AB 345: Local agencies must authorize the sale or separate transfer of certain ADUs | Best Best & Krieger LLP
Applies to ADUs built by qualified non-profit organizations
In almost every legislative session over the past few years, the California legislature has enacted bills that further reduce local control over the development of accessory housing units (ADUs). Recent examples include legislation that requires ministerial approval of ADU applications within 60 days, authorizes ADUs on multi-family housing lots, and prohibits local agencies from imposing height and setback standards beyond. limits set by the state. (For more information on recent changes in state ADU law, see here and here).
Assembly Bill 345 is the latest development in this area. As of January 1, 2022, local agencies will be required to authorize the sale or separate transport of ADU in limited circumstances.
Separate sale or disposal before AB 345
State law generally prohibits local ADU ordinances from authorizing the sale or transport of ADU separately from the principal residence. This landscape was first altered with AB 587, which created a limited exception by allowing (but not requiring) local agencies to pass ordinances allowing ADUs to be transported separately from the primary dwelling if certain conditions are met. These conditions include, among other things, that the property: (1) has been built by a qualified non-profit organization; (2) sold and occupied by a low income buyer; and (3) held in a mutually agreed upon rental that met the specified requirements.
AB 587 came into effect on January 1, 2020. The rationale for this bill was, in part, to provide low-income families with the opportunity to build wealth and equity through home ownership. Unlike many other facets of state ADU law, however, the provisions of AB 587 are not binding or self-executing. Rather, local ordinances must specifically authorize the sale of ADUs separately from the principal dwelling.
AB 345 builds on AB 587 by adding new requirements and making its provisions mandatory. As of January 1, 2022, local agencies will be required to authorize the sale or transport of ADUs separately from the primary residence in certain circumstances, including meeting all of the conditions set out in section 65852.26 (a) (1) of the Government Code. (5). Among other things, these conditions require that:
- The ADU or main accommodation was built or developed by a qualified non-profit organization
- ADU is sold to a qualified low income buyer
- There is an enforceable restriction on the use of the property between the low-income and non-profit buyer which meets the requirements of section 402.1 of the Taxation Code.
- The property is held in a registered mutual agreement rental which includes all of the following:
- Gives each low-income buyer an undivided and unequal interest in the property based on the size of the home each qualified buyer occupies
- Gives the association a right of first refusal to buy back the ADU or the main house if the buyer wishes to sell
- Obliges the buyer to occupy the UDA or the main house as his main residence
- Contains affordability restrictions on the sale or transfer of ADU or primary housing that ensure ADU and primary housing will remain low-rental housing for at least 45 years
- Identifies areas of the property that are for the exclusive use of a roommate
- Outlines the responsibilities of each roommate for the costs of taxes, insurance, utilities, general maintenance and repairs, improvements and any other costs, obligations or liabilities associated with the property
- Contains dispute resolution procedures (between roommates) before taking legal action
Next steps and takeaways
As of January 1, 2022, local agencies should note these next steps and takeaways from AB 345:
- Mandatory requirement: As of January 1, 2022, local agencies must authorize the sale or transport of DSUs separately from the principal dwelling if the conditions provided for in article 65852.26 of the Government Code are met.
- Limited applicability: The impact of AB 345 can be quite limited as it only applies to properties built by qualified non-profit organizations which are then purchased and occupied by qualified low-income buyers.
- Not applicable to JADU: AB 345 does not apply or allow the sale or separate transfer of junior secondary suites (also known as JADU). Pursuant to section 65852.22 of the Government Code, an ordinance of a local agency must prohibit the sale or transport of JADUs separately from the principal dwelling.
- Update of the ADU ordinance: ADU orders generally include a provision that the sale or separate transport of an ADU is not permitted. As a nod to the changes that AB 345 has made to this landscape, local agencies should consider qualifying this part of their ADU ordinance to include something to the effect of: the lot and the main dwelling .
- Develop an AB 345 Control List: The provisions of AB 345 only apply when many detailed conditions are fulfilled. So, to help staff (and the public) implement this new law, local agencies may consider coordinating with a legal advisor to create a checklist that follows the requirements of AB 345. Well done, such a checklist would provide staff and the public with a simple and digestible method of determining whether the property in question meets the requirements of AB 345.