Thinking about selling your ADU as its own condo in San José? You’re not alone. With recent changes in California law, more owners are exploring this path to unlock equity or simplify ownership. In this guide, you’ll learn what changed, how San José’s process works, and the biggest risks to plan for so you can move forward with confidence. Let’s dive in.
What AB 1033 changed
California’s AB 1033 allows cities to let ADUs be sold separately from the main home as condominiums, subject to local approvals and the Subdivision Map Act. San José has adopted a process to implement this option. You still need city signoffs, recorded condominium documents, and lienholder consent before you can sell. You can read the bill text in AB 1033.
San José process at a glance
San José created a defined path to convert an ADU into a condominium that can be sold separately. Start by reviewing San José’s ADU Condominium Conversions guidance and the ADU program’s main resources on the San José ADU program page.
Typical steps include:
- Confirm the ADU was properly permitted and finaled and meets local standards.
- Complete the City’s ADU Condominium Conversion checklist and assemble documents.
- Prepare and record a Parcel Map and a Condominium Plan that define the new condo interests.
- Obtain written consent from all mortgage lenders before recording the condominium plan.
- If your property is in an HOA, secure the association’s written authorization and address any needed CC&R amendments.
- After recordation, request a new address for the ADU, notify utilities, and update county tax records.
Key risks to watch
HOA approvals and CC&Rs
If your property sits inside an HOA, expect a review. While state law limits rules that “effectively prohibit” ADUs, associations still control process and documentation through Davis‑Stirling governance. Be ready for board approvals and possible CC&R amendments. See the relevant California Civil Code sections 4751 and 4741 for context.
Lienholder consent
AB 1033 requires lender consent before the condominium plan is recorded. If your mortgage holder declines or delays, your conversion and sale can stall. Start lender outreach early and get conditions in writing. Review the consent requirement in AB 1033.
Financing and condo reviews
New or unusual condo projects can face tougher underwriting. Lenders may require project reviews, reserve documentation, and proof of adequate insurance. Some buyers may need non‑agency loans or cash, which can affect marketability. For background on current lender scrutiny, see this overview of condominium lending and project review requirements.
Permits and title
Unpermitted ADUs are high risk. Lenders and title companies usually require final permits for structural and habitability items. If work is unpermitted, expect to correct and finalize before marketing a separate condo. The City outlines permit requirements on the San José ADU program page.
Insurance and assessments
Creating separate condo interests means revisiting insurance, HOA budgets, and maintenance responsibilities. Buyers and lenders will check master policy limits and clarity on common areas like driveways, roofs, and fencing. Missing or inadequate coverage can slow or stop financing.
Property taxes
In Santa Clara County, an ADU is treated as new construction for assessment purposes. The added value is typically reassessed while your main home’s base year value remains. Learn more from the Santa Clara County Assessor guidance on new construction assessments.
Seller prep checklist
Before you list, assemble key items to reduce surprises:
- Permits and finals. Collect building permits and final inspections for the ADU and related work. Use the City’s checklist on the San José ADU Condominium Conversions page.
- Survey and title. Order a current title report and engage a surveyor or civil engineer for the Parcel Map and Condominium Plan.
- Lender contacts. Gather loan statements and begin the consent process required by AB 1033.
- HOA documents. If applicable, compile CC&Rs, bylaws, rules, budgets, reserve studies, insurance declarations, and recent minutes for board review.
- Utilities plan. Prepare for separate billing and notifications after recordation.
- Disclosures. Be transparent about work performed. Review your obligations under California disclosure rules for sellers.
Buyer due diligence tips
If you are considering purchasing an ADU sold as a condo, verify:
- Permits and inspections. Confirm the ADU is permitted and finaled, and check for open violations with the City.
- Condo documents. Read the recorded Condominium Plan and CC&Rs to understand common areas, maintenance, and dues.
- Financing path. Ask your lender about project eligibility and get pre‑approved for this specific condo structure. See the context on condominium lending and project review requirements.
- Insurance coverage. Verify master policy limits and required individual policies.
Next steps
If selling your ADU as a condo makes sense, start with the City’s resources and a realistic timeline. Confirm permits, open lender conversations early, and coordinate HOA steps to avoid delays. When you are ready to discuss pricing, marketing, and negotiation in Santa Clara County, reach out to Ted Mendoza for experienced, high‑touch guidance.
FAQs
Can an HOA stop a separate ADU sale in San José?
- An HOA’s approval is often required, but state law limits rules that “effectively prohibit” ADUs; expect a formal review and possible CC&R amendments before a condo conversion proceeds.
Will an ADU raise my property taxes in Santa Clara County?
- The ADU’s added value is typically reassessed as new construction while your main home’s base year value remains under Prop 13.
Can buyers get conventional loans for an ADU condo?
- Sometimes, but new or atypical condo structures can face stricter project reviews, so some buyers may need non‑agency financing or cash.
What if my ADU was not permitted?
- Unpermitted ADUs create major financing and title issues; the practical path is to obtain retroactive permits, pass inspections, and finalize before marketing a separate sale.
What documents should I gather before listing an ADU condo?
- Collect permits and finals, title and survey, lender contact details for consent, HOA documents, a utilities plan, and thorough disclosure materials.
