Many owners build an ADU to rent it. Once you rent it, you are a landlord, and tenant law applies. This guide covers the basics and where to look next.
LA ADU Guide is an information site. We are not attorneys and this is not legal advice. Landlord and tenant law is detailed and changes often. Talk to a housing attorney or the city housing department about your case.
State ADU law: renting is allowed
Gov. Code 66314(d)(1) says "the accessory dwelling unit may be rented separate from the primary residence," subject to Article 4 of the same chapter (starting at Section 66340). Short-term rentals are a separate topic. See ADU short-term rental rules in LA.
Whether you must live on the property is another question. See ADU owner-occupancy rules.
The statewide rent cap (AB 1482)
California's Tenant Protection Act is in Civil Code 1947.12. In plain terms:
- The yearly rent increase is capped at "5 percent plus the percentage change in the cost of living, or 10 percent, whichever is lower."
- Rent may not be raised more than twice in 12 months for the same tenant.
The cap does not cover every unit. Some of the exemptions listed in section 1947.12(d) matter for ADU owners.
| Exemption | What the statute says | What it may mean for an ADU |
|---|---|---|
| New housing, (d)(4) | Housing with a certificate of occupancy "within the previous 15 years," other than a mobilehome | A new ADU may be exempt from the cap for a time. The 15 years run from its certificate of occupancy. |
| Separately alienable, (d)(5) | Residential property that can be sold separately from other units, with conditions on the owner type and a written notice to the tenant | May apply if the ADU is legally sellable on its own. Not automatic. |
| Owner-occupied two units, (d)(6) | Applies only if "neither unit is an accessory dwelling unit or a junior accessory dwelling unit" | An ADU and a main house on one lot does not qualify for this one. |
These are summaries. Read the full section and the notice requirements. The just cause eviction rules in the same law have their own exemptions and notice rules. Confirm before you act.
Local rules in Los Angeles
The City of Los Angeles has a Rent Stabilization Ordinance and its own eviction rules. Whether they cover an ADU depends on facts such as the date the building was built. We did not verify these for ADUs, so ask the LA Housing Department. Other cities and unincorporated LA County have their own rules. Look up the city where your lot sits.
Practical checklist for a landlord
- [ ] Confirm the unit has a final inspection and certificate of occupancy
- [ ] Check which rent cap and eviction rules apply, and write down why
- [ ] Use a written lease with the rent, term, deposit and house rules
- [ ] Give any legally required notices, including exemption notices
- [ ] Keep records of rent, repairs and expenses
- [ ] Check your insurance for rental use
- [ ] Review the unit for habitability: smoke and carbon monoxide alarms, heating, plumbing, safe entry
- [ ] Plan for taxes on rent. See ADU rental income and property tax
Things that can go wrong
- Assuming the unit is exempt. If you are wrong, you may have raised rent more than the law allows.
- Verbal deals. Put terms in writing.
- Missing notices. Several exemptions depend on written notice to the tenant.
- HOA or deed limits. These can limit rental even if state law allows it. See ADU HOA rules in California.
- Lender terms. Some loans have rules about rental use.
Taxes on the rent
The IRS says "in most cases, you must include in your gross income all amounts you receive as rent." Our rental income guide covers the basics.
Common questions
Can I rent the ADU and the main house at the same time? State law says the ADU may be rented separate from the primary residence. Owner-occupancy rules vary by when the ADU permit was issued. See ADU owner-occupancy rules.
Do I have to use a written lease? It is the safest way to record the terms. Many notices and disclosures are also required in writing. Ask a housing attorney which apply.
Who pays utilities? That is a lease term. If the ADU has no separate meter, decide in writing how the bill is split. See impact fees and utility connections.
Can I rent to family? Yes in general, but the same safety and permit rules apply, and tax treatment may differ.
What if a tenant stops paying? Do not change locks or shut off utilities. Eviction in California follows strict court procedures. Get legal advice first.
What to remember
- State law allows an ADU to be rented separately from the main home.
- A new ADU may be exempt from the AB 1482 cap for 15 years, but check the exact exemption and notice rules.
- City rules may add more. Ask the housing department where your ADU sits.
See the ADU financing hub for related guides.
Sources
- California Gov. Code 66314 (ADU rental language)
- California Civil Code 1947.12 (statewide rent cap and exemptions)
- California HCD: Accessory Dwelling Units (ADU Handbook, updated March 2026)
- IRS Publication 527, Residential Rental Property (2025 returns)
- LA Housing Department: Rent Stabilization Ordinance