Here Is What Every California Homeowner Should Know.
California real estate just crossed a line that has been years in the making. For the first time in state history, a backyard accessory dwelling unit sold as its own separately owned home, completely apart from the main house it sits behind. It happened in San Jose, but the law behind it applies statewide, and a handful of other California cities are already following suit. A client of mine asked last week whether she could ever do the same thing with her own ADU here in the Tri-Valley. The honest answer, for now, is no, not yet, and I want to walk through exactly why, and what is actually happening around the state.
What Just Happened in San Jose?
A 749 square foot, two bedroom, one bath accessory dwelling unit on Josefa Street near downtown San Jose sold for $530,000 in early July 2026. It is the first arms length sale in California history of an ADU on its own separate deed, sold independently from the main house on the property. The new owner moved in just days before the story broke.
The seller was a Bay Area real estate developer that had purchased the property, built out the ADU, and worked with the city through the entire condominium conversion process. San Jose's Public Works Department approved the parcel map splitting the property into two condominium units in August 2025, and the sale itself closed roughly eleven months later. That gap matters. Even in the city that pioneered this process, it took the better part of a year to go from legal approval to an actual closed transaction, since appraisers had to figure out how to value a brand new type of product, lenders had to underwrite it for the first time, and a buyer had to be found who was comfortable being first.
What Is AB 1033?
AB 1033 is a California state law that took effect in January 2024. It gives cities and counties the option, not the requirement, to allow homeowners to sell an ADU separately from the primary residence by converting the property into a condominium structure. The land itself is not physically subdivided into two lots. Instead, the existing parcel is legally mapped into two condominium units, one for the main house and one for the ADU, governed by recorded CC&Rs.
Nothing about AB 1033 is automatic. Each city has to opt in and adopt its own local ordinance before any of this is possible within its limits. San Jose was the first city in the state to do so, adopting its ordinance in June 2024. San Diego, Santa Cruz, Santa Monica, and San Diego County have also opted in since then.
Which California Cities Have Actually Opted In?
This is the part that gets lost in the headlines. AB 1033 gave every city and county in California the option to allow this, but it did not require any of them to. Each one has to adopt its own local ordinance before separate ADU sales are legally possible within its limits, and so far, adoption has been limited to a small group of cities.
• San Jose was the first city in the state to opt in, adopting its ordinance in June 2024. The Josefa Street sale that made headlines closed in July 2026.
• San Diego has opted in and allows the sale of ADUs as condominiums.
• Santa Cruz allows ADUs to be mapped as condominiums so they can be sold separately.
• Santa Monica opted in in early 2025 under specific conditions outlined in its city code.
• San Diego County adopted its ordinance in March 2026, with implementation effective that April.
• Berkeley has discussed the idea in city council but had not finalized adoption as of the most recent update.
• Napa and San Francisco have both expressed interest but have not yet taken formal action.
That is the entire list as of today. Every other city and county in California, including everywhere here in the Tri-Valley, has not opted in.
Has Pleasanton, Livermore, Dublin, San Ramon, or Danville Adopted This?
Not as of today. I looked into this specifically because I know it is the next question on everyone's mind. None of our Tri-Valley cities, and not Alameda County, have adopted an AB 1033 ordinance yet. That does not mean it will never happen here, but it does mean that right now, an ADU in Pleasanton or Livermore or Dublin cannot legally be sold apart from the main home on the lot. If that changes, I will be the first to let you know.
If the Land Was Never Split, Who Owns What?
This is the part that trips people up, and it is worth understanding clearly. Because the lot itself was never subdivided, the ADU buyer does not own a piece of dirt the way you would with a typical single family home. What they own is the unit itself, structured like a condominium, while the underlying land is held as a shared or common interest between both owners under the recorded condominium plan and CC&Rs. It functions a lot like owning a condo in a two unit building, even though from the street it looks like two separate houses.
What About the Driveway?
On the Josefa Street property specifically, the main home sits toward the front of the lot and the ADU sits toward the rear, and the two homes share a single long driveway. Because there is no physical lot split, that shared driveway is handled as a common area or a recorded access easement benefiting the rear unit. This is standard practice any time a rear structure has no direct street frontage of its own, and it is exactly the kind of detail that should be spelled out clearly in the condominium plan before anyone signs on the dotted line.
Who Handles Maintenance, and Are the Utilities Separate?
Utilities, yes, separate. San Jose specifically highlighted that the Josefa Street ADU has its own detached utilities, meaning PG&E and water are metered and billed independently to the ADU owner rather than passed through the main house. That is actually one of the requirements built into most AB 1033 conversions. The city also pointed to private parking and its own exterior main entry door as features of this particular unit, both of which are part of what makes it feel like an actual standalone home rather than a typical condo or townhouse.
Why This Matters for Tri-Valley Homeowners Right Now
Even though none of our local cities have opted in yet, this is still worth paying attention to. ADUs have become incredibly popular across Pleasanton, Livermore, Dublin, San Ramon, and Danville over the past several years, whether for aging parents, adult children, or rental income. If a Tri-Valley city eventually follows San Jose's lead, homeowners who already have a permitted ADU on their property could be sitting on an entirely new way to unlock equity without selling the whole property. That is a meaningful shift in how we think about ADUs, from an amenity that adds value to the whole property, to a potential standalone asset in its own right.
What Should You Do If You Are Considering This?
• If you already have or are planning an ADU, keep good records of permits and the certificate of occupancy. Any future condo conversion will require these.
• Talk to your lender before assuming this is an option down the road. Converting a property into condominiums can affect an existing mortgage, and banks do not always love it.
• Watch your local city council agenda. Ordinance adoption is a public process, and I will be tracking it for Tri-Valley cities as it develops.
• Do not assume San Jose's rules will look identical here. Each city that opts in gets to set its own local requirements within the framework of the state law.
Frequently Asked Questions
Can I sell my ADU separately from my house right now if I live in the Tri-Valley?
No. AB 1033 only applies in cities that have formally adopted a local ordinance to allow it. None of the Tri-Valley cities have done so as of this writing.
Does the ADU owner get their own piece of land?
No. The lot is not physically subdivided. The ADU is sold as a condominium unit, with the land held as a shared interest under the condominium plan, similar to how condo ownership works in a multi unit building.
Are utilities separate between the main house and the ADU under AB 1033?
Yes, in the San Jose example, and generally required under these conversions. PG&E and water are independently metered and billed to each unit.
Is there an HOA?
Some governing documents, including CC&Rs, are required as part of every conversion, but the Josefa Street property was notably marketed with no HOA fees, which suggests maintenance responsibilities may be defined directly in the CC&Rs rather than managed through an active HOA.
How long does this process take?
On the pioneering San Jose property, it took roughly eleven months from the time the condominium conversion was approved to the time the sale actually closed. That timeline reflects how new this type of transaction is for appraisers, lenders, and buyers alike.
Curious what this could mean for your own property down the road, or whether your ADU might be a candidate if our local cities eventually opt in? Let's talk. If this was useful, share it with a Tri-Valley homeowner who has an ADU on their mind.
Sources: City of San José news releases, CapRadio, KQED, ABC7 San Francisco, KABC, GuruFocus, LA Construction Compliance Services, Type Five, California Assembly Bill 1033 legislative text
Patty Recupero
REALTOR® | ELATION REAL ESTATE | CA DRE 02112275