Sell ADUs as Condos in San José — Are Corner Lots the Big Winners?

Remember the law that allows homeowners to sell their accessory dwelling units (ADUs) separately? Since it took effect last year, we’re now seeing it put into action in the Bay Area. California’s AB1033, effective in 2024, allows homeowners to sell their ADU as a condominium. San Jose is the first city in the state to implement the policy, with the goal of creating more affordable homeownership opportunities.

San José Leads the Way

In San José, the policy is already in action. One of the first transactions under the policy is already moving forward: an ADU has been sold as a condo and is now under contract. Interested buyers can even check out both the main home and the ADU.

Why the Corner Lot Matters

When discussing this project, it’s important to highlight one key factor — the corner lot. Some people feel that corner lots, with two street-facing sides, offer less privacy and may come with more noise or safety concerns, while others appreciate their openness and extra space. In this San Jose case, the debut sale wasn’t just luck — the property’s corner lot location was a major reason the project was able to move forward successfully:

• Easier separation: A corner lot allows both the main house and the ADU to have convenient, independent entrances and utilities, making the ADU feel more like a standalone home.

• More space: Corner lots are often larger. This San Jose property is nearly 12,000 sq. ft., which made it possible to build a 1,200 sq. ft. three-bedroom, two-bath ADU — much larger than what a typical backyard ADU could accommodate.

• Better natural light: With no direct neighbor on one side, there’s more sunlight, making the interior brighter and more appealing.

The Numbers

Will corner lots see higher value under this new policy? In this case, the San Jose ADU is listed at $1.6 million (the main home is also for sale at over $3 million). For sellers, that’s a strong return; for buyers, it’s significantly less than the price of a brand-new single-family home. Seattle data shows that in 2024, 60% of ADUs were sold as condos, with prices averaging about 60% of their main home’s price — proof that demand for these smaller homes is strong.

Why Owners Might Explore This

Looking ahead, the prospects for building and selling ADUs are promising. Supporters say that for ordinary homeowners, selling an ADU can offer several potential benefits:

• Unlock equity: Sell the ADU, pay down or clear your mortgage.

• Help family: Transfer the unit to a child or relative at a more affordable price point.

• Expand access: Add to the supply of homes for buyers priced out of traditional single-family houses.

Not Without Hurdles

Selling an ADU as a condo takes more than listing it on the MLS. Owners with mortgages need lender approval. Condos often appraise lower than single-family homes. And before a property can be split, the ADU must have a certificate of occupancy, followed by a condo-mapping process that can take months.

That’s why, so far, most applications have come from developers rather than individual homeowners.

Looking Ahead

For the right property — especially a corner lot — AB 1033 opens a new path in California’s tight housing market. The process can be complex, but early examples show it’s possible.

As more cities adopt the policy, we may see corner lots and larger parcels gain even more value.

If you have the space, the location, and the patience, your backyard cottage could be your next big real estate win.