Which SB 9 Option is Best for You? Part 1

Part 1: The Options

Senate Bill 9 is such exciting legislation because it has two powerful provisions: the lot split and the two-unit development. Many California homeowners recognize the new law’s potential—to build wealth, lessen our environmental impact, and help alleviate the housing crisis—and want to use it on their own properties. However, many are unsure about the best way to utilize SB 9.

In Part 1, we’ll discuss the different provisions of Senate Bill 9—as well as another popular property development option, ADUs—to help you understand them better. In Part 2, we’ll help you decide which option is the best fit for you, your goals, and your unique property.

SB 9 urban lot split

What is the SB 9 urban lot split provision?

The lot split provision allows owners of eligible properties to subdivide (or “split”) their parcel into two roughly equally sized lots, without a public hearing or discretionary review.

Only certain properties within urban single family residential zones are eligible. Eligibility requirements are addressed in greater detail in Part 2 of this article.

Lot requirements

There are a number of requirements for SB 9 urban lot splits, some of which are outlined in the text of the state law (and therefore applicable statewide), while others are specific to individual jurisdictions.

State law requirements Include:

• Split must be between 60/40 and 50/50
• Each resulting lot must be at least 1,200 square feet
• A lot can only be split once using SB 9
• The same property owner (or anyone acting in concert with the owner(s) may not split two or more adjacent lots

There are other limitations that cities can place. Some of these include:

• Each lot have street access, either via direct street frontage, a “flag” lot, or a recorded easement
• The newly created lot must have separate utility connections
• Each lot must be a certain width or shape (these restrictions may be deemed in violation of state law, as they often prevent lot splits on otherwise eligible parcels)
• A prohibition on splitting vacant lots

Occupancy requirements

There are a number of requirements that concern the past, current, and future inhabitants of the property. These include:

• Applicants must sign an affidavit agreeing to live on one of the two lots as their primary residence for a minimum of three years following the split
• The other lot (i.e. the one you’re not living on) can be sold, either vacant or developed
• You can use the second provision of SB 9—the two-unit-development—to build up to two residential units on the new lot. In some jurisdictions, you can build two primary units and up to two accessory dwelling units (ADUs). In others, you can build two units total (two primary units or one PU and one ADU); and certain cities don’t allow ADUs on split lots at all, so both units must be primary units.
• Current or former (within the last three years) rental units may not be demolished, and neither can rent controlled or stabilized units or officially recognized low income housing. You can still split the lot, but you may not demolish any rental units until they have been continuously vacant or fully owner-occupied for three years.
• SB 9 lot splits are not allowed on properties with a tenant eviction within the last fifteen years.

To learn more about your jurisdiction’s requirements for lot splits, visit our SB 9 City Guides.

SB 9 two-unit development

What is the SB 9 two-unit development provision?

SB 9’s two-unit development (or “duplex”) provision lets homeowners create a second primary unit on their property. This can be done by converting the existing single-family home into a duplex, building a house on the property, or (if the lot is vacant) building a duplex or two single-family homes.

Like the lot split provision, the two-unit development provision is applicable in urban single family residential zones only.

SB 9 building requirements

These will depend greatly on your jurisdiction, as cities are allowed to interpret the law in their own way to a certain extent. However, there are some guidelines they must follow:

• Side and rear setbacks as small as 4’ must be allowed
• No setbacks may be required for buildings built in the same location and to the same dimensions as an existing structure with nonconforming setbacks
• Cities must allow units to be at least 800 square feet
• No requirement or limitation placed by the city can prevent the building of two units of at least 800 square feet each

Some cities place size (square footage) and height limits on SB 9 units, while others allow SB 9 units the same standards as single-family homes in the zone. Cities may also impose requirements and limitations on design, landscaping, parking, fire safety, and utilities.

To learn more about your jurisdiction’s requirements for two-unit developments, visit our SB 9 City Guides.

Allowable units

Two primary units are allowed per lot. Accessory dwelling units (ADUs) and junior accessory dwelling units (JADUs) are also allowed, in accordance with local ADU law, for up to four units total on a property.

Some cities may choose to restrict ADUs on split lots, allowing a maximum of four units total across both lots (i.e. one original parcel of land).

Occupancy

Unlike the lot split provision, there is no owner-occupancy requirement for the two-unit provision, so you can use it on an investment property. However, some jurisdictions choose to impose an owner occupancy requirement for two-unit developments via local ordinance. Check our SB 9 City Guides or your local ordinance for clarification.

Units may be rented for a minimum of 30 days at a time. Some cities have income limits for SB 9 rental units, so refer to your city's SB 9 City Guides or local ordinance to learn if these limits apply in your area.

Most cities do not allow units on the same lot to be sold separately. Some cities do allow “separate conveyance”, as it’s called, provided you follow the necessary bureaucratic steps to convert the dwelling into a condominium first. Refer to your local SB 9 ordinance or City Planning Department to determine separate conveyance policy in your jurisdiction.

ADU

What is an ADU?

ADU stands for accessory dwelling unit, and it is not related to SB 9 (although some people choose to build ADUs along with SB 9 projects). Also called casitas, backyard cottages, and granny flats, ADUs are separate units that can be rented out to tenants or family. An ADU cannot be the only dwelling unit on a property, and they cannot be sold separately. All cities must allow ADUs in residential neighborhoods, but they can place their own restrictions and requirements on them, just like SB 9 units.

Some people find that an ADU meets their needs better than an SB 9 two-unit development. Since ADUs have been around longer, the permitting and construction financing processes are more established. This can make the process easier to navigate for property owners who don’t have a background in real estate development.

Homestead only works with homeowners pursuing SB 9. If you decide an ADU is a better fit for you, we recommend contacting our sister company, Otto ADU.

Conclusion

Now that we've covered the different SB 9 provisions (as well as ADUs), read Part 2 to learn how to determine which provision is ideal for your property.