A Regional Coalition for Housing

This section outlines a general process for creating an ADU. Whether or not you will need all of the steps outlined depends on the scope of your project and the city or county area you live in. Also, please note that while the steps are presented in an order that may be useful to you, you may need to adjust the order of the steps to make it fit your particular situation.  Being able to visualize the relationship of the steps on this flow chart may be helpful to you.

There are three basic stages:
Pre-Construction/Permitting
Construction Management
After Construction

There are twelve sections within these stages: 1) Arrange Pre-Loan Approval For Your ADU; 2) Develop A Design For Your ADU; 3) Apply For Approval From Your City; 4) Select An Architect; 5) Select A Contractor; 6) Get A Bid From Your Contractor; 7) Arrange Financing; 8) Prepare A Construction Contract For Your Project; 9) Construction Management; 10) Loan; 11) Record The City's Covenant Agreement; 12) Ready To Use.

What If My ADU Already Exists?
If you have an existing ADU that is not currently registered, you may find that some of these steps may not apply to you as you go through the process of obtaining city approval and getting your ADU registered. For example, you may only find that you need to prepare a design and apply for ADU and/or building permit approval. If your ADU already conforms to the required codes and regulations, you would not have any construction work to do. Be sure to read the 'Getting Approval for an Unregistered ADU' pages for more information.

What If I Have Only Minor Work To Complete My ADU?
There are types of work that you may do that does not require a building permit. Generally, these are the finish and cosmetic items associated with construction. For example, you may hang cabinets, install countertops, lay carpet, paint, or install wallpaper without a permit. You will want to check with your city about other types of work to see if a permit is required.

Pre-Construction/Permitting

1) Arrange Pre-Loan Approval For Your ADU
If you need to borrow money for your ADU project, you will want to consider whether you need pre-loan approval. (See the 'Lending Assistance' pages for more information.)

2) Develop A Design For Your ADU
Remember, you have options for the preparation of your design. You can prepare the design yourself; have a contractor prepare the design; or have an architect prepare the design (see the 'Architect Services' pages for more information).

Decide Whether You Need Help In Designing Your ADU
Your first step is to decide who will develop your design. If you are planning to do it yourself, you will need to talk to your building officials in the area you live in to see what is required, and then decide if you have the understanding, skills, and time available to do the design. If you are planning to have a contractor design your ADU, you will want to write in a provision about this in your contract. If you are planning on using an architect for assistance, you will need a separate contract for architectural services (separate from you contract with the contractor). For a 'form' agreement, which you can modify depending on the services you want, see the 'Contractor Services' or 'Architect Services' pages for information on where to get the form you will need.

Check On ADU Requirements
If you are planning to do the design yourself, make sure you first check with you local officials to see if they have any mandatory requirements that apply to your ADU design (See the 'zoning information' pages and the application materials for your city included in this packet). For example, at least one city does not allow detached ADUs at this time. The minimum and maximum size of ADUs allowed can vary from city to city. And, at least one city counts the square footage of a deck attached to your ADU as part of the maximum square footage in your ADU. There are a number of other areas where the regulations can be different from city to city. Know what you can and cannot do before you start designing your ADU. If you are using a contractor or architect to do the design, they will do this step.

Benefits Of Starting With A Design
Beginning your process with an ADU design will help you on several levels.

• First you will get a chance to look at the proposed living space and think about what it would be like to live there from your tenants point of view (for example, is there enough storage and outlets).
  
• You will need a design to apply for an ADU permit.
  
• You will need a design when you get a bid from your contractor (although having your contractor prepare your design is one of your options).
• A design may help you when you arrange pre-loan approval with your lender.

3) Apply For Approval From Your City
There are two parts of the permitting process for an ADU:

Part 1 - Apply to get approval that your ADU meets basic zoning requirements (such as, size, location, and parking).

Part 2 - Apply to get the building permit for any construction work necessary for your ADU. There may be other permits you will need as well (such as electrical).

Some cities require you to apply for ADU (zoning/land use) approval before you are authorized to apply for a building permit. In some cities, zoning approval may be processed at the same time as the building permit application, or, depending on where you live, you may just apply for a building permit. Check the application materials in this packet to see what is required where you live.

A. Steps For Zoning Approval
If zoning approval in your area is required, there may be separate zoning application forms. Some of the more common requirements for zoning review are as follows:

Site Plan
You will need a site plan, which shows the outline and dimensions of your property, footprint and dimensions of existing buildings and proposed construction, and location and dimensions of off-street parking areas. Different cities have somewhat different requirements for the site plan, so they may require additional information. If you are planning to draw up your own plan, be sure to check with your city about the requirements. Design Elements
Your city may require that one or more 'exterior' design features of your ADU be reviewed separately by city staff or a city design review group called a design review process, and may involve requirements for your ADUs front door location, design of exterior materials, colors, or other matter. If this step is required in your city, the zoning/land use approval is for the sighting of your ADU and its design elements. This is not the same thing as building permit approval. Building permit approval is an authorization to proceed with actual construction.

