More on SB 9
california state law allows for small subdivisions
Did you know that a new CA state law allows for the subdivision of almost any single family zoned lot? Subdivisions used to be a big ordeal and something only an experienced developer would take on. The intent of this new law is to create more housing in a state where many people are priced out of the market. Think creatively about it.
If you are not a property owner and would like to be, but don’t have enough saved up to buy into the high cost housing market then join forces with another person. The purchasing power of two people is much greater than one. And before you find all the reasons why it won’t work ask yourself if you really think you are the only responsible, hardworking individual out there who has a similar dream of owning a house in your city. Together people can achieve dreams.
If you are already a property owner you might be interested in creating some personal equity by subdividing your property. Get a free guide to find out whether your property is eligible. I hope you found the guide I sent you useful. It has a lot of technical information in it, but it will allow you to determine if your property is eligible.
Build Housing on your Lot
The law also allows you to build up to 4 houses on the newly subdivided lots (2 on each lot). You might be wondering how this is possible. Even with an existing house on the lot there are a number of ways to cut the pie. There are many new smaller homes being built as the average household size is decreasing and we have an aging population. Many of the people I talk to in the design industry in CA are seeing the same trend of downsizing. You can divide up an existing house or add a smaller home with an ADU on the new lot and do nothing to the existing house. The new law allows for reduced setbacks on new construction so there are ways to get smaller homes in tighter spaces and they can be attached.
Now there was a lot of negative press about this bill when it was being considered so please be forewarned that if you conduct a Google search on the topic you will run into advocacy groups who have some misinterpretations of the law. For example, the law does not allow 6 units or 8 units, the maximum required to be allowed by a city is 4. Below is a graphic from the County of Santa Clara Planning Department explaining the potential buildouts.
There are some limitations such as restrictions on loss of affordable housing, limitations on a single individual being able to subdivide multiple lots in a row and a limit as to how much demolition can be done on a house that is currently a rental. Again, the law is all about creating housing that is affordable so there were some built in stop gaps for more loss of rental housing.
Sale or rent the Other Lot to Create income
So now that you may have had some time to think about whether or not SB9 makes sense for you the next question is how do I navigate the system and make a sale when I am done building out the project? One of the added values with SB9 is that you are not required to go through anything but staff level review, no public hearings, no additional big infrastructure asks…many of the things that used to make a subdivision impossible for the average homeowner have been removed. Of course, you do still have to go through an architectural design and permitting process. Even if you are doing just a lot subdivision and plan to sell the vacant lot it will required some administrative approvals and map recording. However, if you have someone helping you or at least a plan through you will be able to subdivide in far less time than it used to take.
There is a requirement that an owner must live on the lot for three years, but since you obviously cannot live on both lots this does not prevent you from selling the new lot and claiming ownership in the original space. Additionally, three years is not much time and one can still rent parts of your own home if you have a second home somewhere else that you purchased with the income from the sale of the new lot. If you purchased with someone else make sure that you and your partner are on the same page about income distribution and what you intend to do with the lots and houses after building.