AB 1033's Second Wave: How Small Cities Are Adopting ADU Condo Sales

Ten California jurisdictions now let homeowners sell an ADU as an independent condominium. San Jose recorded the state's first transaction in August 2025. But the cities joining in 2025 and 2026 look nothing like San Jose. Sebastopol has 7,300 residents and 100 ADUs. West Hollywood is 80% renters. Santa Monica layers AB 1033 on top of one of California's strictest rent control regimes. The same law is being adopted for entirely different reasons, and that divergence matters for anyone considering whether AB 1033 applies to their property. For the legal mechanics and conversion process, see our AB 1033 comprehensive guide. For the design and construction implications, see our architect's AB 1033 guide.

Bottom Line

AB 1033 adoption is splitting into two phases with distinct characteristics:

Phase 1 was driven by large Bay Area and Southern California cities with existing ADU pipelines and developer demand: San Jose, Oakland, San Francisco, San Diego. The motivation was market creation at scale.
Phase 2 includes cities where the housing context makes AB 1033 function differently than intended: Sebastopol (population 7,300, median home price $1.4 million, equity-unlock for aging homeowners), West Hollywood (80% renter city, timeshare prohibition), Santa Monica (rent control overlay), and Santa Cruz (Coastal Zone constraints). The motivation is more varied: asset liquidity in small towns, affordable ownership pathways in renter-dominated cities, and starter-home creation in land-constrained coastal markets.

The distinction is about housing context, not adoption date. West Hollywood and Santa Cruz adopted early (2024-2025) but face implementation challenges characteristic of non-metro or specialty markets. The classification tracks how the law is used, not when it was passed.

The practical difference: Phase 1 cities are generating transaction data and establishing lender workflows. Phase 2 cities are adopting the legal framework before the market infrastructure exists. If you own property in a Phase 2 city, you have the legal right to convert but face longer timelines, higher uncertainty, and fewer service providers than a homeowner in San Jose. [1][2][3]

The Adoption Timeline: 10 Jurisdictions in 21 Months

AB 1033 is opt-in. Each city writes its own implementing ordinance. As of June 2026, ten jurisdictions have adopted: [1][4][5]

Jurisdiction	Ordinance	Adopted	Key Differentiator
San Jose	Ord. 31095	July 2024	First in state; first completed sale Aug 2025
Santa Cruz	Ord. 2024-18	Oct 2024	Coastal Zone / LCP overlay adds complexity
West Hollywood	Ord. 25-04	Feb 2025	Prohibits timeshare/fractional; 80% renter city
Oakland	Ord. 13856 C.M.S.	July 2025	Ministerial approval; HCD compliance review flagged issues
San Diego (City)	Ord. O-21989	July 2025	Integrated with ADU density bonus program
San Francisco	File 241069	July 2025	Only ADUs filed after May 1, 2025; effective Aug 2025
Santa Monica	Ord. 2786 (CCS)	Oct 2025	Existing rent control and condo conversion ordinance overlay
Berkeley	Ord. 7,999-N.S.	Jan 2026	Exempt from condo conversion mitigation fees
Sebastopol	Ord. 1162	Jan 2026	First in Sonoma County; population 7,300
San Diego County	Ord. 10986	Mar 2026	Unincorporated areas; rural infrastructure concerns

Four more jurisdictions are actively considering adoption: Los Angeles (Council File 25-0753, "Missing Middle LA"), Santa Cruz County (Housing Advisory Committee review September 2025), Mountain View (staff study session Task 6b, FY Q2-Q3 2026), and Napa (advocacy-stage discussions with council). [6][7][8][9]

The pace is accelerating: one city by mid-2024, seven by end of 2025, ten by April 2026. But volume does not equal uniformity. The cities joining in Phase 2 share a legal framework and almost nothing else.

Sebastopol: The Small-City Test Case

Sebastopol is the most revealing Phase 2 adoption because its housing profile is the furthest from the Silicon Valley context where AB 1033 was designed.

