An accessory dwelling unit (ADU) is a secondary housing unit on a single-family residential lot in California that is a separate and distinct living unit than the main residence. Many ADUs in California are rented out by the property owner for money or are used to house a family friend or relative for no charge.
ADUs have distinguishing characteristics that help further define, differentiate, and distinguish them from other housing types.
- ADUs are accessory and adjacent to a primary housing unit.
- ADUs are significantly smaller than the average home in the United States.
- ADUs tend to be one of two units owned by one owner on a single family residential lot.
- A large range of municipal land use and zoning regulations differentiate ADU types and styles, and dramatically affect their allowed uses.
The seller of real property in California which may have an ADU is advised to disclose to the buyer in writing this material fact well before close of escrow. Additionally, the seller is advised to provide in a written disclosure all permits from appropriate governmental entities demonstrating that the ADU is a legal permitted structure on the land where it is located and that it can be rented out to a tenant.
The buyer of the real property which may have an ADU upon it should consult with a permit expert well before close of escrow. The buyer needs to ascertain if the ADU is a legal permitted structure as part of the buyer’s due diligence, to protect his or her interests in the property’s purchase and to ascertain if the ADU can be rented out to a tenant.
Key suggested written disclosures by the seller who has an ADU on his, her or their real property to a buyer well before close of escrow are as follows:
- Disclose that the listed parcel has an ADU on premises.
- Provide copies of all permits issued by a governmental entity for the ADU including the issued certificate of occupation.
- Provide information on the individual(s) who constructed the ADU if available including any construction contracts.
- Provide copies of all leases for the ADU if applicable.
- If the ADU is used as a vacation rental, provide copies of all permits for the structure’s use as a vacation rental.
- Provide copies of all repairs and maintenance done to the ADU with back up documentation.
- Recommend in writing that any buyer go to the governmental permit and resource department having jurisdiction over the subject ADU and discuss it well before waiving all contingencies and closing escrow on the property.
- Recommend in writing that the buyer consult with assorted experts (licensed contractor, licensed pest inspector, licensed home inspector, surveyor and the like) well before waiving all contingencies and closing escrow on the property.
- Recommend in writing that if the ADU is a permitted vacation rental that the buyer go to the governmental permit and resource department having jurisdiction over the subject ADU’s vacation rental permit and discuss its assignability well before waiving all contingencies and closing escrow on the property.
The key in any real estate transaction is to document in saved writings and emails all disclosures with respect to the real property under contract.
By: Edward McCutchan
Sunderland | McCutchan, LLP
1083 Vine Street Ste. 907
Healdsburg, CA 95448
(707) 433-0377
emccutchan@sunmclaw.com
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