Could California Homeowners Soon Build Two Detached ADUs? What AB 956 Could Mean

California's backyard-housing boom may be about to take another significant step.

For years, accessory dwelling units—or ADUs—have become an increasingly important part of California's attempt to create more housing without requiring entirely new subdivisions.

Homeowners have converted garages.

They've built backyard cottages.

Families have created housing for parents and adult children.

Investors have added rental units.

And California lawmakers have repeatedly changed state law to make many ADUs easier to approve.

Now lawmakers are considering another expansion.

Assembly Bill 956 has passed the California Legislature and has been presented to Gov. Gavin Newsom.

If enacted, the legislation would expand the statewide ministerial approval pathway for qualifying single-family properties from one detached new-construction ADU to two detached new-construction ADUs.

That's a potentially significant change.

But before homeowners start drawing two cottages in the backyard, there's an important distinction:

As of September 14, 2026, AB 956 is not yet law.

Here's what homeowners should understand.

What Is an ADU?

An accessory dwelling unit is an independent residential unit located on the same property as another primary residence.

You've probably heard them called:

Backyard cottages.

Granny flats.

In-law units.

Casitas.

Garage apartments.

Secondary units.

The exact design can vary substantially, but an ADU generally contains the facilities necessary for independent living, including sleeping, cooking and sanitation.

For California, ADUs have become attractive because they allow additional housing to be created inside neighborhoods that already exist.

You don't necessarily need a new subdivision.

You don't need another street.

You may not need another parcel.

You're creating additional housing on land that's already residential.

What Would AB 956 Change?

Under the current statewide framework applicable to single-family lots, state law provides a ministerial pathway for one detached new-construction ADU, subject to applicable requirements.

AB 956 would change that number from one to two detached new-construction ADUs on a lot with an existing or proposed single-family dwelling.

The enrolled bill allows local agencies to impose specified limitations, including a floor-area limitation of no more than 800 square feet of livable space for a detached new-construction ADU under this pathway, along with applicable height rules. Side and rear setbacks under the provision are no more than four feet.

That doesn't mean every California backyard can suddenly accommodate two houses.

Lot configuration matters.

Building codes matter.

Fire and safety requirements matter.

Utilities matter.

Local implementation matters.

The specific property matters.

But the statewide entitlement could become substantially more flexible.

This Isn't Law Yet

This part is important enough to repeat.

AB 956 has passed the Legislature.

The Assembly concurred in the Senate amendments in late August, and the enrolled bill was presented to the governor on September 4.

But passing the Legislature and becoming law aren't the same thing.

As of this writing, the bill remains with the governor.

So if you're considering an ADU project today, you should work under current law unless and until the legislation is enacted and effective.

In other words:

Don't build based on a headline.

Verify the current rules for your specific property before spending substantial money.

Why Would Someone Want Two ADUs?

This is where the story becomes much bigger than housing policy.

Imagine a California homeowner with a large backyard.

The main house might be occupied by Mom and Dad.

One ADU could eventually house an aging parent.

The second could house an adult child.

That's three generations living on one property while maintaining separate living spaces.

Or perhaps one ADU is used for family and another becomes a rental.

Or both are rentals, subject to applicable laws and restrictions.

Or a homeowner eventually moves into one unit and uses the primary residence differently.

There are dozens of potential configurations.

That's why I don't think ADUs should be viewed exclusively as tiny investment properties.

They're increasingly becoming family infrastructure.

California Families Are Changing

The traditional American housing model was fairly simple.

Buy a starter house.

Have children.

Buy a larger house.

Children leave.

Parents eventually downsize.

But as we've discussed recently, that cycle doesn't work as neatly anymore.

Housing is expensive.

Childcare is expensive.

Older homeowners aren't necessarily downsizing.

Adult children may need longer to become financially independent.

Parents may eventually need care.

And California families are looking for ways to make incredibly valuable residential land work harder.

