Washington's HB 1337 removed the three biggest barriers that previously made DADUs impractical for most homeowners — and added cost provisions that changed the math on every project.
Before HB 1337, building a DADU meant navigating complex subdivision processes, limiting your rental options, and being unable to sell units separately. Those restrictions made DADUs less attractive as investment opportunities and limited their flexibility as housing solutions.
HB 1337 changed that framework. Here are the three provisions that moved DADUs from a niche option into a practical opportunity for property owners:
Up to two DADUs on your existing lot, with no lot split and no plat.
Local rules can no longer force the owner to live on the property.
DADUs can be converted to condominiums and sold independently of the main house.
The single change that removed the largest upfront cost from multi-unit DADU projects.
Previously, if you wanted to build two DADUs you had to subdivide your property — a process that could cost $50,000–$100,000+ in fees, surveys, legal work, and time. That made multiple DADUs financially unfeasible for most homeowners.
Now, under HB 1337:
You can construct up to two detached accessory dwelling units on your property without any subdivision requirement.
No lot splitting. No complex legal process. Straightforward development.
Your lot remains a single parcel with one tax ID, one address, and simplified property management.
A simpler ownership structure means lower ongoing costs and less administration.
Avoid the expensive and time-consuming subdivision approval process, surveys, and legal documentation.
Save $50,000–$100,000+ in subdivision costs and months of waiting.
Local ordinances can no longer condition a DADU on the owner living in one of the units.
Previously, many cities required the property owner to live in either the main house or the DADU. That severely limited rental income potential and investment options.
Now, under HB 1337:
You are no longer restricted to renting only to family members or to living on-site yourself.
The unit can be offered on the open rental market, which expands the applicant pool.
A larger pool of qualified applicants gives you room to screen consistently and fill the unit on schedule.
A deeper applicant pool supports steadier occupancy and fewer vacancy gaps.
Market-rate rents instead of family-only discounts mean meaningfully higher returns on the investment.
DADUs in strong rental submarkets rent for $3,000–$5,000+ per month.
Own the property as an investment, renting both the main house and the DADUs to maximize cash flow.
Build DADUs now and rent them while working, then move into a DADU and rent or sell the main house in retirement.
Provide housing for family when needed, then convert to market-rate rentals later without selling or moving.
Rent all units for maximum income while living elsewhere, building equity across multiple properties.
Scenario: A two-DADU property in a Pierce County submarket with steady rental demand.
Market-rate income: $4,000/month per DADU × 2 units = $96,000/year.
Family-only restriction: would have limited occupancy to family members, typically resulting in below-market rents or no income at all.
The difference: potentially tens of thousands of dollars per year in additional income — compounded over years, that represents hundreds of thousands in wealth building.
Illustrative example only. Actual rents depend on unit size, finish level, submarket conditions, and vacancy.
DADUs can be converted to condominiums and sold independently — while you keep the main house.
This is arguably the most significant change in HB 1337. You can convert your DADUs into condominiums and sell them independently — while keeping your main house.
What "condominiumization" means: it is the legal process of converting separate dwelling units on a single property into individually owned condominiums. Each unit gets its own legal description and can be sold separately — just like condos in a building.
Convert your DADUs to condos and sell them as separate properties to different buyers.
Unlock equity without selling your main residence.
Sell one or both DADUs while continuing to live in your primary home — or keep the main house as a rental investment.
Generate capital without displacing yourself.
Choose your strategy based on your needs: sell now for proceeds, rent for ongoing income, or combine both approaches.
Adapt the strategy as your circumstances change.
Build two DADUs → convert to condos → sell both immediately.
Result: recover your construction costs plus profit, while still owning your main house. You have essentially extracted equity from your land without selling your home.
Build two DADUs → convert to condos → sell one, keep one as a rental.
Result: recoup construction costs by selling one unit while maintaining ongoing rental income from the other.
Build two DADUs → rent both for years → convert and sell later.
Result: generate rental income while the properties appreciate, then convert to condos and sell when you are ready to cash out. Maximum total return.
Build a DADU for family → later convert to a condo → sell to a family member or on the open market.
Result: provide family housing initially, then convert to ownership when circumstances change — helping family build equity, or transitioning to a market sale.
This is wealth creation through use of land you already own — without selling your home or moving away.
Illustrative figures for explanation only. Construction costs, resale values, conversion expenses, and taxes vary by property and by market, and are not a projection of results.
Each provision is meaningful on its own. Together they create a workable framework for property owners.
No subdivision costs mean you can afford to build more units.
No owner-occupancy requirement means maximum rental income potential.