Surrounding Property Owners
You may need to provide a list of property owners within 300 ft. (or some other distance) from your property. The list would be used by some cities to notify other neighborhood property owners either of your intent to obtain ADU approval, or that ADU approval has been granted to you. The city application will tell you how you can get this information.

B. Steps For Building Permit Approval
If you are using an architect or contractor, decide if you want either of them to do this step for you, and if so, write this provision into your agreement with them. If you are planning to get the permit(s), then start with the building permit from your city or county, and ask your building officials if additional permit(s) will needed for your design. Until recently, electrical permits were issued only by the state department of labor and industries. Currently, some cities now issue the electrical permits and use their own inspectors for the electrical inspections. If your jurisdiction does not issue electrical permits, you will still need to get the electrical permit and inspections from the state department of labor and industries. Check with your local building officials about where you will need to go for electrical permits, and where to call for inspections, in the area where you live.

Permit Review
When your local building department reviews your design, they will check to see if any changes are required.

Final Design
When the city or county approves your design, with or without changes, it becomes your 'final' design. This final design is what will be used for construction. If the city or county made any changes to the design you submitted for review and approval, you will want to check with your contractor and lender to see if anything is affected by the differences:

• Check with your contractor to see if the bid will need to be modified to accommodate the changes. If so, prepare a change order for the construction contract.
• If the bid does need to be changed, check to see if you need additional loan approval from your lender.
• Make sure your construction contract refers to the final design, rather than any preliminary or earlier version of your design. If it does not, prepare a change order for the contract.

Changes To Final Design
If you want to make changes in the design after the city approves a final design:

• Check with the city to see if you need additional city review and approval of these design changes. Additional review may or may not result in project delay.
• Check with your architect to see if there would be any design issues that may need to be resolved.
• Check with your contractor to see if changes to your project bid need to be made. If so, obtain a new or revised bid.
• Check with your private and/or public lender to see if you need additional loan approval, or revised paperwork of some nature. If so, complete the required paperwork.
• Make sure your construction contract refers any revised final design, rather than an earlier design. If not, prepare a change order to the construction contract.

4) Select An Architect
If you have an existing (but unregistered) ADU, or for projects in an area of the house which is already mostly finished, you may or may not need the services of an architect. If you do not, skip this step. If you believe you do, see the 'Architect Services' pages for more information about finding and selecting an architect.

5) Select A Contractor
If you have an existing (but unregistered) ADU, or for projects in an area of the house which is already mostly finished, you may or may not need the services of a contractor. If you do not, skip this step. If you believe you might, see the 'Contractor Services' pages for more information about finding and selecting a contractor.

6) Get A Bid From Your Contractor
(NOTE: This step could be made a part of the process of selecting your contractor.) Get a bid from the contractor you select (or from each contractor you a thinking about, if you are doing this step as part of the process of selecting a contractor). Each bid should be in writing, and have the contractor's business name and address on it. The more detailed each bid is the better. Make sure each bid includes sales and other taxes that apply. If other costs, such as permits are not part of the bid, it should clearly indicate this. For related information, see the 'Contractor Services' pages.

7) Arrange Financing
If you need to arrange financing for your project, please keep in mind that you may want to go in for pre-loan approval before you apply for your loan. See the 'Lending Assistance' pages for more information.

Pre-Loan Approval From Your Lender
The primary purpose of the pre-loan approval is to do a check, early in the process, to see if your credit rating meets the lender's standards for a loan, and to find out much of a loan amount you can get. Take your design and your bid(s) with you.

8) Prepare A Construction Contract For Your Project
You have options about who prepares your construction contract and what it should contain. See the 'Contractor Services' pages for more information.

Construction Management

9) Construction Management
Make sure all the necessary permits are posted on the property. The permits authorize the construction work. You might also want to make photocopies of all permits, and keep these in a file with a copy of your construction contract. While the construction is underway, someone will need to manage the construction project:

If you are using an architect to manage your construction project, make sure your architect services contract specifies what services you expect the architect to perform. See the 'Architect Services' pages for where to get a 'form' services contract that you can modify for an agreement that best suites the services needs you have.

If you are using a contractor to manage your construction project, make sure your contractor services or construction contract specifies what services you expect the contractor to perform. See the 'Contractor Services' pages for where to get a 'form' services contract that you can modify for an agreement that best suites the services needs you have.