The numbers: 7,322 residents. Approximately 3,300 housing units. Roughly 100 existing ADUs. Median home sale price of $1.4 million, second in Sonoma County only to Healdsburg. Median resident age of 49.1 years. Homeownership rate of 56.3%. An Urban Growth Boundary that has restricted outward expansion since 1996. [10][11][12]

The context: Sebastopol sits in Sonoma County, a region shaped by wildfire and workforce economics. The 2017 Tubbs Fire destroyed over 5,300 structures in the county, and the 2019 Kincade Fire displaced thousands more. Post-fire rebuilding accelerated ADU construction as displaced residents sought faster, cheaper housing on existing lots. At the same time, Sonoma's wine and hospitality industry faces a chronic workforce housing gap: the median household income in Sebastopol ($87,684) is well below what's needed to buy at $1.4 million, and nearly 30% of the workforce works remotely. [11] In this environment, AB 1033 is not primarily about building new units. It is about letting older homeowners on oversized lots monetize structures that already exist.

The vote: The Sebastopol City Council voted 4-1 on January 6, 2026 to introduce and first-read Ordinance 1162, with staff recommending waiver of second reading and final adoption at the January 20 meeting. Mayor Jill McLewis cast the lone dissenting vote. [10][13]

The champion's argument: Councilmember Phill Carter, who campaigned on ADU expansion, framed AB 1033 as an equity-unlock tool for aging homeowners: "Imagine, older homeowners can unlock $300,000 or more in equity — without moving." He also argued the policy would benefit the city's budget through new property tax revenue from separately assessed ADU condos, using existing infrastructure rather than requiring new development. Carter estimated homeowner conversion costs at $10,000 to $20,000 (surveyor, attorney for CC&Rs, title work, recording fees) and suggested the city could reduce this by 60-70% by providing template CC&Rs pre-approved by the city attorney. [13]

The dissent: Mayor McLewis's objection centered on infrastructure capacity, not housing philosophy. Sebastopol's roads, water, and sewer systems are in acknowledged disrepair. State law prohibits impact fees for ADUs under 750 square feet, and AB 1033 was silent on impact fees for condo conversions of existing units. "We just have infrastructure that's crumbling everywhere," McLewis said. "It is irresponsible to vote for something like this... Why don't we know what the impact fees are?" [10][13]

Where it stands now: The city published an AB 1033 Readiness Checklist, a Tentative Parcel Map Application Checklist, and an FAQ document in March 2026. The basic application pathway exists. No completed AB 1033 applications have been publicly reported as of June 2026. [14]

The county gap: Sonoma County itself has not opted in. Permit Sonoma Program Manager Genevieve Bertone stated the county has been focused on mandatory state law compliance and has not yet addressed AB 1033. Fifth District Supervisor Lynda Hopkins said the question is "already on her radar" and asked Permit Sonoma to monitor statewide implementation for possible Board consideration. A homeowner in unincorporated Sonoma County cannot use AB 1033 regardless of what Sebastopol has done. [13][15]

What Sebastopol reveals about Phase 2

The Sebastopol case exposes a pattern that will repeat as AB 1033 spreads to smaller jurisdictions:

Motivation mismatch. AB 1033 was conceived as a housing production accelerator for high-demand metros. In Sebastopol, housing production is not the primary use case. With only ~100 ADUs across 3,300 homes, the near-term impact is conversion of existing units, not construction of new ones. The real value proposition is asset liquidity for homeowners sitting on $1.4 million properties who want to extract value without selling the primary residence.

Infrastructure tension. State law's impact fee exemption for small ADUs creates a fiscal gap that larger cities can absorb but smaller cities with aging systems cannot easily ignore. McLewis's objection is not anti-housing; it is a legitimate capacity concern that will surface in every small city considering AB 1033.

