The NEW way to own with AB 1033

5 min readJan 23, 2024


New ways to own with approved conventional lending for TICs, ADUs and all the tiny home movements!

ADUs, tiny homes and TICs are some of the types of properties that will benefit from AB 1033

Los Angeles is taking significant strides to enhance opportunities for homeownership throughout our cherished city. With the recent passage of the AB 1033 law, a collaborative effort between lenders and developers is underway to establish a dynamic marketplace tailored to facilitate homeownership, particularly for entry-level buyers who may have faced affordability challenges in recent years.

This development marks a pivotal moment for all stakeholders. The era of challenging fractional lending for Tenancy in Common (TIC) arrangements is coming to an end, making way for conventional lending options in the evolving landscape of communities embracing creative living. Beyond the positive impact on TICs, families now have the exciting prospect of selling their guest houses and/or Accessory Dwelling Units (ADUs) to family members. What’s even more promising is the availability of distinct lending options that align with their individual lifestyles and family plans.

This transformative shift opens up new avenues for aspiring homeowners and fosters a sense of optimism as Los Angeles embraces a more inclusive and accessible approach to homeownership.

Now families who own homes can build and ADU in the back and sell the separate home to their own family with its own deed and financing.

Here’s how the new rules will work in participating cities:

In the process of constructing Accessory Dwelling Units (ADUs), homeowners are required to inform local utilities — covering water, sewer, gas, and electricity — about the establishment and separate conveyance of these units. Additionally, each property undertaking this development must establish a homeowners association, which will assess dues to cover the maintenance expenses of shared spaces such as driveways, pools, or common roofs, ensuring the overall well-being of the property’s exterior.

Similar to the structure of condominiums, both the main dwelling and the ADU will be subject to distinct property taxes. Much like Tenancy in Common (TIC) arrangements today, the creation of these units necessitates a specialized legal community agreement and memorandum. TICs currently rely on a TICA (TIC Agreement), expertly crafted by our TIC Guru and lawyer, Andy Sirkin, as a guiding document similar to the CC&Rs of a TIC community.

TICAs are signed by all community owners, establishing rules, regulations, operational procedures, and voting mechanisms for future decisions. Furthermore, a comprehensive diagram delineating exclusive owner areas and shared common spaces is integral. This visual representation, signed and connected with the TICA, is crucial for clarity and consensus, protecting all community members through the conveyance of exclusive access and rights.

It’s noteworthy that the AB 1033 communities will follow a similar documentation process. Presently, communities with four or fewer units do not require Department of Real Estate (DRE) approval of the TICA and agreements. However, communities with five or more units are subject to DRE approval at this time. This regulatory framework ensures transparency, accountability, and legal adherence within these evolving community developments.

TIC and AB 1033 communities will help many achieve the dream of home ownership

In essence, this marks a transformative moment for developers, lenders, and prospective homeowners alike — a true game-changer. It is poised to open up new and diverse avenues, making the dream of home ownership in Los Angeles more attainable through innovative and creative means. We eagerly anticipate collaborating with developers, sellers, and buyers to turn these dreams into reality, fostering the growth of joyful communities where individuals can establish homesteads they take pride in. The future holds exciting possibilities as we collectively contribute to the realization of these aspirations.

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Lauren Biedenharn Is your perfect partner when finding your new home and lifestyle. With a background In the arts and technology, she has a unique touch In her service to find and achieve your next real estate milestone. She has been a pioneer In new types of ownership from TICs, to tokenized ownership and blockchain technology.

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