an ADU as an independent condominium in San Diego will require strategic support from real estate professionals familiar with the city’s evolving regulatory landscape. Experienced agents and legal advisors understand the complexities involved in ADU condo conversions, from zoning considerations and subdivision requirements to title and deed management. Although San Diego has yet to finalize its ordinance—currently anticipated for mid-2025—beginning collaboration now ensures you’ll be well-prepared to quickly navigate the process and maximize your ADU’s market potential once separate sales are permitted.

Importance of Local Expertise in ADU Sales

Local real estate agents play a critical role in helping homeowners navigate California’s high-cost housing market, particularly concerning Accessory Dwelling Units (ADUs) as independent properties. Their deep understanding of local zoning complexities, condo conversion processes, and site-specific conditions ensures careful planning and compliance with local ordinances, setbacks, and applicable development standards.

Choosing the Right Agent with ADU Experience

Select agents experienced in guiding homeowners through the complexities of ADU condo conversions, including knowledge of preapproved plan processes, optimal living space options, and how to manage issues related to subdividing parcels for individual properties. Ask prospective agents specifically about their track record with Accessory Dwelling Units, successful handling of multi-unit property conversions, and their expertise in navigating local planning departments.

Working with Legal Advisors

Engaging legal advisors is crucial for handling intricate zoning regulations, subdivision compliance, and necessary documentation related to deed and title complexities. ADU sale adheres strictly to applicable development standards, helps navigate requirements from planning departments, particularly regarding Coastal Development Permits, and addresses unique considerations in Multiple-Dwelling Unit Zones Their support maximizes flexibility for homeowners and ensures smooth transactions when converting ADUs into individual properties.

Partner with agents who specialize in ADU transactions to streamline zoning, financing, and marketing steps.

Get Help in Building & Selling Your ADU in San Diego

San Diego’s pending ADU ordinance offers a clear path to separate sale of Accessory Dwelling Units, transforming backyard homes into individual properties and expanding housing supply. By planning ahead—securing permits, working with planning departments, and mapping out a condominium plan—property owners and first-time homeowners can capitalize on this exciting development. For smooth execution, consult qualified real estate and legal professionals to navigate zoning regulations, condo conversion requirements, and ensure compliance for a successful separate sale of an ADU. If you’re curious on getting the most up-to-date info on this, or want to build your dream ADU, we can help at Better Place Design & Build.

Engage legal and real estate experts early to navigate complex regulations and close your ADU sale smoothly.