Administrative thinness. Sebastopol's planning department published implementation documents within three months of adoption. Larger cities took longer but had dedicated ADU program staff. Small cities move faster on paper but have fewer resources to support homeowners through the complex conversion process (condominium plan, Davis-Stirling compliance, HOA formation, utility separation, lienholder consent). [13][14]

West Hollywood: AB 1033 in a Renter City

West Hollywood's adoption reveals a different logic. This is a city where 80.2% of housing units are renter-occupied, the homeownership rate is 19.8%, and the median owner-occupied home value is $924,800. [16]

Ordinance 25-04 passed unanimously (5-0) on February 18, 2025, with first reading on February 3. The ordinance takes effect 30 days after adoption. [17]

The distinctive provision: West Hollywood explicitly prohibits the use of an AB 1033-converted ADU as a timeshare or fractional ownership property. Section 19.36.310(E)(9)(a) of the amended zoning code requires a deed restriction barring timeshare and fractional uses under Government Code §§ 66341/66342. [17]

This prohibition is rare among AB 1033 implementing ordinances. Most cities adopted the state framework without adding restrictions on ownership structure. West Hollywood's addition reflects a specific local concern: in a city dominated by rental housing and surrounded by Los Angeles's short-term rental market, the council wanted to prevent AB 1033 from becoming a vehicle for investment fragmentation rather than resident homeownership.

No completed AB 1033 transactions have been publicly reported in West Hollywood as of June 2026. The practical challenge is structural: in a city where most residential lots contain multi-unit buildings rather than single-family homes with backyard ADUs, the typical AB 1033 scenario (detached ADU behind a house, sold to a new owner) applies to a smaller share of properties than in suburban cities. [16][17]

Santa Cruz and Santa Monica: Phase 2 in Different Flavors

Sebastopol and West Hollywood are the deepest case studies, but two other Phase 2 cities illustrate the range:

Santa Cruz (population 62,581, median home value ~$1.2 million) adopted Ordinance 2024-18 in October 2024, bundled with broader state-law compliance updates. The differentiator is the Coastal Zone. Santa Cruz sits partially within a Local Coastal Program (LCP) area, requiring some ADU projects to obtain a Coastal Development Permit on top of standard building permits. The city's ADU update included separate ordinances for LCP (Ord. 2024-17) and non-LCP (Ord. 2024-18) areas. For a homeowner pursuing AB 1033 on a coastal parcel, the condo conversion process layers on top of an already complex coastal permitting framework. No AB 1033 transactions have been publicly reported. [18][19]

Santa Monica (population ~93,000, median home value ~$1.6 million) adopted Ordinance 2786 (CCS) in October 2025. The distinctive challenge is regulatory layering: Santa Monica has one of California's most aggressive rent control regimes and an existing condo conversion ordinance that predates AB 1033. A homeowner converting an ADU to a condo must navigate both the state AB 1033 framework and the city's pre-existing condo conversion restrictions, which were designed to prevent loss of rental stock. This makes Santa Monica a test of whether AB 1033 can function inside a regulatory environment that was built to do the opposite of what AB 1033 enables. [4][5]

Neither city has generated AB 1033 transactions as of June 2026. Both illustrate a common Phase 2 pattern: the legal framework exists, but the gap between "ordinance adopted" and "first sale closed" may be measured in years, not months.

Why Most Cities Haven't Adopted

As of June 2026, 10 out of California's 482 incorporated cities and 58 counties have adopted AB 1033 — roughly 2% of all jurisdictions. The law has been available since January 2024. No state registry of adopting cities exists; this count is cross-referenced from city council records, CoDADU's tracker, and HCD ordinance review letters. [1][4][5]

The barriers are documented in policy analyses and council discussions across multiple cities:

Administrative burden without clear demand. Adopting AB 1033 requires drafting an implementing ordinance, establishing application procedures, setting fees, and training staff on the condominium subdivision process. For cities that have received zero inquiries from homeowners about selling ADUs, the cost-benefit calculation does not favor early adoption. [20]

Davis-Stirling complexity. The mandatory HOA formation under the Davis-Stirling Common Interest Development Act is a significant friction point even for supportive jurisdictions. Sebastopol's Planning Director Jane Riley stated publicly: "As long as the state requires that there needs to be a homeowners association, there aren't going to be a lot of people who want to take this on." [13] For the full lending and HOA cost analysis, see our AB 1033 mortgage guide.