Condominiumization means you control when and how you realize gains.
Your DADU strategy can evolve with your circumstances.
HB 1337 transformed DADUs from a restricted, expensive option into a practical, flexible, and financially workable opportunity for Washington homeowners. Whether the goal is passive income, family housing, or long-term wealth building, these three provisions make it possible.
Requirement by requirement, what the law changed for homeowners.
| Aspect | Before HB 1337 | After HB 1337 |
|---|---|---|
| Building multiple DADUs | Required costly subdivision ($50K–$100K+) | No subdivision required |
| Owner occupancy | Must live on the property in many cities | No occupancy requirement |
| Rental options | Limited to family or on-site tenants | Rent on the open market at market rates |
| Selling DADUs | Must sell the entire property | Sell DADUs separately as condominiums |
| Investment flexibility | Very limited options | Rental, sale, or hybrid strategies all available |
| Time to develop | 6–18 months (including subdivision) | 4–8 months (construction only) |
| Exit strategies | Rent or sell the entire property | Multiple exit options |
| Wealth-building potential | Limited by restrictions | Significant wealth creation opportunities |
Timelines and dollar ranges are typical figures for Western Washington projects; actual results vary by jurisdiction and by property.
HB 1337 opens real opportunities, but several factors still deserve attention.
While HB 1337 sets the statewide framework, local jurisdictions may still impose additional requirements related to:
Every property is different — a professional feasibility analysis is essential.
Converting DADUs to condominiums requires:
Plan ahead with experienced professionals who understand the condo conversion process.
HeartLink Homes helps property owners navigate HB 1337's opportunities while avoiding common pitfalls. We connect you with the right experts — builders, attorneys, surveyors, and financial advisors — who understand DADU development in detail.
Understanding these changes is the first step. Implementing them successfully takes a strategic approach.
Every lot is different. A professional feasibility analysis determines what is actually possible on your specific property.
Are you focused on income, family housing, wealth building, or retirement planning? Your strategy depends on your objectives.
DADU development requires coordinating builders, architects, attorneys, and financial professionals who understand HB 1337.
Beyond the three major changes, HB 1337 includes further provisions that lower development costs and increase owner flexibility.
This is one of the biggest financial advantages of HB 1337.
Under previous rules — and under other development types such as multiplexes permitted by HB 1110 — property owners were often required to pay for public right-of-way improvements: sidewalks, curbs, street widening, and drainage systems. Those costs could easily reach $50,000–$100,000 or more.
HB 1337 specifically prohibits local governments from requiring ROW improvements as a condition for DADU permits.
HB 1337 allows more efficient use of your property:
Traditional setback requirements could consume significant portions of smaller lots, making DADU development impractical. HB 1337's reduced setbacks mean you can maximize the usable space on your property.
New DADUs built under HB 1337 are exempt from Washington's rent stabilization law (HB 1217) for 12 years.
Washington's rent stabilization law limits annual rent increases to 7% on most rental properties. New DADUs receive a 12-year exemption, which means:
The exemption recognizes that new construction needs financial flexibility to pencil — and it makes DADU development notably more attractive from an investment standpoint.
Compared with the other housing development paths in Washington, DADUs under HB 1337 sit in the middle — not too complex, not too limited, but workable for most property owners.
High infrastructure costs:
Plus: significant property loss to improvements. On a 1-acre property, you might lose half an acre or more to required right-of-way improvements, setbacks, and infrastructure — before you start building housing units.
Optimal efficiency:
Result: maximum land use without costly improvements. You can use virtually all of your existing property for housing, with no land lost to required improvements. Your money goes into the housing units themselves, not into infrastructure that generates no income.
Answers to the questions homeowners ask most often about building DADUs under the law.
We'll cover what's feasible on your specific lot under HB 1337, which approach — rental income, condo sales, or a hybrid — fits your goals, realistic costs, financing and construction timelines, and the professionals who should be involved next. No obligation. Just education and honest guidance about your options.
This explanation of what HB 1337 changed was prepared by HeartLink Homes at Keller Williams Realty Puyallup. Information has been compiled from:
Important: This page is general education, not legal, tax, or financial advice. Dollar figures, timelines, rents, and resale values shown here are illustrative examples, not projections or guarantees. DADU rules are implemented locally, and requirements for lot size, height, setbacks, parking, utilities, and permitting vary by jurisdiction and change over time. Condominiumization involves legal, survey, and association work beyond what HB 1337 authorizes. Verify current requirements with your city or county planning department, and consult qualified legal and tax counsel, before making decisions. Contact HeartLink Homes to discuss your specific property.