TIC to Condo Conversion, ADUs and Adding Value in SF

Updated 2026-10-24, 7 minute read

Three projects can add real value to a San Francisco property, and each is governed by rules stricter here than anywhere else in California: converting a TIC share into a condo, adding an accessory dwelling unit, and legalizing a unit built without permits. Here is where each path stands, what it costs in broad terms, and what it does to your taxes.

Where TIC condo conversion stands

For decades the route from TIC to condo for buildings of three to six units was an annual lottery with long odds. In 2013 the city's Expedited Conversion Program let buildings already in the lottery pool convert for a per-unit fee and suspended the lottery, and the Subdivision Code conditions its return on circumstances that, per the city's most recent published program update, had not occurred. As of 2026-10-24, treat the lottery as closed and confirm anything newer with Public Works and a TIC attorney.

What remains open:

Two-unit buildings. A two-unit building can convert without a lottery when both units are owner-occupied by separate owners who each hold at least a 25% ownership interest and have lived there as a principal residence for at least one year.
Bars that cannot be cured. Buildings with two or more evictions tied to separate units since May 1, 2005 are barred, with one narrow exception for a two-unit building whose units have been owner-occupied by the same owners for ten years; a building where a protected (elderly, disabled or catastrophically ill) tenant was evicted cannot convert, and a unit legalized under the city's unwarranted-unit program can never be subdivided.
Tenant protections. Non-purchasing tenants have had to be offered lifetime leases under the expedited rules, and the application asks about every tenancy and eviction in the building's history.

Have a TIC attorney run the eligibility check before you spend a dollar on surveys. TIC attorneys and fractional lenders covers how to pick one.

The conversion process, in order

Eligibility review. Occupancy and eviction history, rent control status of each unit, and whether any unit was legalized under Section 207.3.
Inspection and corrections. DBI inspects the building; anything that fails current code is corrected and permitted first.
Survey, map and documents. A licensed surveyor prepares the condominium map for Public Works approval while the attorney drafts the condominium plan, CC&Rs and HOA documents.
Fees and recording. Application, inspection and map fees, plus a per-unit conversion fee under the expedited program (as of 2026-10-24, check the current schedule); once recorded, each unit is its own parcel with its own deed and tax bill.
Refinancing. Each owner replaces the fractional loan, which carries rates about half a point to a point above condo loans, with a conventional mortgage; refinancing covers how to shop it.

Timelines run many months to more than a year.

What conversion is worth

TICs trade below equivalent condos; the discount is commonly put in the range of 10% to 20% and varies with building size and financing conditions, so check current sales. Conversion closes that gap by removing the fractional-loan premium, the small buyer pool and shared-title governance. Check the gap for your building type with the comps tool by comparing recent TIC and condo sales nearby, then weigh it against the full cost. For a two-unit building where both owners qualify the arithmetic is usually favorable; for anything larger, the plan is to be a good TIC until the rules change.

ADUs in San Francisco

State law requires cities to approve qualifying ADUs ministerially within a set review period and allows an ADU and a junior ADU on a single-family lot and multiple ADUs in multifamily buildings. San Francisco layers its own program on top:

Path	What you get	What you give up
State-mandated path	The baseline state entitlements, with no rent-control waiver	Less flexibility on size, count and location in some buildings
SF local program	More flexibility in existing buildings, including ground-floor and garage conversions in multi-unit buildings	In a building covered by the Rent Ordinance the new ADU is rent controlled; buildings with recent no-fault evictions can be ineligible

Common SF projects: converting a garage or ground-floor storage into a unit, carving a unit out of a basement level, and, on deep lots, a detached unit. A conversion inside an existing shell is usually the cheaper path, a detached unit is new construction, and both are six-figure projects here. As of 2026-10-24 there is no reliable published SF average, so get two bids using different delivery models, a fixed-price design-build package and an architect with separate contractor bids, and verify every license on the CSLB site. An ADU generally cannot be sold separately from the main home; check Planning's ADU page for current rules.

Costs, timelines and financing

Expect design and permitting to take months before construction starts, and construction to run several more. A HELOC is the usual financing when your first mortgage rate is low, since you draw as invoices come in and pay interest only on the draw; a cash-out refinance makes sense only when you would refinance the first mortgage anyway; renovation loans lend against the after-improvement value at the price of more paperwork. Interest on any of these is deductible only to the extent the money substantially improves the home; refinancing covers the comparison.

Rent control and ADUs

Two separate rules apply. Rent increase limits cover units in buildings with a certificate of occupancy before June 13, 1979, and state law (Costa-Hawkins) exempts new construction, which is why a state-path ADU is not rent controlled; the local program conditions its extra flexibility on waiving that exemption. Just-cause eviction protection is different: since Ordinance 296-19 took effect in 2020, every residential rental unit in the city is covered, including a brand-new ADU. If you build to rent, read renting under SF rent control first.

Legalizing an unwarranted unit vs removing it

If your building has an in-law behind the garage that appears nowhere on the 3R report, you can legalize it or remove it.

Legalize it. The city's program under Planning Code Section 207.3 allows one unpermitted unit per lot, built before January 1, 2013 and used as housing, to be legalized. DBI screens eligibility, you document the unit's age with leases or utility bills, and a licensed contractor reports on what it takes to meet code; the cost of bringing one unit to code commonly reaches six figures. Two permanent conditions follow: a legalized unit can never be condo-converted, and a unit where a no-fault eviction was filed after March 2014 waits five or ten years to apply. Where the space qualifies, the ADU path can be cheaper and faster.

