AB 1154 & SB 543: What California’s New ADU Laws Mean | SBKN Engineering

California's housing crisis has fueled decades of innovation in state and local law, pushing jurisdictions to ease restrictions on dense and accessory housing types. Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs) have become central tools in the toolbox for adding housing supply incrementally.

But today’s ADU environment is also plagued by regulatory confusion, patchwork rules, and unexpected compliance costs (e.g. sprinkler retrofits, restrictive owner-occupancy mandates). That makes life hard for homeowners, designers, permitting professionals, and engineers alike.

Enter AB 1154 and SB 543 — two new California laws that aim to clean up, clarify, and expand the ADU/JADU regime. Both have been passed by the Legislature and signed (or soon to be) by the Governor. These changes affect everything from owner-occupancy to permitting timelines to impact fees and fire protection triggers.

In this post, we’ll:

• Walk through the main provisions of AB 1154 and SB 543

• Explain how local jurisdictions are required to adjust

• Dive into practical implications for engineers, designers, and builders

• Identify risks, compliance pitfalls, and best practices

• Show how SBKN Engineering is positioning itself to support clients in this new environment

• Invite you to take the next step via our intake form

Background: Why These Laws Matter

Before delving into details, let's quickly recap what ADUs and JADUs are — and why they matter for California’s housing goals.

• ADU (Accessory Dwelling Unit): A secondary dwelling unit on the same lot as a primary residence. It may be attached, detached, or even carved within existing structures. It must provide complete independent living facilities (kitchen, bathroom, sleeping, etc.). Los Angeles Housing Department+1

• JADU (Junior Accessory Dwelling Unit): A subtype of ADU, typically smaller (at or under 500 sq ft of livable space) and constructed within the footprint of the existing home (e.g. converted bedroom, garage) with an efficiency kitchen. It may share sanitation (bathroom) or have its own. LegiScan+2Bill Texts+2

ADUs and JADUs are attractive because:

• They allow relatively low-cost infill housing on existing parcels (no new land acquisition). California Housing Department

• They provide revenue potential (rental income) for homeowners. California Housing Department+1

• They can support multigenerational living or “granny flats” while preserving lot-scale privacy. California Housing Department

• Over the years, California has passed many incremental ADU reforms to reduce barriers (e.g. parking waivers, ministerial review, limits on discretionary design controls). California State Assembly+2Bill Texts+2

Nevertheless, gaps remain: local jurisdictions often adopt stricter rules than state law, local reviews drag, definitions differ, sprinklers are triggered unexpectedly, owner-occupancy rules constrain investor use, and short-term rentals create ambiguity.

AB 1154 and SB 543 aim to address many of these pain points.

Key Provisions of AB 1154 (Carrillo)

AB 1154 makes targeted changes specifically around Junior ADUs and some ADU provisions, with the goal of achieving more consistency and removing constraints. Bill Texts+5California State Assembly+5alcl.assembly.ca.gov+5

Here are the major changes and what they mean:

How Localities Must Adapt

These new laws don’t just exist in a vacuum — they require local jurisdictions (cities, counties) to update their municipal codes, planning handbooks, and permit processes. Here’s how:

1. Amend Local ADU / JADU Ordinances
   Jurisdictions must revise their zoning/ordinance language to align with the updated definitions (interior livable space, JADU ≤500 sq ft) and ensure they don’t impose conflicting standards. Under SB 543, local JADU ordinance submissions will be reviewed by HCD. PolicyEngage+3LegiScan+3PolicyEngage+3

2. Update Permit Application / Checklist Forms
   Local planning departments will need to incorporate the 15-day completeness review clock, provide standardized “what’s missing” checklists, and implement new permit submittal policies that avoid discretionary review when criteria are met. PolicyEngage+2PolicyEngage+2

3. Revise Fee & Impact Charging Schedules
   Existing fee schedules must be adjusted so that ADUs ≤750 sq ft and JADUs ≤500 sq ft are exempt from certain impact or capacity fees. For larger units, fee structures need to be proportional. Bill Texts+2PolicyEngage+2

4. Clarify Fire and Safety Standards
   Municipal fire and building code divisions must interpret and update fire retrofit policies so that adding an ADU or JADU does not trigger sprinkler retrofits when not otherwise required. PolicyEngage+2LegiScan+2

5. Train Staff & Update Workflows
   Planning, building, fire, and engineering review teams must be trained in the new timelines, non-discretionary rules, and completeness protocols.

6. Enforce Compliance & Respond to HCD Feedback
   Local agencies should expect oversight from HCD. If their JADU ordinances or processes conflict with state law, they may need to revise. California YIMBY+3LegiScan+3PolicyEngage+3

Some local governments are already actively reforming their ADU programs in anticipation. For example:

• The City of San Diego adopted a package of reforms to align more with state ADU laws (including updates to parking, fire safety, and infrastructure) in mid-2025. Inside San Diego

• Many counties (e.g. Sonoma) maintain online resources differentiating ADU vs JADU regulations, including prohibiting JADUs from being used as short-term rentals. Permit Sonoma

The takeaway: local governments will be under pressure to move quickly. Homeowners, developers, and engineers should stay ahead of local ordinance updates.

