What Is the 10-Year Rule for Garage Conversions?

Where the “10-Year Rule” Comes From

If you have searched for information about garage conversions, you have probably encountered references to a “10-year rule.” The phrase appears in forums, real estate discussions, and contractor websites, but it rarely comes with a clear explanation. That is because the “10-year rule” is not a single, codified law. It is a shorthand that blends several different concepts together.

The term originates primarily from UK planning law, where a Certificate of Lawful Development can be obtained for building work that has existed without challenge for 10 years of continuous use. In the UK, if an unauthorized conversion has been in place for a decade and no enforcement action was taken, the homeowner can apply for a certificate that retroactively recognizes the development as lawful.

In California, no equivalent 10-year rule exists in state law. However, homeowners frequently confuse several related concepts, including enforcement timelines for unpermitted work, property tax reassessment rules under Proposition 13, and recent ADU legalization legislation. This article breaks down each of these areas so you can make informed decisions about your garage conversion project.

Unpermitted Garage Conversions in California

There Is No Automatic Legalization After 10 Years

One of the most common misconceptions is that unpermitted construction becomes “grandfathered in” after a certain number of years. In California, this is not the case. Local code enforcement agencies retain the authority to issue violations for unpermitted work regardless of how long ago it was completed. A garage conversion done 15 years ago without permits is just as vulnerable to enforcement action as one completed last month.

When code enforcement discovers an unpermitted garage conversion, the consequences can be significant. The agency may issue a Notice of Violation, impose daily fines until the violation is corrected, and in some cases require the homeowner to demolish the unpermitted work and restore the garage to its original approved state. Restoration costs typically range from $2,500 to $5,000, and that does not include any accumulated fines.

AB 2533: California’s Legalization Pathway

While there is no automatic 10-year safe harbor, California has created a practical path forward for homeowners with unpermitted garage conversions. Assembly Bill 2533, which took effect on January 1, 2025, expands statewide amnesty for unpermitted ADUs and Junior ADUs (JADUs) built before January 1, 2020.

Under AB 2533:

• Local building departments must assist homeowners in obtaining retroactive permits
• The unit only needs to meet basic health and safety standards, not the full current building code
• Cities cannot deny legalization solely because the conversion does not comply with non-safety-related building codes
• Impact, connection, and capacity fees are waived when no infrastructure changes are involved
• A legalization inspection checks basic safety items (electrical, plumbing, fire separation, egress), and if the unit can reach compliance through reasonable upgrades, a retroactive permit is issued

Assembly Bill 1287, introduced in January 2025, proposes extending the deadline for legalization applications by an additional 18 months, recognizing that many homeowners are still learning about the program.

If your garage was converted before January 1, 2020 without permits, AB 2533 is a far more reliable path to legalization than waiting and hoping enforcement never arrives.

Property Taxes and Garage Conversions Under Prop 13

How Reassessment Works

For many homeowners, the bigger concern about the “10-year rule” relates to property taxes. Will converting a garage trigger a full reassessment of your entire property at current market value?

The answer, under California’s Proposition 13, is no. Prop 13 established that property is assessed for tax purposes at the purchase price, and the assessed value cannot increase by more than 2% per year unless there is a change of ownership or new construction.

A garage conversion qualifies as “new construction” because it changes the use of an existing space from storage/parking to habitable living area. However, the reassessment applies only to the newly constructed portion, not to your entire property.

Here is how it works in practice. The county assessor evaluates the market value of the converted space, typically based on the cost of construction. That value is added on top of your existing Prop 13-protected assessed value through a “blended assessment.”

Example Calculation

Consider a Bay Area homeowner who purchased their home in 2005 for $800,000. After two decades of Prop 13’s 2% annual cap, the current assessed value is approximately $1,190,000. The homeowner completes a garage conversion costing $150,000.

The assessor does not reassess the entire property at today’s market value (which might be $2.5 million or more). Instead:

Component	Assessed Value
Existing home (Prop 13 base)	$1,190,000
Garage conversion (new construction)	$150,000
New total assessed value	$1,340,000

At California’s standard 1% base property tax rate (plus local overrides, typically totaling 1.1% to 1.3%), this conversion adds roughly $1,500 to $1,950 per year in property taxes. Your existing home’s Prop 13 protection remains intact.

