Accessory Dwelling Unit (ADU)
Definition of 'Accessory Dwelling Unit (ADU)'
A legal and regulatory term for a secondary house or apartment with its own kitchen, living area and separate entrance that shares the building lot of a larger, primary house. The ADU may be attached to an existing house or garage, or it may be built as a stand-alone unit, but it usually uses the water and energy connections of the primary house and may be rented separately.
Investopedia explains 'Accessory Dwelling Unit (ADU)'
Since the post-World War II housing boom, most residential areas in the United States were zoned to limit density and control the size and separation of single-family dwellings. More recently, as cities and older suburbs have needed to contain urban sprawl, yet provide for population growth and economic diversity within their communities, zoning changes in a growing number of places have permitted the addition of Accessory Dwelling Units. The new zoning rules usually limit the size and general style of the new unit and require that the owner live on the property.
Some cities, such as Portland, Ore., have lowered the cost of building permits for ADUs, further encouraging construction of these units.