Practical Implications for SBKN Engineering Projects

As an engineering firm deeply involved in structural, civil, MEP, and permit coordination work — here’s how AB 1154 and SB 543 shift the playing field, plus tips on how SBKN should adapt to help clients succeed.

1. Increased Use of JADUs by Investors

With AB 1154 removing owner-occupancy for JADUs that have separate bathroom facilities, more investors and landlords may want to incorporate JADUs into their property portfolios. This means:

• More demand for JADU feasibility studies, structural analysis, plumbing/electrical routing, and permit drawings.

• We should position SBKN as an expert in converting interior space or garages into JADUs under the new rules.

• Clients may want dual units (main + JADU) with separate meters, ingress/egress, etc. We need to streamline that design.

2. Stricter Compliance Checks by Local Agencies

Because SB 543 imposes tighter timelines (e.g., 15-day completeness review) and forbids discretionary delays in many cases, there’s less tolerance for sloppy or incomplete submittals.

• SBKN must ensure complete, high-quality permit packages from day one (site plans, structural, MEP, code compliance, fire, etc.).

• Our internal QA/QC should be robust to catch missing items before submission.

• Maintain checklists aligned with updated state law requirements.

3. Lowered Fee Burden on Smaller Units

Because small ADUs and JADUs are often exempt from impact fees, project financial projections become more favorable. That means:

• More smaller ADU/JADU projects may become financially viable.

• SBKN can emphasize in proposals that we will manage fee waivers or exemptions (i.e., “we’ll certify your project qualifies for fee exemption up to 750 sq ft / 500 sq ft”)

• In bid and cost estimates, we can count less contingency for unexpected local charges (with appropriate caveats).

4. Avoiding Surprise Retrofit Costs (Sprinklers & Beyond)

One risk, historically, was local building or fire code staff interpreting that adding an ADU triggers the requirement to retrofit sprinklers or other upgrades in the main building. Now:

• SB 543 states clearly that ADU or JADU construction does not require retrofitting sprinklers in existing multifamily dwellings (if not already required). PolicyEngage+2LegiScan+2

• SBKN should proactively cite this in permit docs or cover letters to avoid local pushback or overreach.

• Even so, we should still verify local fire code interpretations (some jurisdictions may try to resist).

5. Faster Permitting Timeline Expectations

With state-mandated timelines and reduced discretionary control, clients can expect:

• Shorter review cycles (initial completeness check within 15 days)

• Potentially fewer design iteration cycles due to reduced discretionary requests

• More predictable scheduling for construction start

That said, local agencies may struggle to adjust and initially be slow, but over time the reforms should speed up the process.

6. How SBKN Engineering Can Help You Navigate These Changes

These new ADU and JADU laws open the door for more affordable, flexible housing — but understanding how they apply to your specific property can still be tricky. That’s where SBKN Engineering comes in.

Our team stays ahead of every state and local code change so you don’t have to.

We handle everything from feasibility studies and design plans to permit coordination — ensuring your project meets the latest state standards and avoids costly delays.

Whether you’re converting existing space or planning a new detached unit, SBKN can help you take advantage of these new opportunities the right way — efficiently, legally, and strategically.

7. Risk Management & Compliance Diligence

Even though state law now reduces room for local overreach, risks remain:

• Some local amendments or interpretations might improperly conflict with state law

• Local staff training may lag, producing inconsistent decisions

• Appeals or legal challenges may arise

• Projects may inadvertently exceed size or code thresholds, losing exemptions

To mitigate:

• Monitor local ordinance updates in your target jurisdictions

• Engage local planning or legal consultants early

• Include clauses in client contracts about scope, assumptions, and changes

• Keep documentation of compliance reasoning (i.e. internal memos citing SB 543/AB 1154)

Sample Client Journey: How SBKN Helps You under the New Regime

To illustrate, here’s a hypothetical client path for an ADU / JADU project under the new laws — and where SBKN’s services add value.

1. Initial Consultation & Feasibility Study

   • We assess property zoning, existing structure, setbacks, utilities

   • We verify whether a JADU (≤500 sq ft) is structurally viable

   • We estimate cost savings due to fee exemptions or sprinkler non-triggering

2. Design & Engineering Package

   • Architectural schematics, structural framing, foundation, lateral design

   • MEP layout (plumbing, electrical, HVAC)

   • Fire and life safety analysis (but without assuming retrofits)

   • Code compliance narrative referencing SB 543 / AB 1154 allowances

3. Permit Submittal & Completeness-Ready Package

   • Full permit application including site plans, calculations, energy, etc.

