Hiring an ADU builder in the South Bay or Peninsula: what to check

Type "ADU builder" and a city name into Google and you get a page of companies promising the same timeline at the same price. Nothing on that page helps you tell them apart, and that's what owners in Belmont, Mountain View and Morgan Hill keep asking me about this fall.

We don't build ADUs ourselves. We help owners pick a contractor, review the bids, and then manage the unit once it's finished, so I see a builder choice play out from both ends: the bid that left out the trench, the final inspection that slipped, the utility application nobody filed, the floor plan drawn to 749 square feet because of a fee rule. Most owners I talk to are designing now so they can file under the new ADU laws that start January 1, which makes November a good month to pick a builder. This is what I'd check first.

Start with your city's pre-approved list

Every city in California had to set up a program for pre-approving ADU plans by January 1, 2025, and post the approved plans on its website with the designer's contact information. That's Government Code Section 65852.27, and it's the most useful builder directory almost nobody uses.

There's a second reason to start there. When a detached ADU application uses a plan pre-approved in the current building code cycle, the city has to approve or deny it within 30 days of a complete application. Everything else gets 60.

What the lists look like around here:

• San José posts its vendors alphabetically, with every pre-approved floor plan and its size. If your lot is zoned residential, has an existing house or duplex, and isn't in a geohazard, landslide, flood or wildland-urban interface zone, the permit can be issued the same day as the plan review meeting.
• Mountain View pre-approves detached new-construction units, including its reach code requirements. You still submit a site plan with utility connections, a Title 24 report if the design changed, and a survey if the unit sits within six feet of a property line or setback.
• Belmont and Morgan Hill run online plan galleries where you can filter designs and contact the designer directly. Belmont's pre-approvals expire at the end of the building code cycle, so ask when a plan was approved.

Two cautions. The statute says plainly that a city listing isn't an endorsement. And a pre-approved plan covers the building, not your lot. Where the unit sits, the foundation, and the utility runs are still site-specific, and that's where most of the price difference between bids comes from.

Notice the 749s

Scroll San José's list and the same numbers keep coming up. 746 square feet. 747. 748. 749. Builders drew them that way on purpose, because 750 is the fee line.

State law bars impact fees on an ADU with 750 square feet of interior livable space or less. Above that, a city can charge impact fees in proportion to the size of the main house. There's a second line at 500 square feet. School districts can't charge their fee on an addition of 500 square feet or less, and state law treats an ADU under 500 as one of those. Builders draw to those numbers because owners ask them to.

From January the math changes. SB 1117 limits impact fees to the square footage above 750 for the first two ADUs on a lot, so a 900 square foot unit gets charged on 150 feet instead of 900. If a builder's catalog is all 749s and what you need is a real two-bedroom, ask what their larger plans cost and run the fee math for a January filing. Those plans were drawn for this year's rules.

Utility connections are the other fee. A unit converted inside the existing house can't be forced onto a new utility connection or charged a connection fee for one. A new detached unit can be, as long as the charge is proportionate to its size or plumbing fixtures. Your water and sewer district sets that number. Call before you compare bids, because some builders include it and some don't.

Five minutes on the CSLB site

Run every builder you're seriously considering through the Contractors State License Board's license lookup. Check that the license is active, that the name and number match the contract, and that the classification fits the job. For a full ADU that's usually a general building contractor, class B.

Then look at the bond and the insurance. The license bond is $25,000. That's the legal floor, and it won't go far on a project this size.

Workers' comp is the one owners skip. Right now a contractor with no employees can file an exemption instead of carrying a policy, and the current version of that rule is set to expire January 1, 2028. A builder who shows up with a crew has employees. If the CSLB record shows an exemption and there are six people in your backyard, have that conversation before someone gets hurt on your property. Roofers can't claim the exemption at all.

The contract: $1,000 down, then pay for work done

The CSLB treats ADU construction as a home improvement project, and the home improvement payment rules come with it. The down payment can't be more than $1,000 or 10% of the contract price, whichever is less. After that, a contractor can't collect for work that isn't done or materials that haven't arrived, and every progress payment has to be written in dollars and tied to specific work.

So a bid asking for 25% at signing is asking you to waive a rule that exists to protect you. I'd treat that as information about the builder. Watch for big upfront charges labeled "plans" or "permits," too. The CSLB's own advice is to ask for an accounting of plan costs, confirm with the architect or engineer that they were paid, and check permit fees on the city's website.

What I'd ask every builder

Who pulls the permit? San José's guidance is to have the vendor or contractor do it, which keeps the liability for the work with the professional.

Who files the utility application, and when? The building is rarely the long pole now. The service connection is, and PG&E's deferral of new housing connections didn't help. I'd want that application in the day the permit allows it.

What's excluded from the price? Trenching to the panel, the sewer lateral, a panel upgrade, grading on a sloped lot. That's where two bids on the same pre-approved plan stop looking alike.

Can I see two finished units in my city? Not photos. Addresses that passed final. The final inspection is where a builder's habits show up, and one who's been through your city's inspectors before is worth paying for.

A word on price

I'm not going to give you a per-square-foot number. The bids I see on the same floor plan swing a lot, and nearly all of the swing is site work: how far the trench runs, whether the lot slopes, whether the panel needs replacing. A pre-approved plan pins down the building. It doesn't pin down your backyard.

The way to get a real number is to pick a plan size, take it to at least three builders from your city's list, and have them price the same site. Then compare what each one left out, not only the total. If you'd like a second set of eyes on those bids, that's part of our ADU build coordination.

Before you sign with a builder, it helps to know what the finished unit will rent for. Get a free ADU rental analysis and I'll run the numbers for your property. Or call me at (408) 813-8001.

Sources

• Government Code Section 65852.27 — California Legislative Information
• Government Code Section 66311.5 — California Legislative Information
• Government Code Section 66317 — California Legislative Information
• Education Code Section 17620 — California Legislative Information
• Preapproved ADUs — City of San José
• Preapproved ADU Program — City of Mountain View
• Pre-Approved Accessory Dwelling Unit — City of Belmont
• Accessory Dwelling Units — City of Morgan Hill
• Don't Pay Too Much Money Upfront on Home Improvement Projects — Contractors State License Board
• Bond Requirements — Contractors State License Board
• Business and Professions Code 7125 — Contractors State License Board