California ADU Laws 2027: What State Law Requires
California ADU law is the set of state rules in Government Code sections 66310 to 66342 that require cities to review qualifying accessory dwelling units ministerially, without a hearing, and that limit the standards and fees a city may apply to them.
An accessory dwelling unit, or ADU, is a second home on the same lot as a house; a junior ADU is a smaller unit created inside the house. This guide sets out what state law requires of a city, what a city still decides, what changes on January 1, 2027, and how the build is usually financed. Solve Lending & Realty is a mortgage and real estate brokerage, not a law firm or a permitting agency; confirm your project with your city’s planning department.
Equity and renovation routes side by side.
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Figures reviewed
Key Facts
- A city has 15 business days to say whether an application is complete and 60 days to approve or deny a completed one when a house is already on the lot.
- From January 1, 2027, the ministerial path covers two detached, newly built ADUs on a single-family lot, up from one.
- An ADU of 750 square feet of interior livable space or less carries no impact fee.
Where California’s ADU Law Lives
Since January 1, 2025, California’s ADU rules sit in Government Code sections 66310 to 66342, moved there from the older section 65852.2 by a 2024 bill, SB 477. The state housing department, HCD, publishes an ADU Handbook that explains them; it is guidance, not the statute, and its March 2026 edition predates the 2027 changes below.
Ministerial Review and the 60-Day Clock
Section 66317 says an ADU permit application “shall be considered and approved ministerially without discretionary review or a hearing.” HCD describes that as a check against the objective standards in effect that “uses no discretionary judgment, opinion, or subjective standards.” There is no public hearing.
Two clocks run. The city must tell you whether the application is complete, listing anything missing, within 15 business days. When there is an existing house on the lot, it must then approve or deny a completed application within 60 days, or the application “shall be deemed approved.” A denial comes back in writing with what is deficient and how to fix it, and a local rule other than a consistent ADU ordinance may not be the basis for a delay or a denial.
Size, Height and Setbacks: What a City Can Still Require
A city may still apply objective size, height and setback standards, checked without discretionary judgment, within the statute’s limits. Under section 66323, a detached, newly built ADU on a single-family lot may be held to side and rear setbacks of no more than four feet and to not more than 800 square feet of livable space.
Height has a floor the city must allow: under section 66321, 16 feet for a detached ADU, or 18 feet within one-half mile walking distance of a major transit stop or a high-quality transit corridor, plus up to two feet to match the roof pitch of the house. Sprinklers are not required in the ADU if they are not required in the house, and a rental must be for a term longer than 30 days. A larger unit may still be possible under your city’s own ordinance; that is a local path, not the state’s.
What Changes on January 1, 2027
Two 2026 bills change ADU counts and impact fees from January 1, 2027. AB 956 (Chapter 791, Statutes of 2026) and SB 1117 (Chapter 809, Statutes of 2026) were both signed September 29, 2026. Status and statute text checked October 15, 2026.
Two detached ADUs instead of one
Section 66323(a)(2) will cover “Two detached, new construction, accessory dwelling units” on a lot with a proposed or existing single-family dwelling, each within the same setback, size and height limits. Both must be new construction; a converted garage or an unpermitted unit is a different path. Once both are built, a city “is not required to ministerially approve” a junior ADU on the same lot. That is not a ban, so ask before you design.
Impact fees above 750 square feet
An ADU of 750 square feet of interior livable space or less, or a junior ADU of 500 square feet or less, carries no impact fee. Under SB 1117, on a lot with up to two ADUs, fees on a larger unit are charged in proportion to the house and “only on the area in excess of 750 square feet.” With more than two ADUs there is no deduction. Connection fees and capacity charges are separate. The bill has no transition language, so if your permit may cross January 1, 2027, ask your city in writing which fee rules will apply.
What an HOA Can and Cannot Do
Civil Code section 4751 makes void any HOA rule that “either effectively prohibits or unreasonably restricts the construction or use of an accessory dwelling unit or junior accessory dwelling unit” meeting state standards, while letting an association “impose reasonable restrictions.” From 2027 it covers a lot “zoned to allow single-family residential use.” Whether your association’s rules survive is a question for a real estate attorney.
Financing the Build
One way to pay for an ADU build is the equity in the house. A HELOC (home equity line of credit) is a revolving line of credit secured by the equity in your home: you draw what you need, repay, and draw again. A fixed second mortgage (also called a home equity loan or closed-end second) is a fixed-rate, fixed-payment second mortgage that delivers a one-time lump sum at closing. A renovation HELOC is a line sized in part on what the home is expected to be worth once the work is done, depending on the program. A cash-out refinance replaces the first mortgage, which matters most when its current rate is low.
Each route may qualify depending on credit, income, equity, property type and lender guidelines, and each is secured by your home; falling behind can lead to foreclosure.
Rent from the finished unit helps less than most owners expect. For loans sold to Fannie Mae, “Rental income is only allowed from one existing ADU,” on a one-unit principal residence, within a cap on its share of qualifying income, and “Only one ADU is permitted on the parcel” of a one-unit home. How a lot with two detached ADUs will be classified is worth settling with a lender before the second unit is built.
Before You Apply
- Confirm the lot’s zoning and ask which objective standards the city applies, including any 800 square foot cap.
- Ask whether a junior ADU will be allowed on the same lot, and in what order.
- Ask which fee rules apply if your permit crosses January 1, 2027.
- Ask a lender how the finished property would be classified before the design is final.
Which Financing Route Fits Which Owner
Read across from your situation: columns are the active programs on file, each with its credit floor. A cash-out refinance is described above; it replaces the first mortgage, so it is not a column here.
| Owner | HELOC | Renovation HELOC | Fixed second mortgage |
|---|---|---|---|
| Credit score from | varies by scoring model | 640 | 640 |
| Paying the builder in stages over several months | May fit: draw as the work progresses. | May fit | May not fit: one lump sum at closing. |
| Wants a fixed payment from day one | May not fit: rate and payment can change. | May not fit | May fit |
| Current equity alone does not cover the budget | May not fit | May fit: sized in part on the finished value. | May not fit |
| Has a low rate on the first mortgage and wants to keep it | May fit | May fit | May fit |
California ADU Law FAQ
Does a California city have to approve my ADU?
If the application meets the state standards and the city’s objective standards, state law requires ministerial review without a hearing. A city must decide on a completed application within 60 days when there is an existing house on the lot, or the application is deemed approved. Local rules outside a consistent ADU ordinance may not be the basis for a delay or a denial.
Can I build two detached ADUs on my lot in 2027?
From January 1, 2027, AB 956 brings two detached, newly built ADUs on a lot with a proposed or existing single-family home into the ministerial path, with setbacks of no more than four feet. The city may cap each unit at 800 square feet of livable space and apply the state height limits. Other local rules may still apply, so check with your city.
Do I pay impact fees on an ADU?
Not on an ADU of 750 square feet of interior livable space or less, or a junior ADU of 500 square feet or less. From January 1, 2027, on a lot with up to two ADUs, a larger unit is charged in proportion to the house and only on the area above 750 square feet. Connection fees and capacity charges are separate.
Price the Build Before the Drawings Are Final
Bring your current mortgage statement and a rough budget for the unit. We will set the equity and renovation routes side by side, against keeping your first mortgage as it is, and tell you plainly if the numbers argue for waiting.
Equity and renovation routes side by side.
Not sure what your home is worth? Check your California home value