   • Cover letter summarizing legal basis (e.g., no sprinkler retrofit, fee exemption)

   • Pre-check using internal checklist aligned with new law requirements

4. Plan Check / Review Support

   • Respond to completeness review deficiency letters within prescribed time

   • Liaise with planning and building staff; push back on overreach, citing state law

   • Appeal support if necessary

5. Construction Support & Inspections

   • Shop drawings, construction administration, field reviews

   • Assist with final inspections, as-built corrections

6. Project Closeout & Certification

   • Deliver record drawings, compliance report, client handoff

   • Assist with any final utility hookups or certificate of occupancy

Throughout, our goal is to use the new law effectively to reduce friction, cost, and timeline while maximizing compliance and minimizing surprise requirements.

Risks, Uncertainties & Common Pitfalls

No law is perfect, and implementation will take time. Here’s what to watch out for and how SBKN can help you avoid trouble:

SBKN’s strength in permitting strategy, code interpretation, and advocacy becomes especially valuable during this transitional period.

Recommendations & Best Practices for SBKN Clients

To make the most of AB 1154 and SB 543, here are some recommended practices we can provide to clients:

1. Start Early with Ordinance Review
   Before design, check whether the local jurisdiction has updated its ADU/JADU ordinance. If not, ask for a pre-application meeting to gauge compliance risk.

2. Design for Compliance Margins
   Aim to keep JADU/ADU square footage slightly under thresholds (e.g. under 500 or 750 sq ft) to preserve fee and regulatory benefits.

3. Prepare a Legal Rationale Narrative
   Include a narrative in permit packages explaining how the project aligns with the state law changes (i.e. AB 1154, SB 543) to preempt misinterpretation.

4. Use Standardized Checklist Submittals
   Submit easy-to-follow checklists for planning/building staff to confirm completeness, minimizing back-and-forth.

5. Build Client Awareness of Limitations
   Make sure clients understand that although state law has improved conditions, local staff adjustment, staffing delays, or appeals could still slow permitting.

6. Leverage Fee Exemptions Strategically
   For smaller units, make sure clients receive the benefit of impact or capacity fee exemptions. Confirm with planning staff ahead of submittal.

7. Monitor HCD Guidelines & Updates
   HCD will issue implementing guidelines and updates; stay current and revise internal processes as needed.

8. Document Everything
   Maintain record of plan changes, correspondence, staff comments, legal citations — it can be crucial if appeals or disputes arise.

What This Means for the Future of Housing in California

Taken together, AB 1154 and SB 543 represent a notable leap in California’s ADU/JADU regime. While many past laws nudged local governments gently, these bills bite — specifying clear limits, timelines, enforcement, and overrides. Some long-term effects we anticipate:

• Acceleration of small-scale infill housing: More homeowners and small-scale developers may take on ADU/JADU projects due to fewer barriers

• Greater consistency across localities: Homeowners and designers will benefit from reduced regulatory surprise when working across different jurisdictions

• Market shift to smaller, flexible units: Because of fee protection and lower compliance cost, smaller units ( ≤ 500 sq ft or ≤ 750 sq ft) may proliferate

• Increased pressure on local planning staff: Local agencies will need to adapt workflows, train staff, and tighten their process systems

• Litigation risk during transitional period: Some local governments or third parties may challenge local ordinances or interpretations, creating legal fights

• Stronger role for HCD oversight: As HCD reviews local JADU ordinances and enforces compliance, we’ll see more top-down involvement

• Potential for further ADU/plex reforms: These laws may set the stage for broader “middle housing” or multi-unit infill reforms in future sessions

For firms like SBKN, this is more than a regulatory change — it’s a repositioning. We have the opportunity to lead in compliant design, smart permitting strategy, and client education on leveraging the new law to its fullest.

How to Get Started

If you’re considering an ADU or JADU — or want to update an existing project in light of AB 1154 and SB 543 — SBKN Engineering is ready to help you navigate the new landscape.

Get started now via our intake form: www.sbknengineering.com/intake-form

We’ll review your property, provide a feasibility assessment, and craft a pathway forward that leverages the new laws to your advantage.

Let’s build smarter, quicker, and with confidence in the evolving regulatory environment.

References & Helpful Links

• AB 1154 (Carrillo) — bill text and analysis (Legiscan) LegiScan+3LegiScan+3alcl.assembly.ca.gov+3

• SB 543 (McNerney) — bill text and analysis PolicyEngage+4LegiScan+4LegiScan+4

• HCD – Accessory Dwelling Units overview (CA Department of Housing & Community Development) California Housing Department

• Assembly ADU Handbook (2025 update) California State Assembly

• Casita Coalition support for SB 543 & JADU parity California YIMBY+1

• San Diego ADU ordinance reform context Inside San Diego