Lienholder consent uncertainty. California Government Code § 65852.26 requires written consent from every lienholder before a condo map can be recorded. Most homeowners carry a mortgage. Fannie Mae's servicing guidelines make consent structurally difficult for conforming loans. This single requirement can block conversion regardless of what the local ordinance allows. [21]

Infrastructure and fiscal concerns. McLewis's objection in Sebastopol is not unique. San Diego County's adoption process surfaced rural infrastructure concerns. Berkeley's staff analysis weighed the policy against affordability impacts. Cities with deferred maintenance on water, sewer, and road systems view additional density — even the modest density of ADU condo conversions — as a fiscal risk without impact fee revenue. [10][13][22]

Insufficient ADU inventory. California issues roughly 25,000 ADU permits annually, but the distribution is heavily concentrated in Los Angeles County and the Bay Area. Many smaller cities have fewer than 50 total ADUs. A city with a handful of ADUs has no realistic market for condo conversions, making the administrative effort of adopting AB 1033 difficult to justify. This is arguably the most fundamental barrier: not opposition to the policy, but absence of the housing stock that makes it relevant.

Wait-and-see incentive. With no state mandate to adopt, and with early-adopter cities generating transaction data that later adopters can learn from, many cities rationally choose to wait. A Small Housing BC case study on AB 1033 implementation documented this pattern: cities outside the initial adopter group prefer to observe outcomes before committing administrative resources. [20]

The Mandatory Adoption Question

AB 1033 is voluntary. No California legislator has introduced a bill in the 2025-2026 session to make adoption mandatory. [23]

The precedent exists, however. AB 976 (2023, effective January 2025) permanently removed ADU owner-occupancy requirements statewide after many cities failed to do so voluntarily. The pattern was identical: state law created an opt-in framework, most cities did not opt in, and the legislature eventually made it mandatory. [24]

The Casita Coalition, which co-sponsored AB 1033 with the Bay Area Council, has publicly described a roadmap where early adopters generate transaction data, academic and advocacy partners track outcomes, and the accumulated evidence base supports a future push for mandatory adoption. A Small Housing BC case study documented this strategy: supporters are building toward "further legislative reform... to make it mandatory." [20][25]

If this trajectory holds, the current 10-city adoption map may be a pilot phase rather than a permanent configuration. Cities that adopt now gain experience and shape the implementation norms that a future mandatory framework would likely reference. Cities that wait may eventually be required to implement a framework whose conventions were set by others.

What This Means for Property Owners

If you own property with an ADU (or plan to build one) in a Phase 2 city, the decision framework differs from Phase 1 markets:

Check your city's status first. AB 1033 only works where your city has adopted an implementing ordinance. If you are in unincorporated Sonoma County, Santa Cruz County, Napa, Mountain View, or Los Angeles, the right does not yet exist regardless of state law. CoDADU maintains a tracker at codadu.com, but verify against your city's planning department — the tracker has documented lag. [4]

Ground your pricing expectations in data, not optimism. The only verified AB 1033 transactions as of June 2026 are in San Jose: a 749 SF detached ADU listed at $549,000-$598,000, and a 1,200 SF corner-lot ADU listed near $1.6 million. [2] Both are in a metro where median home prices exceed $1.3 million. In a Phase 2 market like Sebastopol ($1.4 million median), a comparable ADU condo might trade at $350,000-$550,000 based on the San Jose price-per-square-foot range ($733-$1,333/SF), but this is extrapolation from two data points, not a market. Councilmember Carter's "$300,000 or more" estimate is plausible but unverified. Until Phase 2 cities generate their own transactions, pricing is speculative.