An ADU can potentially solve several of those problems simultaneously.

Two ADUs could expand those possibilities further.

Imagine the Multigenerational Possibilities

Suppose a couple owns a four-bedroom California house on a sufficiently large lot.

Their adult daughter and son-in-law are struggling with rent.

One detached ADU could potentially give them their own residence.

Years later, one of the homeowner's parents needs to live closer to family.

A second detached ADU could potentially provide another independent living arrangement if the property and law allow it.

Now you've created something very different from the traditional single-family house.

You have a small family compound.

Three independent residences.

One piece of land.

That's not right for everybody.

But given California's housing costs, I think we're going to see a lot more families thinking this way.

ADUs Can Also Create Rental Income

Of course, there's another obvious use.

Rental housing.

An ADU may potentially create additional rental income for a homeowner, subject to local rules and other restrictions.

That income can change the economics of owning the property.

But homeowners should be careful about assuming a specific rental amount or return before building.

Construction costs matter.

Financing costs matter.

Vacancy matters.

Insurance matters.

Property taxes may be affected.

Utility costs matter.

Maintenance matters.

And rental rules can vary.

An ADU can be an investment.

That doesn't mean every ADU is automatically a good investment.

Run the numbers first.

How Much Does an ADU Cost?

There isn't one useful statewide number.

A garage conversion and a detached 800-square-foot cottage are completely different construction projects.

Costs can include:

Design and architecture.

Engineering.

Permits.

Site preparation.

Foundation work.

Utility connections.

Electrical.

Plumbing.

HVAC.

Interior finishes.

Landscaping or access changes.

And the actual building.

Site-specific issues can materially change the budget.

That's why the first step shouldn't be asking:

“How much can I borrow?”

It should be determining what can actually be built and developing a realistic project budget.

Then financing becomes part of the conversation.

How Can You Finance an ADU?

There isn't one universal ADU loan.

The right financing strategy depends heavily on the homeowner and the project.

Some homeowners may use existing cash.

Others may consider a HELOC or home-equity loan if they have substantial equity and want to preserve an attractive existing first mortgage.

Some projects may fit renovation financing.

Larger projects may require construction financing.

A cash-out refinance could potentially make sense in certain circumstances, although homeowners with very low existing mortgage rates should carefully evaluate the cost of replacing their entire first mortgage.

The correct question isn't:

“What's the best ADU loan?”

It's:

“What's the least expensive and most appropriate way to finance this particular project without damaging the rest of my financial picture?”

That's a much better conversation.

Don't Automatically Refinance a 3% Mortgage

This deserves special attention in California.

Many homeowners who bought or refinanced several years ago still have extremely attractive first-mortgage rates.

Suppose someone owes $500,000 at approximately 3% but has substantial home equity.

They want $200,000 for an ADU.

Refinancing the entire existing mortgage into today's rate environment simply to access $200,000 may be expensive.

Depending on the circumstances, a HELOC, fixed home-equity loan or other financing structure could potentially preserve the low-rate first mortgage.

That doesn't mean a second mortgage is always better.

It means you should compare the total cost of the financing, not simply the rate attached to the new money.

Will an ADU Increase Your Home's Value?

Potentially.

But don't assume that spending $250,000 automatically increases your property's value by $250,000.

Real estate doesn't work that neatly.

Appraisers look at the market.

What are buyers paying for comparable properties with ADUs?

How common are ADUs in the neighborhood?

What's the quality of construction?

What's the unit's utility?

How does it affect the primary residence?

Does it have privacy and parking?

Value ultimately depends on what the market recognizes.

That said, an additional legal residential unit can obviously create meaningful utility for a property.

The exact value is property- and market-specific.

Could You Sell the ADUs Separately?

Don't assume so.

The ability to construct an ADU doesn't automatically mean you've created a separately saleable parcel or condominium.

Separate conveyance of ADUs involves its own legal and local requirements.

