New Guidelines Make Way for Granny Flats

Have you ever thought about adding a “granny flat” to your property? Perhaps you’ve got a parent who could live there and you could look after them while still giving the parent their own, private living quarters? But you probably didn’t get very far when you found out that getting permits to build such a structure was nearly impossible? That’s all changed as of this year and now, thanks to Assembly Bill 2299, you can.

As you might expect there are several guidelines that must be followed in order to receive the building permit but once they’re understood it’s really not any more difficult than building any residential property from the ground up.

So why now? Why the change of heart?

According to the sponsor of AB 2299, the California Apartment Association, “California is struggling to meet the needs of its citizens when it comes to housing, especially housing that is affordable near job centers and public transportation. By promoting the developments of second units, AB 2299 will help alleviate our housing shortage, while capitalizing on limited resources. While second units can serve as much needed rental housing, they can also provide homes for college students, elderly parents, or individuals with disabilities, who need to live close to their families or teachers who can provide them support. By providing for the efficient approval of second units, you will bring units to the housing market sooner and will make them more affordable.”

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The legal definition of a so-called granny flat is under the umbrella of an “accessory dwelling unit,” or ADU. An ADU is an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated.” Remember we’re looking at legislative-speak here so it can be a bit confusing. Essentially, if the structure is built to code and someone can live there independently with utilities, heat and air, living and sleeping areas, sanitation and can cook and clean and it’s on the same lot as the existing home, it’s an ADU.

AB 2299 Requirements

There are several requirements the new property must meet and it’s probably best to work with a contractor with previous experience building such units and knows how to build per specification instead of finding out what need to be built and how on the job.

Some of the AB 2299 requirements are:

• The separate unit cannot be sold separately from the existing home
• Zoning is for residential single or multi-family properties
• The separate unit must be located on the same legal lot as the existing home
• The unit cannot be more than 50% larger in square footage as the existing home
• Square footage cannot exceed 1,200 feet
• There can be no more than one new parking space per new bedroom. Tandem parking is okay
• No local ordinance can be more stringent than the ones set forth in AB 2299


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Granny Flats Construction Process

For those who intend to finance the new construction, plans and specifications will need to be drawn up and blueprints provided. The contractor will make a detailed list of the construction process and itemize the amounts for each separate building phase. The owners will then present the plans and specs to their bank or mortgage company that will oversee the distribution of funds and the overall process. The bank won’t provide a lump sum payment to the contractor but will distribute the amounts needed as the project progresses. If the contractor is not on the bank’s approved contractor list, the contractor will go through the approval process or the owners can select a contractor from a list of approved contractors.

The contractor begins the process and as each phase is completed the contractor requests additional funds to continue the project directly from the bank. The bank then sends an inspector at each interval to confirm the phase has in fact been completed. Once the project has finished, one final inspection is made and a completion certificate is issued. The contractor should also assist with proper permits and zoning issues.

Another perhaps less expensive way to finance construction of your granny flat is with a home equity line of credit, or a HELOC, taken out on the primary residence. A HELOC can be used as funds are needed to complete construction and only the amounts drawn from a HELOC accrue interest. Once the project has been completed the HELOC can be paid back down to zero and used again in the future for other purposes. In addition to a HELOC a second mortgage on the primary residence. A straight second mortgage will be issued in one lump sum into the owner’s bank account and interest will accrue immediately as the funds are disbursed.


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Chad Baker is Regional Manager for RPM Mortgage. Chad is consistently recognized in the top 1% of mortgage originators in the United States 2011-2016.
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