California ADU Owner Occupancy Rule: AB 976 and AB 1033

What the state statute says about renting and selling an ADU

Government Code Section 66314(d)(1) states that, except as provided in Article 4, the accessory dwelling unit may be rented separate from the primary residence, but shall not be sold or otherwise conveyed separate from the primary residence. The text sets two separate permissions in the same sentence: the ADU may be rented on its own, and the ADU may not be sold on its own. The ban on separate sale is the default statewide rule.

The same rule is the same rule whether the ADU is attached, detached, a converted garage, or a new construction detached unit. Section 66314(d)(1) addresses only the rental and sale question. It does not address whether the owner has to live on the lot. The owner-occupancy question is governed by AB 976, which is the next topic. The sale question is governed by Section 66314(d)(1) plus the opt-in path under AB 1033, which the third section of this article covers.

AB 976: a city cannot require the owner to live in the ADU

AB 976 (Ting), enrolled September 12, 2023 and chaptered October 11, 2023, made the existing prohibition on local owner-occupancy requirements for ADUs permanent. The operative language, as carried into Section 66314 of the Government Code, prohibits a local agency from imposing an owner-occupancy requirement on any accessory dwelling unit. AB 976 became operative on January 1, 2024, and the prohibition is now a permanent feature of state ADU law.

The practical effect is that a homeowner may build an ADU, live in the primary residence, and rent the ADU to a tenant. The same homeowner may move out of the primary residence, rent the primary residence to a tenant, and rent the ADU to another tenant. The same homeowner may own the property through a limited liability company, trust, or other entity, and rent both units. The only two limits that survive are: (1) Section 66314(d)(12) and the underlying rental term rule, which allow a city to require that the ADU rental term be 30 days or longer, so an ADU is not automatically a short-term rental; and (2) any private deed restriction or HOA rule that runs with the land, which is enforced by private parties and not by the local agency.

A city that adopts an ADU ordinance containing an owner-occupancy requirement for a standard ADU after January 1, 2024 conflicts with state law and is preempted. Section 66325(a) carries the same preemptive force for the rest of Article 2, with the same less restrictive exception. AB 976 did not change the rule for junior accessory dwelling units. The JADU rule is set out in Section 66333 and is a separate question that the next two sections address.

AB 1033 and the opt-in path to a separate ADU sale

AB 1033, enacted in 2023, allows a city or county to adopt a local ordinance that permits an ADU to be sold as a separate condominium unit through a Subdivision Map Act conversion. The state default under Section 66314(d)(1) is that an ADU shall not be sold or otherwise conveyed separate from the primary residence. AB 1033 creates a carve-out from that default, but only when the local agency has affirmatively adopted an authorizing ordinance. Separate sale is not automatic, and it is not statewide.

The mechanics under AB 1033 run through the Subdivision Map Act and the Davis-Stirling common-interest framework rather than through a simplified ADU permit. A homeowner who wants to use the AB 1033 path typically has to file a tentative parcel map or tentative map application, obtain separate utility connections, create a condominium map and CC&Rs, and receive a separate assessor's parcel number. Each of those steps is a real-property step, not an ADU permit step. The AB 1033 ordinance is also the place where a local agency may add first-time-buyer and owner-occupancy protections for the resulting condo units.

A homeowner comparing the rule across California should ask three questions of the local agency: (1) has the city or county adopted an AB 1033 ordinance authorizing separate ADU sale, (2) does the project meet the city's specific conditions (separate utilities, separate access, separate parcel number, HOA formation), and (3) what additional local protections apply to the resulting condominium unit. Until a city adopts an AB 1033 ordinance, the Section 66314(d)(1) ban on separate sale remains in force, and any contract to sell the ADU alone is not enforceable against the default rule.

JADU owner-occupancy: AB 1154, effective January 1, 2026

The owner-occupancy rule for a junior accessory dwelling unit is different from the rule for a standard ADU. Section 66333(b), as amended by AB 1154 effective January 1, 2026, requires owner-occupancy in the single-family residence only if the JADU has shared sanitation facilities with the existing structure. The owner may reside in either the remaining portion of the structure or the newly created JADU. Owner-occupancy is not required if the JADU has separate sanitation facilities, or if the owner is another governmental agency, a land trust, or a housing organization.

AB 1154 is a focused change to Section 66333(b). Before January 1, 2026, JADU owner-occupancy was required for any JADU on a single-family lot, regardless of whether the JADU had its own bathroom. After January 1, 2026, the requirement attaches only when the JADU shares sanitation facilities with the primary residence. The other JADU rules in Section 66333(c), (d), (e), (f), and (g) were not changed by AB 1154. The deed restriction in Section 66333(c) still prohibits the sale of a JADU separate from the sale of the single-family residence, regardless of which sanitation configuration the JADU has.

For a homeowner considering a JADU, the relevant question is the sanitation layout. A JADU that adds a separate bathroom to the converted space has a different owner-occupancy rule than a JADU that shares the primary bathroom. The choice of sanitation layout, the choice of separate or shared entrance, and the choice of efficiency kitchen configuration all flow from the same Section 66333 framework. Confirm the sanitation plan with the design team and the permitting agency before signing, because the Section 66333(b) owner-occupancy result follows the bathroom choice.

How L Square applies the owner-occupancy and separate-sale rules on real California lots

L Square Design & Build's site review for a standard ADU starts with the AB 976 owner-occupancy rule. The owner of a single-family lot in Orange County or Los Angeles County is not required to live in the ADU or in the primary residence, may rent both units on 30-day-or-longer terms, and may hold the property through a company, trust, or other entity. The rental term rule is the only AB 976 surviving limit, and a 30 day or longer rental term is the standard L Square build path. L Square does not market ADUs for short-term rental use.

L Square's site review for a JADU starts with the Section 66333(b) test, as amended by AB 1154 effective January 1, 2026. A JADU that shares sanitation facilities with the primary residence requires owner-occupancy, and the owner may live in either the primary or the JADU. A JADU that has its own bathroom does not require owner-occupancy under Section 66333(b) but is still bound by the Section 66333(c) deed restriction that prohibits the sale of the JADU separate from the sale of the primary residence. The Section 66333(c) deed restriction runs with the land, is filed with the permitting agency, and is enforceable against future purchasers.

L Square's site review for a separate-sale project starts with the AB 1033 question. L Square confirms whether the city or county has adopted an AB 1033 ordinance before discussing a separate sale. For projects inside Orange County or Los Angeles County, the answer is set by the city, and the project still has to satisfy the Subdivision Map Act, the Davis-Stirling common-interest framework, and the local ADU Condo Guidance checklist. L Square Design & Build's published 2026 model lineup runs from the 600 sq ft two-bedroom Model 600 at $180,000, to the 800 sq ft Models 800A and 800B at $240,000 each, to the 1,000 sq ft Models 1000A and 1000B at $295,000 each, up to the 1,200 sq ft Model 1200 at $354,000. For a homeowner comparing the owner-occupancy and separate-sale rule across California, the right questions for L Square and the local agency are: (1) is this a standard ADU or a JADU, (2) does the JADU have shared or separate sanitation, and (3) has the local agency adopted an AB 1033 ordinance. L Square Design & Build can be reached at (949) 374-7980 to discuss a specific lot in Orange County or Los Angeles County.