The Yardsworth Chronicles: Empowering Homeowners for Maximum Potential

The recent enactment of California’s Senate Bill 9 (SB9) marks a pivotal moment in addressing the state’s housing crisis, presenting homeowners with a unique opportunity to redefine property ownership: homeowners can now keep their homes, and sell a piece of their backyard. This groundbreaking legislation allows homeowners to break free from historical single-family zoning across California and use part of their land for new housing development, unlocking tremendous value while also helping to address the housing crisis.

Empowering Homeowners Through SB9: A Paradigm Shift

SB9 in California represents more than a mere adjustment in property boundaries or the sale of a fraction of one’s backyard. It marks a transformative journey in the landscape of homeownership, redefining the conventional notions of property ownership, zoning, and financial autonomy.

This legislation acts as a revolutionary gateway for homeowners to access untapped equity within their properties without taking on additional financial obligations. Unlike traditional avenues like HELOCs or refinancing — which mean high interest rates and increased debt — SB9 enables a debt-free alternative to tap home equity, empowering homeowners to leverage their property’s value without the encumbrance of additional loans.

Beyond the financial implications, SB9 bestows homeowners with an unprecedented agency in shaping their financial futures. By facilitating the extraction of untapped equity, this legislation provides individuals with greater control, allowing them to make informed decisions without compromising their financial stability. It creates a landscape where homeowners can explore growth opportunities and investments free from the constraints of conventional financing methods.

Participation in SB9 goes beyond individual benefits, turning homeowners into active contributors to societal change. By engaging in this program, homeowners play a vital role in their communities by increasing residential availability and supporting sustainable urban development.

SB9 heralds a new era by encouraging a fundamental shift in the mindset of homeownership by promoting an ethos not solely focused on property boundaries but deeply rooted in recognizing the potential of residential spaces. This legislative change inspires a paradigm where homeowners can unlock the latent potential within their properties, creating meaningful impacts both personally and within their communities.

Advantages of Selling Part of Your Backyard

Selling part of your backyard under California’s Senate Bill 9 offers homeowners financial freedom and societal impact. By converting a portion of your property into a separate lot, homeowners can access equity without debt.

Unlike home equity loans or refinancing, this allows funds to be unlocked at lower interest rates. Homeowners also contribute to alleviating California’s housing shortage by creating additional residential lots and increasing housing availability, benefitting the broader community. Practically, downsizing outdoor space also promotes sustainability through reduced maintenance and water costs.

Financially, backyard sales provide supplemental income to address financial challenges or explore new investments, like education, as the funds inject financial flexibility without relocation burdens. Additionally, homeowners can diversify portfolios by converting real estate equity into liquid assets, enabling wider investment opportunities. The tax-free nature of proceeds from assessed values also maximizes income.

From a social economic standpoint, increasing housing through backyard conversions counters gentrification by using existing land. New residents and businesses are attracted to the community, driving economic growth, and homeowners can adapt to changing housing needs as the additional units allow them to right-size. Ultimately, selling portions of backyards under SB9 unlocks financial freedom for homeowners while enabling them to actively contribute through increased housing availability.

Considerations Against Selling Part of Your Backyard

While selling part of your backyard under SB9 has many advantages, some considerations may argue against it. For instance, there will be reductions in privacy and usable space in your yard. Where previously you may have had a spacious, enclosed outdoor area, you will suddenly have neighbors or tenants closer, potentially resulting in noise and nuisance issues.

This major lifestyle change requires careful thought, especially for families with children or pets who depend on having ample room to play outdoors. Smaller outdoor spaces may also constrain your ability to entertain guests or host gatherings, especially given expectations of privacy.

Furthermore, there are practical concerns like added complications in subdividing utility costs and access rights, as separating water and electricity lines alone can be a major hassle and a source of future disagreements. Understanding and navigating the legal process of splitting your backyard may also prove complex, requiring substantial investments in permits, surveys, and legal fees. Homeowners should weigh these disadvantages against the potential rewards before committing to a sale under SB9.

How to Sell Part of Your Backyard

If you decide that selling part of your backyard under SB9 aligns with your goals, here are key steps to undertake the process:

Consult with local zoning and permitting offices: Meet with your city or county zoning and permitting office to understand lot split regulations in your area and confirm your property and project eligibility.
Hire a surveyor: A licensed surveyor will need to subdivide your lot and create new property boundary lines. They will handle map revisions and paperwork for permits.
Obtain necessary permits: File permit applications for the lot split, new utility connections, and any new construction. Permit costs vary significantly by location.
Create a design plan: Work with an architect to develop site plans showing precisely where property lines will fall and what the new living spaces will include.
Build additional unit(s): If adding a residence, complete all needed construction for the new home(s). Adhere to zoning regulations during this process.
Install utilities: Add separate meters and connections for electricity, gas, water, sewage, etc., between the properties.
Understand tax implications: Consult a tax professional to examine tax obligations from the proceeds when selling.
List for sale: Hire a qualified real estate professional to market and list the subdivided portion of your yard. They’ll also facilitate purchase offers and negotiations.

While complex, subdividing and selling your backyard can be done by following proper protocols. Seek expert guidance throughout the process to ensure your property qualifies and transactions adhere to California law.

SB9 marks a monumental shift in approaches to homeownership, empowering homeowners with newfound financial and social agency. By allowing the sale of portions of backyards, this legislation liberates the untapped potential within residential properties across the state.

Despite some drawbacks like reduced privacy or legal complexities, SB9 creates avenues to access equity, contribute to housing availability, and redefine antiquated notions of property potential. Ultimately, this progressive law puts financial decision-making and societal impact in the hands of homeowners, turning them into change-makers.

As California leads the country in this bold policy move, it inspires a reimagination of what residential property ownership could entail — one rooted in financial freedom and community contribution. The ripple effects of this paradigm shift stand to reshape housing landscapes for years to come.

– Matt Lucido is a social impact entrepreneur and investor. He is currently the Co-founder & CEO of Yardsworth, an online real estate marketplace for buying & selling backyard land. In 2014, he was recognized by the LA Business Journal as one of the “Twenty in their 20s.” He holds an MBA from the University of Southern California and a Bachelor’s Degree from the University of Virginia, where he lettered on the Virginia Baseball team, founded a non-profit to benefit children of cancer patients, and co-founded a restaurant. He has since held strategy and finance roles at the Honest Company and CapNet Financial. More recently, Matt was a Principal & Investor at Wavemaker Partners, an $800b AUM Venture Capital Firm. He is a 3x Founder with 1 exit. He is also a member of the Jonathan Club in Los Angeles.

Matt Lucido, Special to California Business Journal