This is an area where California law has continued to evolve, and local implementation matters.

If your entire financial plan depends on eventually selling an ADU separately, get appropriate legal and local guidance before building it.

What About HOAs?

AB 956 also addresses restrictions involving common-interest developments and ADUs.

The enrolled legislation modifies provisions intended to prevent certain private restrictions from effectively prohibiting or unreasonably restricting qualifying ADUs.

But again, don't interpret that as:

“My HOA can never regulate anything about my ADU.”

Specific facts and applicable law matter.

Confirm the current rules before beginning a project.

ADUs Aren't Just a Los Angeles or Bay Area Story

ADUs can be relevant throughout California.

Orange County.

Los Angeles.

San Diego.

The Bay Area.

Sacramento.

Inland Empire.

Mountain and vacation communities.

The economics and construction challenges differ dramatically, but the basic problem is similar:

California has incredibly valuable residential land and an enormous housing shortage.

Allowing existing parcels to support additional homes is one way to increase supply without creating an entirely new community.

That's why ADU policy has become such a major part of California housing legislation.

The Backyard Is Becoming Part of California's Housing Supply

This may be the biggest conceptual change.

For generations, a backyard was recreational space.

Grass.

Pool.

Patio.

Swing set.

Maybe a shed.

Today, California policymakers increasingly look at that same backyard and see:

potential housing.

That may irritate some homeowners.

Others see an enormous opportunity.

But either way, it's a significant shift in how California thinks about residential land.

If AB 956 becomes law, that shift becomes even more pronounced.

One single-family parcel could potentially support the primary house plus two detached ADUs under the new pathway, assuming the property and project satisfy the applicable requirements.

That's no longer just a house with a granny flat.

That's potentially a small residential compound.

Should You Start Planning Now?

If you've already been considering an ADU, I don't think it's unreasonable to start investigating what's possible.

But investigating is different from assuming AB 956 is law.

You can evaluate:

Your lot.

Current zoning.

Utilities.

Access.

Potential ADU placement.

Construction budget.

Existing home equity.

Financing options.

Family needs.

Potential rental economics.

If the bill becomes law, you'll already understand the property.

If it doesn't, you've still done useful planning around the ADU options currently available.

The Bottom Line

California's housing shortage isn't going to be solved by one bill.

And ADUs aren't going to magically make California inexpensive.

But they're becoming an increasingly important part of how the state thinks about housing.

AB 956 would push that strategy further by requiring ministerial approval of up to two detached new-construction ADUs under the applicable single-family-lot pathway rather than one.

As of September 14, the bill is still awaiting action from the governor.

So don't treat this as a done deal.

But if you own a California home with a sizable backyard, this is absolutely worth watching.

Because the most valuable part of your property someday might not be the kitchen.

Or the primary bedroom.

Or even the house itself.

It might be the dirt sitting behind it.

FAQ

Can I build two detached ADUs in California right now?

Don't assume that. AB 956 would expand the statewide ministerial pathway to two detached new-construction ADUs on qualifying single-family lots, but as of September 14, 2026, the bill is awaiting gubernatorial action.

Has AB 956 passed the California Legislature?

Yes. It passed both chambers and was presented to the governor on September 4.

How large could the detached ADUs be?

Under the relevant AB 956 pathway, a local agency could impose a floor-area limitation of no more than 800 square feet of livable space on each detached new-construction ADU. Other applicable requirements still matter.

Can an ADU be rented?

Potentially, subject to applicable state and local laws and restrictions. Confirm the rules for the specific property and intended rental arrangement.

How can I finance an ADU?

Depending on the homeowner and project, options may include cash, HELOCs, home-equity loans, renovation financing, construction financing or potentially cash-out refinancing. The economics should be compared carefully.

Can You Build Two ADUs in California? What AB 956 Could Change

California AB 956 could allow qualifying single-family properties to add two detached ADUs. Here's what homeowners should know about the proposed change, costs and financing.