🏠 Big Changes for SF Homeowners: You Can Now Sell In-Law Units as Condos

What San Francisco's New ADU Law Means for Homeowners, Renters, and Buyers in 2025

In a bold step to unlock housing and wealth, San Francisco just passed a game-changing law: Starting May 1, 2025, homeowners can build Accessory Dwelling Units (ADUs) - commonly known as in-law units, and sell them as separately deeded condominiums.

If you’re a homeowner, renter, or buyer, here’s what this means for you.

Key Takeaways

For Homeowners: A New Way to Unlock Equity

This law is especially impactful for longtime homeowners in single-family homes and small 2- or 3-unit buildings. If you’ve got a garage, backyard, or underused space, you can now:

• Build an ADU and sell it as a condo, creating instant equity instead of relying on monthly rental income.

• Retain your main home while accessing capital, an enticing option for "house-rich, cash-poor" owners.

• Cash out or help family by selling or gifting the new unit.
  
  

Expect the biggest impact in neighborhoods like the Sunset, Richmond, and Excelsior, where single-family homes dominate the landscape.

For Renters: Protections Remain in Place

Renters may wonder, “will this lead to displacement’? In short: unlikely.

• The law only applies to newly built ADUs after May 1, 2025.

• Existing in-law units, many of which are rent-controlled, cannot be converted or sold.

• Still, some advocates worry that over time, this could reduce the number of rental ADUs coming online, as more owners opt to sell.
  
  

For Buyers: New Condo Inventory = More Opportunities

Good news for first-time buyers: this law could open doors, literally.

• Expect to see more affordable, small-scale condos hit the market in coming years.

• These will likely be new construction units, think backyard studios, over-garage cottages, or garden-level homes.

• These units will be separately owned and deeded, giving buyers a clear path to homeownership in established neighborhoods.
  
  

While they’ll still reflect SF pricing, the added inventory should create more diverse entry points into the market.

Why It Matters

What’s Next?

Keep an eye on:

• Permit reform: Future proposals may reduce upfront costs or allow deferred permit fees, making ADU development more accessible.

• Legal & tax considerations: Selling an ADU as a separate condo may trigger new property tax assessments or title complexities. Talk to your CPA or real estate attorney if you're considering it.
  
  

Final Thoughts

This is an innovative, San Francisco-style solution, gentle density with big potential. By making it easier to convert unused space into salable homes, the city is opening new doors for multi-generational families, long-time owners, and future buyers alike.

Thinking about building or buying an ADU condo? Reach out, we’re happy to help you navigate this new opportunity.

READ MORE ON ADUS.

Maximizing Income with an ADU: Rental Tips and Tricks

www.legacysfhomes.com/blog/maximizing-income-with-an-adu-rental-tips-and-tricks

Transforming Spaces: The Rising Trend of ADUs

https://legacysfhomes.com/blog/transforming-spaces-the-rising-trend-of-adus

The History of In-law ADU Units in San Francisco

www.legacysfhomes.com/blog/the-history-of-in-law-units-in-san-francisco