Your ADU listing can't say "No Section 8"

I still see it. Not often, but often enough that I want to write it down once: a Bay Area ADU listing with "no Section 8" or "no vouchers" in the description.

That line has been unlawful in California since 2020, and the sentence itself is a separate violation from refusing the tenant. Most owners who write it aren't trying to break a law. They think a voucher means a worse tenant and more paperwork, and nobody has ever walked them through what it means in practice.

What the statute says

Government Code 12955 makes source of income a protected characteristic in housing. The definition is broad and it names vouchers specifically:

"'Source of income' means lawful, verifiable income paid directly to a tenant, or to a representative of a tenant, or paid to a housing owner or landlord on behalf of a tenant, including federal, state, or local public assistance, and federal, state, or local housing subsidies, including, but not limited to, federal housing assistance vouchers issued under Section 8 of the United States Housing Act of 1937."

Paid to the landlord on behalf of the tenant. That phrase is what SB 329 added in 2019, and it's the whole ballgame, because the old workaround was to say the voucher wasn't the tenant's income since it never touched their hands.

The listing itself is a separate violation

This is the part owners miss. Section 12955 also makes it unlawful

"For any person to make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a housing accommodation that indicates any preference, limitation, or discrimination based on ... source of income."

So you don't have to reject anybody. Publishing the preference is enough.

There's a narrow exception elsewhere in the code for renting part of an owner-occupied single-family house to a single roomer or boarder living within the household. Read it closely and it doesn't help here. It covers a roomer inside your household, not a separate unit with its own entrance and kitchen, and the statute expressly conditions it on the owner complying with the advertising rule anyway. If you're renting a junior ADU that shares sanitation with the main house and you think you're inside that exception, ask an attorney rather than a blog.

What you can still screen on

Nearly everything you'd normally use. Credit history, prior landlord references, eviction history, employment verification, the whole screening process I run on every ADU applies the same way. The Housing Authority says the same thing: screen voucher holders using the same criteria you'd use for anyone else.

The one thing that changes is the income test. Section 12955 prohibits using a financial or income standard that "is not based on the portion of the rent to be paid by the tenant." If your rule is three times the rent, and the tenant's share is $600 while the voucher covers the rest, your test runs against the $600. Applying a 3x rule to the full contract rent is the single most common way an owner turns a legal screening policy into an illegal one.

How the money works

Santa Clara County's Housing Authority lays out six steps, and none of them are exotic. You list the unit, you screen the tenant on your own criteria, the unit passes a Housing Quality Standards inspection, SCCHA checks that the rent is reasonable, you sign a lease with the tenant and a Housing Assistance Payment contract with the agency, and then you enforce the lease like any other.

A third-party inspector schedules the HQS visit, and after that inspections run every two years. The rent check is a comparables test: subsidized rents can't exceed what non-subsidized comparable units go for. That's a ceiling tied to the market rather than to the program.

The agency's payment goes out by direct deposit. The part worth knowing, and the part nobody tells owners, is what happens when a tenant's income falls. SCCHA increases its share and your total stays the same. In a market where the risk you're carrying is a tenant who loses a tech job in month seven, that's not nothing.

One clarification, because owners conflate these two constantly. The payment standard is the maximum subsidy, not a cap on your rent. SCCHA's own page says the payment standard "does not guarantee or limit the amount of rent a property owner may charge." What limits your rent is the reasonableness test.

What changes on October 1

HUD published the FY2027 Fair Market Rents in the Federal Register on September 1, effective October 1. Requests from housing agencies to have an area's numbers reevaluated are due the same day.

A couple of wrinkles matter for an ADU owner in Santa Clara or San Mateo County.

Since 2025, SCCHA has set payment standards by zip code rather than one number for the whole county, using Small Area Fair Market Rents. So what a voucher is worth at your property depends on where the property sits, and a county-wide figure you read somewhere isn't your number. HUD didn't change how small area rents are calculated this year.

And new federal rents don't automatically become new local payment standards. SCCHA's current standards took effect January 1, 2026. If you're deciding something in October on the assumption your local standard jumped that morning, call and ask instead.

HUD also changed how it computes the utility half of these numbers, after the Bureau of Labor Statistics discontinued the local housing fuels and utilities price index it had been using. The replacement is a weighted composite of electricity, natural gas, fuel oil, and water, sewer and trash. That's a methodology footnote for most people, though it does mean year-over-year comparisons to FY2026 aren't quite apples to apples.

Whether it's a good fit for an ADU specifically

I'm not going to tell you it's free money. The inspection is a real step, the lease-up takes longer than a market tenancy, and the reasonableness test means you're not going to clear a number above your comps.

What I'd weigh on the other side is that ADUs are mostly studios and one-bedrooms, which is exactly where voucher demand sits in this county, and the subsidy portion arrives on time every month regardless of what happens to your tenant's job. For an owner whose main fear is a vacancy or a nonpayment spiral, that trade looks different than it does on paper.

Either way it has to be a decision you make about an applicant in front of you, using the same criteria you'd use for anyone, after the unit is listed without a line in it that shouldn't be there.

Worth an afternoon

Open your current listing text and read it as a compliance officer would. Delete anything about vouchers, Section 8, or "employed applicants only," which is the same problem wearing a different hat.

Then look at your written screening criteria, if you have them, and check whether your income multiple is applied to the contract rent or to the tenant's portion. If you don't have written criteria, that's the actual project, and it protects you far beyond this one issue.

Call SCCHA and ask what the payment standard is for your zip code and unit size. It takes one phone call and it turns an abstract policy question into a number you can compare against what your ADU should be renting for.

Want your ADU listing and screening criteria reviewed, or a straight read on what your unit should rent for? Get a free ADU rental analysis and I'll go through it with you. Or call me at (408) 813-8001.

Sources

• Government Code Section 12955 — California Legislative Information
• Government Code Section 12927 — California Legislative Information
• SB 329, Discrimination: housing: source of income — California Legislative Information
• Information for New Landlords — Santa Clara County Housing Authority
• Payment Standards — Santa Clara County Housing Authority
• Fair Market Rents for the Housing Choice Voucher Program, Fiscal Year 2027 — Federal Register, September 1, 2026
• Housing Choice Voucher Program landlord resources — U.S. Department of Housing and Urban Development