The Hidden "Third Way" to Sell Your ADU in Tacoma

If you feel like the rules for Accessory Dwelling Units (ADUs) in Tacoma have been a moving target, you aren’t imagining it.

For decades, ADUs were virtually non-existent here. Then, in just a few short years, we saw a whirlwind of pilot programs and code updates, culminating in the major "Home in Tacoma" changes that took effect in February 2025.

Now that the dust has settled, the biggest opportunity for developers and homeowners isn’t just building an ADU—it’s selling one.

Thanks to these new laws, you can now legally sever the tether between the main house and the cottage. But if you assume the only way to do this is by creating a condominium, you might be leaving value on the table.

There is a better path for most backyard cottages: The Unit Lot Subdivision.

The Two Paths: Condo vs. Fee Simple

If you want to sell a second unit on your property, you generally have two legal mechanisms. Understanding the difference is critical for your profit margin and buyer appeal.

1. The Condominium (The Default Thought)

Most people assume that to sell two houses on one lot, you must "condoize" them.

* How it works: You record a declaration that divides the property into "units" (the air space inside the walls) and "common elements" (the land, the driveway, the roof).

* The Problem: Buyers generally dislike condos. They come with HOAs (even for just two units), monthly dues, and financing that is often harder to secure than a traditional mortgage.

* Best For: Basement units, attic apartments, or attached ADUs where you physically cannot split the land.

2. The Unit Lot Subdivision (The "Fee Simple" Gold Standard)

Tacoma’s code (TMC 13.04.093) explicitly allows for Unit Lot Subdivisions (ULS). This is the game-changer for Detached ADUs (DADUs).

* How it works: We keep the "parent lot" intact for zoning purposes (so we don’t need to meet huge minimum lot sizes), but we draw new internal lines to create tiny, individual lots for each house.

* The Advantage: The buyer owns the land under their house. It is "fee simple" ownership. There is no heavy HOA, financing is standard, and the resale value is typically higher because it feels like buying a "real" house, just on a smaller scale.

The "Reality Check": Feasibility First

Just because the city allows you to sell an ADU separately doesn’t mean it’s profitable. As an architect who focuses on feasibility before design, I see many projects stall because the owners didn't run the numbers on infrastructure.

To sell a unit separately via Unit Lot Subdivision, you typically cannot share utilities.

* Water: Tacoma Water may require a completely new service line, meter, and System Development Charges (SDC). This alone can cost $5,000–$10,000+.

* Power: New connection fees, engineering, and trenching can add another $2,000–$5,000.

* Construction: Building a standalone DADU in Tacoma currently costs $250–$400 per square foot. A 1,000 sq. ft. unit (the new maximum size allowed) can easily cost $300,000+ to build once you factor in site work and permits.

The Math: If it costs $325,000 to build and utility-separate a unit that sells for $400,000, your margin is thin after real estate commissions and taxes. The real value is often created if you already own the land, or if you are developing the entire site (main house + DADU) simultaneously.

Is There a Market for This?

Yes. Tacoma has a "missing middle" housing crisis. Standard single-family homes in desirable neighborhoods often trade above $500,000.

A separately sold DADU creates a product that hits a "sweet spot" price point—likely between $325,000 and $450,000.

* The Buyer: Young professionals priced out of the North End, downsizers who want to stay in their neighborhood without the maintenance of a large craftsman, and investors looking for rentals without managing a massive property.

* The Comparable: These units compete with older 2-bedroom/1-bath homes in South Tacoma. A brand-new, energy-efficient DADU is a compelling alternative.

How to Start: Clarity Before Design

Before you hire a designer to draw floor plans, you need to define the legal and financial roadmap.

* Feasibility Study: Confirm your lot is eligible for Unit Lot Subdivision. Check for "deal killers" like sewer main depth or lack of alley access.

* Utility Reconnaissance: Get hard quotes on water and power separation. This is often the budget breaker.

* The "Short Plat" Process: We apply to the City of Tacoma to subdivide the land while we design the building. These two tracks must happen in parallel to save time.

The Bottom Line

Selling an ADU separately is one of the most powerful tools available to Tacoma homeowners today. It turns a passive accessory into an active asset. But it is a complex development project, not a simple remodel.

Don’t start by drawing walls. Start by understanding the land, the code, and the costs.

Disclaimer: Zoning laws in Tacoma have changed rapidly in recent years. Always consult with a land use attorney and the City of Tacoma Permit Center before purchasing property or beginning a project.