Remove it. Removing a dwelling unit, including an unauthorized one, has required conditional use authorization under Ordinance 33-16, with a narrower process for single-family homes adopted in 2024 under Ordinance 064-24, which waives the conditional use hearing for qualifying owners but makes the home subject to the Rent Ordinance's rent increase limits, and a tenant in the unit has full just-cause protection regardless of its legality.

Whichever path you take, finaled permits are what change the 3R report: a legalized unit or permitted ADU joins the legal unit count the next buyer's agent pulls. SF red flags explains how buyers price an unwarranted unit.

Value added vs cost, and what triggers reassessment

A legal second unit is worth more than an unwarranted one because appraisers, lenders and insurers can count it; a condo is worth more than a TIC share because more buyers can finance it. Measure the gain against closed sales in the comps tool. On property tax, new construction, including an ADU or a legalized unit's upgrades, is assessed at the value it adds and added to your factored base-year value; the rest of the property keeps its Prop 13 base, and seismic work is excluded entirely. A TIC to condo conversion in which each owner receives the unit they occupied, in the same proportion, generally does not trigger reassessment, but confirm with the Assessor before recording. Prop 13 and Prop 19 covers the triggers.

What to shop for right now

Two medium-savings items: a TIC attorney's flat-fee conversion package, compared across two firms on scope and recent SF conversions, and for an ADU two delivery models priced for the same unit, where the spread on a six-figure project is usually in the tens of thousands.

Shop for this now

Service	When	Savings from shopping	How to shop it
TIC attorney (conversion)	Before you spend anything on surveys or applications, to confirm eligibility and scope	Medium: worth 2-3 quotes Conversion packages are often flat-fee and the fees differ between firms; compare scope and San Francisco experience rather than price alone, because an application rejected for an eviction-history or occupancy problem costs more than any fee difference.	Ask two San Francisco firms that handle conversions for a flat-fee quote covering the eligibility review, the application, the condominium documents and the recording, and ask how many conversions each completed in the past two years.
ADU designer and design-build contractor	After a feasibility check with Planning and before you commit to a permit path	Medium: worth 2-3 quotes Fixed-price design-build packages and architect-plus-contractor bids for the same ADU vary substantially in San Francisco, and the cheaper model depends on the building; the saving from comparing both is usually in the tens of thousands on a six-figure project.	Get a fixed-price design-build proposal and a separate architect-plus-contractor set of bids for the same unit, each itemizing permits, utilities, fire separation and any seismic work; verify every license on the CSLB site and ask for addresses of ADUs each team has permitted in the city.

Frequently asked questions

Can you still convert a TIC to a condo in San Francisco?

Only through narrow doors. The annual conversion lottery that most three- to six-unit buildings depended on is suspended, and the city's code ties its return to conditions that had not been met as of the city's most recent published program update. A two-unit building can still convert without a lottery if both units are owner-occupied by separate owners who each hold at least a 25% ownership interest and have lived there as a principal residence for at least a year (confirm the current Subdivision Code requirements with Public Works). Buildings with two or more evictions tied to separate units since May 1, 2005, buildings where a protected tenant was evicted, and units legalized under the city's unwarranted-unit program are barred.

Is the San Francisco condo conversion lottery still suspended?

Yes, as of the city's most recent published guidance. The 2013 Expedited Conversion Program let buildings already in the lottery pool convert for a fee and suspended the lottery while that program ran, and the Subdivision Code conditions the lottery's return on circumstances that had not occurred per the city's most recent program update. As of 2026-10-24, check with Public Works and a San Francisco TIC attorney before assuming a lottery will reopen; the safe plan is to value a TIC as if it will stay one.

How much does it cost to convert a TIC to a condo?

Budget for an attorney to draft the condominium documents and shepherd the application, a licensed surveyor for the condo map, city application and inspection fees, any building corrections DBI requires before it will sign off, and then each owner's cost to refinance from a fractional loan into a conventional mortgage. The Expedited Conversion Program charged a per-unit city fee on top of that. As of 2026-10-24 there is no reliable published total for a current two-unit conversion; get a flat-fee quote from two TIC attorneys who have completed conversions recently and add the refinance costs.

How much does it cost to build an ADU in San Francisco?

As of 2026-10-24 there is no reliable published San Francisco average, and bids for the same unit vary widely with the building, so get at least two. A garage or ground-floor conversion inside an existing building is usually the cheaper path because the shell exists; a detached unit is new construction with its own foundation, utilities and often excavation on a sloped lot, and costs more. Either way plan for a six-figure project in San Francisco and compare a fixed-price design-build package against an architect plus separate contractor bids.

Is a new ADU rent controlled in SF?

It depends which permit path you use. An ADU added under San Francisco's local program in a building already covered by the Rent Ordinance is itself subject to rent control, because the city conditions that path on the owner waiving the state's new-construction exemption. An ADU approved under the state-mandated path is new construction exempt from rent increase limits under Costa-Hawkins, but every residential unit in the city has been covered by just-cause eviction rules since 2020, so you still need a lawful reason to end the tenancy. Confirm the current rules with the Rent Board and Planning before you choose a path.

Does adding an ADU raise my property taxes?

Yes, but only by the value of what you built. New construction is assessed at the value it adds as of its completion date and that amount is added to your existing factored base-year value; the rest of the property is not reassessed. Converting a TIC to condos generally does not trigger reassessment when each owner ends up with the unit they occupied and the same proportional interest, but confirm your situation with the Assessor before recording anything. Seismic retrofit work is excluded from reassessment entirely.