Estimate your conversion cost realistically. Carter estimated $10,000-$20,000 for the homeowner's share (surveyor, attorney, title, recording). Our analysis across all adopted cities puts the full condo-readiness cost at $40,000-$120,000 when construction upgrades (independent utility metering, dedicated entrance, enhanced fire/sound separation) are included. The wide range depends on whether your ADU was built with condo conversion in mind. For the detailed cost breakdown, see our architect's AB 1033 guide. [13][26]

The lienholder problem is the same everywhere. Your mortgage lender must consent to the condo map before it records. This is the single most common dealbreaker across all AB 1033 cities, regardless of Phase 1 or Phase 2 status. If you carry a mortgage, start with a lender conversation before investing in survey or legal work. Properties owned free and clear bypass this obstacle entirely, which is one reason AB 1033 may see faster uptake among older homeowners who have paid off their loans. [21]

Build condo-ready even if you plan to rent. If there is any possibility your city will adopt AB 1033 in the future (and the mandatory adoption trajectory suggests most eventually will), design your ADU with independent utility connections, a dedicated entrance from the public right-of-way, and clean property boundaries. The cost to retrofit these features after construction is 3-5x higher than building them in. [26]

Expect longer timelines in Phase 2 cities. San Jose has dedicated "ADU Ally" staff and a ~60-day parcel map review process built from two years of experience. Sebastopol published its first application checklists three months after adoption. Title companies, surveyors, and attorneys experienced with AB 1033 conversions are concentrated in the Bay Area and San Diego. If you are in Sebastopol or Santa Cruz, your service provider pool is smaller and learning curves are steeper. [3][14]

What's Coming

Three developments will shape the next 12 months of AB 1033 expansion:

Los Angeles. Council File 25-0753 ("Missing Middle LA") directs City Planning to draft an AB 1033 ordinance. If LA adopts in the second half of 2026, it adds roughly 4 million residents to the AB 1033 market and shifts the law from a Northern California experiment to a statewide reality. [6]

County-level expansion. San Diego County's March 2026 adoption opened unincorporated areas to AB 1033 for the first time. Sonoma County's Supervisor Hopkins has asked Permit Sonoma to monitor statewide implementation. Santa Cruz County's Housing Advisory Committee reviewed the policy in September 2025. If counties begin adopting, the geographic reach of AB 1033 expands dramatically beyond city limits into rural and semi-rural areas where lot sizes are larger and the economics of a detached ADU condo sale may be more favorable. [7][15][22]

Transaction data. San Jose's two completed sales and Berkeley's early applications will generate the appraisal comparables, title insurance precedents, and lender workflows that Phase 2 cities need. Every additional transaction reduces the "first-mover" risk premium that currently makes AB 1033 conversions more expensive and uncertain than they will be once the market matures. [3]

References

[1] AB 1033 Bill Text, California Government Code § 65852.26 (ADU condominium conversion). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1033

[2] CapRadio/KQED, "San Jose Developers Pioneer New California Law, Selling ADUs as Condos," August 14, 2025. https://www.capradio.org/articles/2025/08/14/san-jose-developers-pioneer-new-california-law-selling-adus-as-condos/

[3] City of San Jose, ADU Condominium Conversions. https://www.sanjoseca.gov/businesses/development-services-permit-center/accessory-dwelling-units-adus/adu-condominium-conversions

[4] CoDADU City Status Tracker, verified June 2026. https://www.codadu.com/see-if-you-qualify

[5] Cross-referenced against city council records and ordinance texts: San Jose (sanjoseca.gov Ord. 31095), Santa Cruz (Ord. 2024-18), West Hollywood (Ord. 25-04 via eCode360), Oakland (Ord. 13856 C.M.S. via HCD review letter), San Diego City (Ord. O-21989), San Francisco (Legistar File 241069), Berkeley (Ord. 7,999-N.S.), Sebastopol (Ord. 1162), San Diego County (Ord. 10986).

