Starting January 1, 2026, Folsom homeowners with junior accessory dwelling units that have their own bathrooms will no longer need to live on the property to rent them out. The change comes from Assembly Bill 1154, signed by Governor Gavin Newsom in October 2025, which removes a longstanding barrier that has limited how property owners could use these smaller rental units.
AB 1154 amends California Government Code § 66333(b) to narrow the owner-occupancy requirement for junior ADUs so that it applies only when the unit shares a bathroom with the main house. If a junior ADU in Folsom has its own separate bathroom, the property owner is free to rent it out while living elsewhere. Units that share sanitation facilities with the primary dwelling still require the owner to live on-site.
The legislation was part of a four-bill package of ADU reforms that included AB 462, SB 9, and SB 543. "AB 1154 establishes a single set of clear rules for all ADUs under 500 square feet built within existing single-family homes," according to California YIMBY in a press release. The advocacy group noted that "the bill removes owner-occupancy requirements for JADUs with independent bathrooms, aligning them with ADU rules that have been in place since 2020."
Folsom's Municipal Code Chapter 17.105.070 already specifies that only junior accessory dwelling units with shared sanitation facilities are subject to owner-occupancy requirements, aligning local rules with the new state standard. The December 5, 2025 review letter from the California Department of Housing and Community Development confirmed that Folsom's ADU ordinance updates must conform to the state's elimination of local owner-occupancy requirements for standard ADUs and the revised JADU rules.
The law does impose one significant restriction: junior ADUs cannot be used as short-term rentals. AB 1154 requires that every JADU be rented for terms longer than 30 days. "It also allows local jurisdictions to prohibit short-term rentals for JADUs, matching current ADU regulations," California YIMBY stated.
Junior ADUs are limited to a maximum of 500 square feet under existing state law. The companion bill SB 543 clarifies that this size limit refers to interior livable space rather than exterior footprint. AB 1154 also prohibits local agencies from imposing parking minimums on small ADUs under 500 square feet built within existing single-family homes, which includes junior ADUs of that size.
The bill moved through the Legislature with strong support, passing the Assembly Local Government Committee with a unanimous 9–0 vote in April 2025 after clearing the Assembly Housing Committee in March. For context, state law already clarifies that no owner-occupancy requirement is allowed for standard ADUs approved under Government Code § 66323, meaning Folsom owners can rent out both the primary dwelling and a standard ADU without living on site.
For Folsom homeowners who have built or are considering junior ADUs with separate bathrooms, the change opens new flexibility for rental income without the constraint of maintaining on-site residency. As the January 1 effective date approaches, property owners with qualifying units may want to review their JADU configurations and rental strategies to take advantage of the expanded options under the new law.