ADUs for Multifamily Properties

California state law allows single-family homeowners to build an ADU on their property. But what about properties with two or more residential units?

Yes, you can build an ADU on your duplex, triplex, fourplex, or apartment building!

What’s more, recent changes to California ADU law and Freddie Mac’s lending policy have expanded multifamily ADU options and made financing more accessible.

Read on to learn everything you need to know about ADUs on multifamily properties.

How is “multifamily unit” defined?

The answer to this question changes a bit depending on the jurisdiction. In the City of Los Angeles, it’s defined as a primary structure with at least two connected units. Multifamily properties in LA can add two or more ADUs, according to state law and local ordinance.

Other jurisdictions may have different definitions, but “multifamily” properties usually describe more than one residential unit, which may be attached (like a duplex or apartment building) or detached (e.g. multiple freestanding houses or structures).

Why add an ADU to a multifamily property?

People tend to think of accessory dwelling units as an option for single-family homeowners to create an additional unit on their property. While this is the most common application for ADUs, it’s not the only one—ADUs can be beneficial for multifamily properties, too!

Converting an underutilized garage or storage area into an ADU increases the overall property value and provides additional rental income. It can be a great way to add units and maximize a property’s rental potential.

What kind of ADUs are allowed on a multifamily property?

There are two main types of accessory dwelling units available for multifamily properties: converted ADUs and new construction ADUs.

Converted ADUs are created by converting existing nonresidential space (such as a parking or storage area) into residential space. They can either be integrated into the main structure or detached from it (e.g. a converted garage or storage shed).

New construction ADUs are built from the ground-up on empty land rather than converted from an existing structure.

How many multifamily ADUs are allowed on a lot?

California state law allows up to two detached ADUs per multifamily lot. These detached accessory units can be converted from an existing accessory structure (like a detached garage)  or built from the ground-up.

In some jurisdictions, you can also add up to 25% of the pre-existing number of units in attached ADUs. For example, a property with 8 existing residential units can add up to 2 accessory units. All multifamily properties may add at least one attached ADU, regardless of the number of units.

Keep in mind that each bedroom in an accessory dwelling unit must have an exterior-facing window that meets minimum dimension requirements. This requirement can limit the number of  ADUs that are feasible in a given space.

To summarize, all multifamily properties can add two detached ADUs and one attached ADU, while properties with 8 or more units may be able to add additional attached ADUs.

Does parking need to be replaced?

According to state law, accessory dwelling units converted from a parking structure do not need to replace the parking.

However, some jurisdictions may have local requirements regarding parking replacement or tenant compensation. Check with your city’s Planning Department to determine what’s required of your property.

What about current tenants?

In order to avoid displacement and or/disruption of tenants, the ideal option is to build a detached ADU or convert an auxiliary structure (like a garage). Depending on your jurisdiction, you may need to submit a Tenant Habitability Plan.

In Los Angeles, multifamily property owners or landlords planning to add one or multiple accessory dwelling units must complete a Tenant Habitability Plan (THP) and submit it to the LA Department of Building and Safety. The THP must outline the planned renovation’s impact on the habitability of the currently occupied units as well as the steps the landlord will take to mitigate the impact on the tenant(s) and their personal property.

Is owner occupancy required?

Most ADUs require that the property owner live on the property, but there is currently an exception for ADUs on multifamily properties. As part of the 2020 state law, owner occupancy is waived for single- and multifamily ADUs built between 2020 and 2025. It is unclear whether the state will continue to waive owner occupancy requirements after 2025, or if it will depend upon local jurisdictions to decide. Regardless, it’s a good time to get started and take advantage of the waived requirement while it lasts!

Conclusion

While it might not be the most common application, ADUs are allowed on multifamily properties and can be of great benefit.

If you’re interested in adding one or more accessory dwelling units to your multifamily property, contact Otto! Otto offers significant discounts on construction and design services for clients building multiple ADU projects at once. Talk to one of our sales representatives to learn more.