Nick Nagy · SB 9 lot split financing

Nick Nagy finances SB 9 lot splits and the units built on them.

SB 9 lets an eligible homeowner split one single-family lot into two and build up to two units on each. The financing question is which loan fits the split, and which properties the law rules out.

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The answer

The direct answer

SB 9 requires a local agency to ministerially approve, without discretionary review, a parcel map that splits an eligible single-family lot into two parcels. Neither new parcel can be smaller than 40 percent of the original lot, and both have to be at least 1,200 square feet unless the local agency sets a smaller minimum on its own. Each new parcel can then carry up to two residential units, and local rules cannot shrink either unit below 800 square feet.

What I tell people first

I look at an SB 9 file in two stages: whether the lot and its history actually qualify for the split, and then what financing structure fits what gets built on it. A construction-to-permanent loan or a renovation line usually fits this project better than a standard purchase loan, and I check the exclusions in the statute before we spend money on a survey. A lot that fails one of those exclusions is not worth spending on a survey or an architect until that question is settled first.

Who this page is for

This page is for you if you own a single-family lot and want to split it into two, or if you are evaluating a lot to buy specifically because it qualifies for an SB 9 split. It fits an owner planning to live in one of the resulting units, since the law requires an owner-occupancy affidavit. It does not fit every lot; several categories of housing are excluded outright. If the lot has any rental history in the last three years, confirm that first, since it can disqualify the property outright.

The fact this page stands on: SB 9 requires each of the two new parcels from an urban lot split to be at least 1,200 square feet, and it protects each of the two allowed units on a parcel down to 800 square feet.
Source: SB 9 (2021), Government Code sections 66411.7 and 65852.21, leginfo.legislature.ca.gov, read September 6, 2026.
Last verified: September 6, 2026

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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 the split actually looks like

An urban lot split under SB 9 creates no more than two new parcels of approximately equal area, with neither parcel smaller than 40 percent of the original lot. Both resulting parcels have to be at least 1,200 square feet, unless the local agency has adopted a smaller minimum lot size by its own ordinance.

Each of the two new parcels can then support up to two residential units. A local agency’s zoning, subdivision and design standards cannot be written in a way that would prevent building two units on a parcel, or that would shrink either unit below 800 square feet of floor area.

How it works

What the law excludes outright

SB 9 does not apply to every lot. The statute excludes parcels involving housing subject to a rent-restriction covenant or public rent control, housing occupied by a tenant within the last three years, and property within a historic district, on the State Historic Resources Inventory, or designated as a local landmark or historic property.

Housing subject to a recorded rent-restriction covenant or public rent control
Housing occupied by a tenant at any point in the last three years
A historic district, the State Historic Resources Inventory, or a locally designated landmark or historic property
A parcel already created through a prior SB 9 lot split, or adjacent to one split by the same owner

The detail that matters

Financing the construction, not just the split

The lot split itself is a legal and mapping process, not a financing event on its own. The financing question comes in on what gets built: a construction-to-permanent loan on the new parcel, or a renovation and addition loan if the second unit goes on the parcel the owner keeps rather than a newly split one.

I underwrite these against the actual construction plan and the finished value, not against a rough estimate of what the land might be worth after the split.

The detail that matters

What a city can still require on top of the minimums

A local agency can still require up to one off-street parking space per new unit, unless the parcel sits within a half mile walk of a major transit stop or a car-share vehicle is parked within a block, in which case no parking can be required at all.

If a unit will connect to an onsite wastewater system rather than a sewer line, the agency can require a percolation test completed within the last 5 years, or one that has been recertified within the last 10 years (Government Code section 66411.7(c)(2), leginfo.legislature.ca.gov, read September 6, 2026).

None of this changes the lot-size or unit-size minimums the state law sets. It only adds site-specific conditions a city can still layer on top of them.

Ask Nick about my lot split 237 lenders, one file, no second application.

Files like these

Three files, and what changed the answer

A homeowner splitting one lot into two

The owner subdivides a single-family lot into two parcels of at least 1,200 square feet each, signs the three-year owner-occupancy affidavit, and lines up construction financing for the unit on the new parcel.

An owner building a second unit on the parcel they keep

Rather than splitting the lot, the owner adds a second unit to the parcel already owned, financed as a construction-to-permanent loan instead of a purchase loan.

A buyer evaluating a lot before making an offer

A buyer runs a property against SB 9’s exclusions, rent restriction, recent tenancy, historic status, before making an offer contingent on the lot actually qualifying for a split.

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

Splitting the lot before checking the property against the rent-restriction and historic-district exclusions.
Signing the owner-occupancy affidavit without a real plan to live there for three years.
Assuming a purchase loan works the same way as a construction-to-permanent loan. It does not.
Forgetting that each new parcel carries its own minimum size and unit-size protections.
Treating the 40 percent minimum split as a target instead of the law’s actual floor.

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.

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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.

SB 9 lot split financing

SB 9 lot split financing covers the construction or renovation loan for the units built after a lot is split, since the split itself is a legal and mapping process rather than a purchase. I build the financing plan around what actually gets constructed on each new parcel.

What size does a lot have to be to split under SB 9?

Neither resulting parcel can be smaller than 40 percent of the original lot, and both have to be at least 1,200 square feet, unless the local agency has set a smaller minimum by its own ordinance.

Do I have to live in one of the new units?

Yes, unless you are a community land trust or a qualified nonprofit. The law requires an applicant to sign an affidavit committing to occupy one unit as a principal residence for at least three years.

Which properties are excluded from SB 9?

Housing under a rent-restriction covenant or rent control, housing occupied by a tenant in the last three years, and property in a historic district or on the State Historic Resources Inventory are all excluded.

What kind of loan finances the construction after a split?

Most of these projects use a construction-to-permanent loan or a renovation line, underwritten against the actual build plan and finished value rather than a purchase price.

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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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You get the number and keep it. A straight answer on what your file supports and what it does not. If waiting is the better move, that is the answer you get, and the numbers are yours either way.