Your ADU Is Built. Is It Ready to Rent?

The certificate of occupancy means the accessory dwelling unit (ADU) is legal to live in. It doesn't mean it's ready to rent. Three setup questions decide whether the first year runs smoothly or ends in small claims court.

Who pays the utilities when the ADU shares a meter?

Whoever the lease says pays, as long as the arrangement was disclosed. California Civil Code section 1940.9 applies whenever a tenant's gas or electric meter also serves anything outside their unit. You must tell the tenant before the tenancy starts, and either take the account into your own name or put the outside area on a separate meter. If you don't disclose, a court can order you to become the customer of record and to reimburse what the tenant paid for service they didn't use.

On an ADU lot, this comes up constantly. A detached ADU fed from the main house panel is the textbook example.

You have three practical options:

• Separate meters. This is the cleanest option and the most expensive up front.
• Owner holds the account and bills back. The lease states the allocation method in writing. I allocate by square footage rather than a flat fee, because it tracks the actual cost and holds up when a tenant questions it.
• Owner pays and builds it into the rent. This is simple, but you absorb the cost of a tenant's 75-degree thermostat in August.

Whatever you choose, put it in writing before move-in. Water raises its own billing questions, so state that method in the lease too.

Does the ADU need its own address?

It should have one before the first tenant moves in. Your city assigns the address number, and the department that handles it varies, so ask the building department before final inspection. The Postal Service then decides how mail is delivered and often requires a second mailbox next to the main one.

This matters more than it seems. Your lease, your notices, and any 3-day notice have to identify the unit exactly. "The back unit" won't do when you need to serve a notice.

Do I have to live on the property to rent a junior ADU?

Not anymore, if the junior accessory dwelling unit (JADU) has its own bathroom. Assembly Bill (AB) 1154 removed the owner-occupancy requirement for JADUs with a private bathroom as of January 1, 2026. If the JADU shares a bathroom with the main house, you still have to live on the property. A standard ADU has had no owner-occupancy requirement since AB 976 made that permanent.

One rule hasn't changed: neither unit can be rented for less than 30 days.

I'm a property manager, not an attorney. Have your lease and disclosures reviewed before your first ADU tenant signs.