If you are managing the construction, it will be your responsibility for making sure the following items get accomplished:

• Contractor Retainer
  Your contractor may require a specified dollar amount or percentage of the value of your project be paid at the front end in order to start the project. If so, make sure the amount or percentage is written into your contract.
  
  
• Paying Invoices
  When you pay invoices, ask your contractor for the lien releases which cover them (this is your guarantee that those workers or material suppliers have been paid). If materials paid for from the invoices have warranties or guarantees, ask you contractor for these as you go. Make sure that all the labor and materials being billed for have actually been used on your project. If there is some doubt about this, ask for an explanation from your contractor. If there is still doubt and you and your contractor do not agree about whether an invoice or portion of an invoice is valid on you project, and you have a dispute resolution procedure in your contract, this would be where you use it. If you do not have this kind of procedure written into your contract, then you will need to seek advice from your legal counsel.
  
  
• City Or Permit Inspections
  You or your contractor will call for the appropriate permit inspections as work progresses, depending on how this duty is specified in your construction contract. Typically, when the inspectors arrive, they will inspect the work and initial or leave some other evidence of approval on or next to the permit posted on the job. If the inspection does not pass approval, they will also indicate that as well.

Change Orders
If you make changes to your project, make all your changes in writing. If you don't have written change orders, there can be misunderstanding between you and your contractor about what changes were authorized or what the details of the proposed changes were. If a change order will modify your final design, you will need to contact your local building department to see if any additional review is required. If you are unsure, call your building official anyway. If a change order increases your budget, and you need additional funds from your lender, be sure to get approval from your lender before signing the change order.

Construction Close-Out
Make sure all the bills are paid, that you have received lien releases for the full cost of the project (for all labor and all materials). Remember, the lien releases give you the proper assurances that people and businesses who supply labor or materials to your project have been paid and won't come back later with a lien for payment against your property. Check to see that you have received all guarantees and warranties for materials and labor, that all inspections have been made and there is documentation of their approvals, and that your city or county has completed all the final inspections for the ADU.

Final City Inspection
It is a common practice now to not issue certificates of occupancy for ADUs when they are completed. Instead, your list of completed inspections constitutes final inspection approval by the city. Be sure to ask your city if this is their practice as well.

Punchlist
As a final step, you will want to walk through the completed ADU with your contractor, to go over your 'punch-list' of items that need corrections. NOTE: before you schedule your walk through with the contractor you should make a careful walk through of your ADU after construction. Make sure all the electrical switches, outlets, fixtures and appliances work. Make sure all the plumbing fixtures, toilets and disposals (if applicable) work and that plumbing leaks are not evident. Check all interior and exterior doors for fit and proper operation. Also make sure door-stops are provided. Check all cabinet doors and drawers for smooth operation. Try to notice if there is any damage to anything or if there is any evidence of construction or installation that appears substandard to you, or if there are materials or appliances that do not meet the specifications in your plans. Make a careful list of everything you do not believe is satisfactory to you. This will be your 'punch-list' of items that you will discuss with the contractor on the day of the walk-through.

Disputes
Some people choose to have an arbitrator/mediator resolve disputes. If you do not have this type of provision in your construction contract, and you and the contractor cannot settle your differences, you may have to go to court to for a resolution.

Retention
It is suggested that you negotiate with your contractor to include a certain amount of retention in your contract, that will be withheld from the contractor final payment, until all the contractor's obligations have been satisfied. A typical provision might be to withhold 10% (but could be another percentage amount) of the funds until everything is completed. Once you have all the lien releases, warranties and guarantees, completed inspections, completed punch-list items, and any disputed items are resolved, this would be the time when the project was considered complete and you would normally release the retention amount to the contractor.

After Construction

10) Loan
Check with your lender to see if you need any additional paperwork for your loan(s). For example, you may need evidence that your ADU has received final inspection approval from your local building department.

11) Record The City's Covenant Agreement
The purpose of the covenant agreement is to certify you are the owner of the property, that you acknowledge there is an ADU on the property, and that you will comply with the city or public requirements (e.g. owner occupancy) for having an ADU. Most cities require some form of recorded covenant agreement. You will need to record the agreement in order to complete the ADU process. Having a recorded covenant also provides you the benefit that, in the future, you have evidence to show lenders (e.g. if you want to refinance or take out equity in your home) or homebuyers (e.g. when you choose to sell your home) that you have a legal ADU.

12) Ready To Use
At this point, your ADU should be complete and ready to occupy. If you are planning to rent-out your ADU, check the 'Renting Out An ADU' pages in this Homeowner's Packet. It will give you some good information and valuable tips.