[6] Los Angeles City Clerk, Council File 25-0753 ("Missing Middle LA"). https://cityclerk.lacity.org/lacityclerkconnect/index.cfm?fa=ccfi.viewrecord&cfnumber=25-0753

[7] Santa Cruz County Housing Advisory Committee, agenda item reviewing AB 1033 implementation, September 24, 2025. https://www2.santacruzcountyca.gov/planning/plnmeetings/ASP/Display/PdfFinder.asp?Type=Agenda&MeetingDate=20250924&MeetingType=1&Filename=012.pdf

[8] City of Mountain View, Study Session Memo: Moderate and Middle Income Homeownership Strategies, December 16, 2025, Task 6b (AB 1033 evaluation). https://mountainview.legistar.com/View.ashx?M=F&ID=15027014&GUID=163255BF-A85D-4970-BC0E-FC01188D1CC4&G=37932D0B-039B-4529-B6D8-73445A1D4799

[9] Napa City Legistar, supplemental reports and public communications regarding AB 1033 advocacy. https://napacity.legistar.com/

[10] The Press Democrat, "Sebastopol authorizes sale of ADUs in bid to increase local affordable housing stock," January 9, 2026. https://www.pressdemocrat.com/2026/01/09/sebastopol-becomes-first-city-in-sonoma-county-to-ok-sale-of-granny-units/

[11] U.S. Census Bureau QuickFacts, Sebastopol city, California. https://www.census.gov/quickfacts/fact/table/sebastopolcitycalifornia/PST045224

[12] Redfin, Sebastopol Housing Market, accessed June 2026. https://www.redfin.com/city/18089/CA/Sebastopol/housing-market

[13] Sebastopol Times, "Sebastopol City Council approves ADU condo conversions, but that's just the beginning," January 9, 2026. https://www.sebastopoltimes.com/p/sebastopol-city-council-approves

[14] City of Sebastopol, Housing & Homelessness page (AB 1033 Readiness Checklist, Tentative Parcel Map Application Checklist, FAQ, published March 2026). https://www.cityofsebastopol.gov/our-community/housing-homelessness/

[15] Permit Sonoma FAQ on AB 1033, updated February 2026. https://app.infilla.com/o/sonomacounty/faqs/4707fcf4-2d16-49e6-a5d6-26ffb3068144

[16] U.S. Census Bureau QuickFacts, West Hollywood city, California. https://www.census.gov/quickfacts/fact/table/westhollywoodcitycalifornia/PST045224

[17] City of West Hollywood, Ordinance No. 25-04 (Zone Text Amendment, ADU regulations including AB 1033 implementation). https://ecode360.com/WE5031/laws/LF2283095.pdf

[18] City of Santa Cruz, 2024 Ordinances (Ord. 2024-18, ADU regulations amendment, non-LCP). https://www.santacruzca.gov/Government/City-Council/Publication-of-Ordinances/2024-Ordinances

[19] Santa Cruz Sentinel, "Santa Cruz City Council to consider ADU rule changes," October 4, 2024. https://www.santacruzsentinel.com/2024/10/04/santa-cruz-city-council-to-consider-adu-rule-changes/

[20] Small Housing BC, "California Legislation Allowing Separate Sale of ADUs: Case Study," 2025. https://smallhousingbc.org/wp-content/uploads/2025/04/California-Leg-allowing-separate-sale-of-ADUs-Case-Study.pdf

[21] California Government Code § 65852.26 (lienholder consent requirement); Fannie Mae Servicing Guide. See also our AB 1033 mortgage and lending guide: /blog/ab-1033-adu-condo-mortgage-lending-guide-2026

[22] San Diego County, Guidance for Separate Sale of ADUs under AB 1033, April 3, 2026. https://www.sandiegocounty.gov/content/dam/sdc/pds/longrangeplanning/adu/Guidance%20for%20Separate%20Sale%20of%20ADUs%20under%20AB1033%20_%202026.04.03.pdf

[23] LegiScan, California 2025-2026 session search for AB 1033-related mandatory adoption bills, accessed June 2026. https://legiscan.com/CA

[24] AB 976 (2023), permanently removing ADU owner-occupancy requirements statewide effective January 1, 2025. California Government Code § 66310.

[25] Casita Coalition, AB 1033 implementation resources and guidebooks. https://www.casitacoalition.org/guidebooks-and-resources

[26] Cost estimates compiled from SnapADU (San Diego), CoDADU (Bay Area), city staff reports, and council member testimony. Ranges reflect variation by jurisdiction, ADU configuration, and existing utility infrastructure. See architect's guide for full breakdown: /blog/ab-1033-adu-condo-architect-design-guide-2026