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Nick Nagy · AB 1033 ADU condo financing

Nick Nagy finances ADU condo purchases and sales under AB 1033.

AB 1033 lets a participating city allow an ADU to be sold as its own condominium. The financing depends on a piece of paperwork most homeowners have never heard of: lienholder consent.

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The answer

The direct answer

AB 1033 authorizes a city, if it chooses to adopt an ordinance, to let a homeowner subdivide a primary home and its ADU into separate condominiums that can be sold on their own. Adoption is city by city, so the first question on any AB 1033 deal is whether the property actually sits in a city that has opted in. Once it does, the law sets specific requirements before the county will record the condominium plan.

What I tell people first

I treat an AB 1033 file as two problems stacked on top of each other: the legal subdivision process, and the financing on whichever side of the deal you are on, buying the ADU, selling it, or refinancing what is left. The lienholder consent step is where most of these deals stall, so I get that conversation started early rather than after the subdivision map is already drawn. Once consent is secured, the rest of the file moves like any other purchase or refinance, so the up-front legal work is where the real risk sits, not the financing itself.

Who this page is for

This page is for you if you own a home with an ADU in a city that allows AB 1033 subdivisions, and you want to sell the ADU on its own to pay down debt or fund something else. It is also for a buyer who wants to purchase just the ADU as an entry point into a premium neighborhood at a lower price than the main house. Confirm your city has actually adopted an ordinance before you plan around this.

The fact this page stands on
AB 1033 requires written consent from every lienholder, recorded with the county recorder, before a condominium plan splitting a home and its ADU can be filed.
Source
AB 1033 (2023), Government Code section 65852.2(a)(10), leginfo.legislature.ca.gov, read September 6, 2026.
Last verified
September 6, 2026
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Nick Nagy, mortgage broker and loan officer at Loan Factory
Nick Nagy NMLS #314880 · CA DRE #01444600 · Loan Factory, Inc. · 23 years About Nick · Licences, verified at source · Text 916-805-1933

Part of the Nick Nagy pages on go.homeaccesslist.com, and of the California Mortgage Answer Desk.

How it works

What AB 1033 actually authorizes

AB 1033 amended California’s ADU law so that a local agency may, if it adopts its own ordinance, allow the primary dwelling and one or more ADUs on a lot to be sold separately as condominiums under the Davis-Stirling Common Interest Development Act.

Adoption is not automatic and it is not statewide. A city has to choose to pass its own ordinance before any property inside it can use this path. I confirm that directly with the city, not from a list someone else compiled.

The detail that matters

The paperwork the law actually requires

Before a county recorder will record the subdivision map or the condominium plan, the law requires a safety inspection, evidenced by a certificate of occupancy or a HUD housing quality standards report, and it requires that the condominiums conform to the Subdivision Map Act and any local subdivision ordinance.

How it works

Why lienholder consent is the real gatekeeper

A lienholder is not required to consent, and the law is explicit that a lienholder may refuse. If a lender consents, it may attach its own conditions, which can include paying off the current loan through a refinance before the subdivision proceeds.

This is the step I start on first, before a homeowner spends money on a subdivision map that a lienholder later refuses to sign off on.

The detail that matters

Financing the buy side and the sell side

A buyer purchasing just the subdivided ADU is financing a standalone condominium purchase once the plan is recorded, not a fraction of the main house. A seller who is liquidating the ADU is usually using the proceeds to pay down or pay off the remaining mortgage on the primary unit, which changes what that primary unit’s own refinance looks like afterward.

How it works

What utilities and the local agency require after the split

Once an ADU is established as a condominium, the law requires the homeowner to notify utility providers, water, sewer, gas and electric, of the new condominium creation and the separate conveyance. That is a homeowner task, not a lender task, but I flag it so it does not get missed at closing.

The detail that matters

The HOA and shared-space wrinkle

Because the condominiums are created under the Davis-Stirling Common Interest Development Act, a homeowners association typically has to exist to manage anything the two units share, a driveway, a shared wall, shared utilities. Setting that structure up is a legal task that happens before financing, not after.

If the ADU itself was permitted more recently, the same Government Code section that AB 1033 amended requires a local agency to approve or deny a complete ADU permit application within 60 days when the lot already has an existing home, or the application is deemed approved (Government Code section 65852.2(a)(3)(A), as amended by AB 1033, leginfo.legislature.ca.gov, read September 6, 2026).

I ask where the property sits in that sequence, ADU already built and permitted, or being built now, because it changes how soon a subdivision and condo filing can realistically follow.

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Files like these

Three files, and what changed the answer

A homeowner in a city that has adopted AB 1033

An owner wants to sell the ADU behind the main house as its own condominium and use the proceeds to pay down the first mortgage. The file starts with lienholder consent, then the subdivision map.

A buyer purchasing only the ADU

A buyer wants to purchase just the ADU unit as a condominium once it is subdivided, financed as a standalone purchase rather than as part of the main home’s sale.

A homeowner refinancing after the split

Once the condominium plan records, the owner refinances the remaining primary unit on its own, separate from the ADU’s new owner.

None of these is a promise about your file. They are shapes. The number on your own file comes from running it, which is the point of the form on this page.

Where it goes wrong

The mistakes, and none of them is the buyer

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Nick Nagy, mortgage loan originator, Loan Factory, Inc.
Who answers

Nick Nagy

23 years in California lending · NMLS 314880 · CA DRE 01444600 · Loan Factory, Inc.

Dual licensed, so the loan side and the real estate side of a move get looked at as one problem instead of two. Most of what goes wrong in a move is a timing problem wearing a financing costume, and it is cheaper to catch it before you write an offer than after.

Financing is placed through Loan Factory, Inc. Real estate work is under CA DRE 01444600. More about Nick.
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The desk behind the file

One file, 237 lenders competing for it, and a broker who has done this for 23 years.

Loan Factory, Inc. is the brokerage. These are its published figures.

20,907+Loan Factory Google reviews
5.0Loan Factory average rating
237Lenders available through Loan Factory
48States Loan Factory is licensed in

A retail bank has one guideline book. A broker shops the same file across the shelf and finds the lender whose box it already fits.

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Straight answers

Questions people here actually ask

The follow-on questions, answered in the order they get asked.

AB 1033 financing

AB 1033 financing covers both sides of a deal: buying a subdivided ADU as its own condominium, or financing what happens on the main house once the ADU is sold off. Both require the city to have adopted an AB 1033 ordinance first.

Can I sell my ADU separately from my house in California?

Only if your city has adopted an ordinance under AB 1033, and only after the subdivision requirements are met, including a safety inspection and written consent from every lienholder on the property.

Does my mortgage lender have to agree to an AB 1033 subdivision?

Yes. The law requires written consent from every lienholder before the county will record the subdivision map or condominium plan, and a lienholder is allowed to refuse or attach conditions.

Is AB 1033 available everywhere in California?

No. Adoption is city by city under a local ordinance. I verify directly with the city where the property sits before building a file around this program.

What has to happen before an ADU condominium plan can be recorded?

A subdivision map meeting Subdivision Map Act requirements, a safety inspection, and written consent from every lienholder, all before the county recorder will record the map or plan.

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Mortgage loan originator, NMLS 314880, and licensed real estate salesperson, CA DRE 01444600, both under Loan Factory, Inc. 20,907+ Google reviews · 5.0 average · 237 lenders, the company's own published figures.

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AB 1033 bill text, leginfo.legislature.ca.gov leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240AB1033