Supplemental Tax Bills

If your conversion is completed mid-year, expect a supplemental tax bill from the county assessor. This prorated assessment covers the period from the first day of the month following completion through the end of the fiscal year (June 30). It is a one-time catch-up bill, not a recurring charge.

SB 1164: The New Construction Exclusion for ADUs

Senate Bill 1164 introduces an important new benefit for homeowners building ADUs, including garage conversions. The law excludes qualifying ADU construction from classification as “new construction” for property tax purposes, effectively preventing the added value from increasing your property tax bill.

Key Requirements

To qualify for the SB 1164 exclusion:

• Construction must be completed on or after January 1, 2025 and before January 1, 2030
• The homeowner must notify the county assessor within 30 days of completing construction
• The homeowner must submit an affidavit stating the unit will be used as residential housing
• The property must not change ownership after claiming the exclusion

When the Exclusion Ends

The SB 1164 exclusion terminates if:

• The property undergoes a change of ownership
• The ADU is converted to any use other than residential housing
• The applicable time period expires

This legislation represents a significant incentive for homeowners considering a garage conversion between now and 2030. If you qualify, the converted space could add zero additional property tax for the duration you own the home.

The UK 10-Year Rule: Why It Shows Up in Search Results

Because many search results blend information from different countries, it helps to understand the actual UK “10-year rule” so you can distinguish it from California law.

In the United Kingdom, the Town and Country Planning Act allows homeowners to apply for a Certificate of Lawful Existing Use or Development (CLEUD) if unauthorized building work has been in continuous use for a specific period without enforcement action.

Historically, the threshold was four years for residential building operations. However, a significant legislative change took effect on April 25, 2024. Work substantially completed after that date now requires 10 years of continuous use before a certificate can be obtained. Work completed before that date may still qualify under the older four-year rule.

This UK framework has no legal relevance in California. If you encounter advice about a “10-year rule” that references planning permission or certificates of lawfulness, it is almost certainly discussing UK law, not California regulations.

What Actually Matters for California Garage Conversions

Rather than focusing on the idea of a 10-year rule, California homeowners should focus on the regulatory frameworks that actually govern garage conversions in the state.

Permits Come First

The single most important step is obtaining proper permits before you begin construction. A permitted garage conversion:

• Protects you from code enforcement violations and fines
• Ensures the space meets health and safety standards for habitation
• Adds legitimate value to your property for resale
• Qualifies for potential tax benefits under SB 1164
• Avoids the risk and cost of forced reversion

Understand Your Local Requirements

While California state law has streamlined the ADU and garage conversion process significantly, local jurisdictions still enforce objective design standards and building code requirements. Your conversion must meet California building code standards for habitable space, including minimum ceiling height (7 feet finished), insulation, ventilation, electrical, plumbing, fire safety, and egress.

Under state law, local agencies must review complete ADU applications within 60 days and cannot impose parking replacement requirements for garage conversions. These protections apply across every city and county in California.

Plan for the Tax Impact

Whether you are converting a garage into a rental ADU, a home office, or a guest suite, understanding the tax implications upfront helps you budget accurately. Work with your contractor and a qualified CPA to:

• Estimate the assessed value of the conversion based on construction costs
• Determine if your project qualifies for the SB 1164 new construction exclusion
• Explore depreciation deductions if the unit will be used as rental property
• Factor supplemental tax bills into your first-year budget

How Custom Home Approaches Garage Conversions

At Custom Home, we guide Bay Area homeowners through the entire garage conversion process, from initial feasibility assessment through permitting and construction. Our two-phase design-build approach starts with a thorough evaluation of your existing garage, local zoning requirements, and project goals before any construction begins.

We handle permit applications, coordinate with local building departments, and ensure every conversion meets current California building code standards. If you have an unpermitted conversion that needs legalization under AB 2533, we can assess what upgrades are needed and manage the retroactive permitting process.

Our team also helps you understand the full financial picture, including construction costs, property tax implications, and potential rental income, so you can make a confident decision before committing to the project.

Next Steps

If you are considering a garage conversion in the Bay Area, or if you need to legalize an existing unpermitted conversion, the best first step is a professional consultation. Every garage is different, and factors like structural condition, ceiling height, utility access, and local regulations all shape the scope and cost of your project.

Contact Custom Home to schedule a consultation. We will assess your garage, walk you through the permit requirements for your specific city, and provide a clear scope and budget before any construction begins.