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.

BREAKING DOWN '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.

RELATED TERMS
  1. Housing Unit

    A housing unit is one unit of a house, apartment, mobile home, ...
  2. Open House

    An open house is a scheduled period of time in which a house ...
  3. Housing Starts

    The number of new residential construction projects that have ...
  4. Urban Development Act Of 1970

    Legislation through the U.S. Department of Housing and Urban ...
  5. Primary Offering

    A primary offering is the first issuance of stock from a private ...
  6. Zoning Ordinance

    Written regulations and laws that define how property in specific ...
Related Articles
  1. Retirement

    New Retirement Living Option - And Income Source

    Here's a new option for retirement planning that could help three generations of a family – and be the glue that binds them together.
  2. Investing

    How Cheap is Affordable Housing Right Now?

    Learn how many affordable housing government programs work in the United States, including income requirements and the scarcity of affordable apartments.
  3. Investing

    Where International Real Estate Is Booming

    Which country has the hottest property market right now? The answer will undoubtedly surprise you.
  4. Investing

    Forget McMansions, In-Town Homes Offer Best Values

    Aging baby boomers, Gen X-ers and plugged-in Millennials are seeking the walkable communities of yesteryear. Smaller and older homes are holding value and appreciating more rapidly than homes ...
  5. Managing Wealth

    McMansion: A Closer Look At The Big House Trend

    The average home size is now 2,500 square feet - how big should you go?
  6. Managing Wealth

    Affordable housing: Investing with purpose and for profit

    Successful real estate investors are more than just landords - they are savvy business executives.
  7. Managing Wealth

    Choosing Between The Suburbs And The City

    The location in which you decide to live can deeply influence your well-being, so choose wisely!
  8. Personal Finance

    The Most Affordable Cities To Live In

    Here is a look at some of the places in the United States where your money will go the furthest.
  9. Investing

    Real Estate Indicators For Prospective Homebuyers

    If you want to buy a home but you’re holding out until market conditions show signs of improvement, housing indicators can help point the way.
  10. Insights

    How Moving Can Affect Your Finances

    Here are the factors you need to look at to determine whether moving to a new area will leave you with more money on a regular basis.
Hot Definitions
  1. Fibonacci Retracement

    A term used in technical analysis that refers to areas of support (price stops going lower) or resistance (price stops going ...
  2. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
  3. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  4. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  6. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
Trading Center