These California Companies Want to Buy Your Backyard — and Build a House

Brian and Gail Tremaine moved to East San José 45 years ago for the quiet. On the outskirts of this Silicon Valley city, atop what was once an apricot orchard, the couple kept sheep, goats and horses.

They planted mulberry trees along the driveway and carved terraces and patios out of the sloping hillside, but a portion of the 1.7-acre property remained untamed.

“It’s just become an area where we need to do weed control and keep it clean because the county gets after us if the weeds get too high,” said Brian Tremaine, 75. “We’re getting to the age where we want less land.”

The couple first considered building an accessory dwelling unit (ADU) or backyard cottage. But the cost — with estimates ranging from $500,000 to $700,000 — was formidable, Brian Tremaine said, as was the idea of taking out a second mortgage.

That’s when they learned about BuildCasa — a company that would purchase a portion of their backyard and assist them in splitting the lot under SB 9, a controversial law that went into effect in January 2022. It allows property owners to build up to two duplexes on most single-family properties.

At the time of its passage, supporters hailed it as the end of single-family zoning in California and an opportunity to spur more housing, while critics worried it would spark a dramatic shift in the makeup of California’s suburban neighborhoods. But in the first two years since the law was in effect, it has produced little in the way of either new lots or housing.

A KQED survey of 16 cities of varying sizes across the state found that between 2022 and 2023, the cities collectively approved 75 lot split applications and 112 applications for new units under the law. That’s compared to more than 8,800 ADUs the cities permitted during the same time frame.

However, a growing cadre of companies is hoping to jumpstart the construction of SB 9 projects by taking on the permitting and development work themselves, as well as making it easier for homeowners to take advantage of the law.

“These types of projects are really costly and complicated for a homeowner to take on,” said Ben Bear, co-founder and CEO of BuildCasa. “They’re basically asking the homeowner to be a developer, which, from a financial and capabilities perspective, is a challenge.”

In Southern California, Yardsworth has emerged with a model similar to BuildCasa. But unlike the latter company, which sells the lots to developers, Yardsworth plans to develop the lots themselves and either sell or rent out the new homes. Elsewhere in the state, other companies are specializing in particular aspects of SB 9.

Bear said his clients make, on average, just over $100,000 selling the new lot — though in high-priced areas of the state, the amounts have been as high as $400,000. Homeowners get to keep their existing home and mortgage.

The tradeoff, he said, is a reduction in the value of the existing property by 10% or less.

“So there’s a major positive benefit when you compare those two numbers,” Bear said.

Whether these offers are enticing enough to encourage more homeowners to take advantage of SB 9 remains to be seen.

Muhammad Alameldin, a policy associate at the Terner Center for Housing Innovation at UC Berkeley, is skeptical that these companies alone can kickstart the construction of new housing because few projects are financially viable under SB 9. He said that without changing the law itself, it would likely result in only a smattering of new homes each year.

“If we do not go back after implementation and reform and fix some of the requirements of [SB 9],” he said, “then what’s the point of even having this big fight in the first place?”

Slow uptake

After the law went into effect, many cities implemented their own restrictions on SB 9 projects. Alameldin co-authored a 2023 report detailing many of them: limitations on the size of new units, open space requirements and burdensome fees, to name a few.

It was a story that had been told before — with ADUs, which were first legalized statewide in 2016. It took several years and nearly a dozen new laws to reduce regulations and spur construction. In 2016, just over 1,000 ADUs were approved across the state. In 2022, there were nearly 25,000 — comprising nearly a fifth of the state’s estimated housing supply.

“It wasn’t by accident,” Alameldin said. “It was years and years of legislation by multiple authors from the Assembly and Senate, who kept improving the law year after year.”

State Sen. Toni Atkins, SB 9’s original author, has introduced a bill, SB 450, that begins to address some of the issues that developers, planning staff and homeowners have faced. It would set a time limit for jurisdictions to approve or reject applications for SB 9 projects and mandate that new housing not be held to stricter design standards than other homes.

The bill passed in the Senate and Assembly last year but was then put on hold. It’s eligible for a floor vote this year.

In a statement, Atkins acknowledged the slow rollout of SB 9 and said she was committed to “finding solutions to the housing crisis by building on past legislative efforts, like SB 9.”

“Implementation of new legislation like SB 9 doesn’t happen overnight; it takes time and thoughtful consideration,” Atkins wrote. “SB 9 is a modest tool that gives homeowners control of housing options that best meet their needs.”

But even with the proposed changes, some developers said SB 450 doesn’t go far enough. Several said they would like to see an anti-speculation measure removed that requires applicants to live on the property for three years after undergoing a lot split.

Doing so would make the projects more enticing to developers, said Peter Taormina, the managing owner of a development company called Cypress Pacific Investors, who is hoping the provision can be changed in subsequent legislation.

“You’re going to have to let the people that do this for a living, roll up their sleeves and do it,” said Taormina, who is in the process of completing an SB 9 project in Marina, California, that consists of splitting three parcels into six with a home and an in-law unit on each. “The end result will be [that] housing will be created.”

But Matt Lucido, co-founder and CEO of Yardsworth, identified less tangible barriers, as well. Most people simply aren’t aware of the bill, he said, and even if they are, they may be reluctant to sell a portion of their backyard.

“It’s a really emotional thing. People are attached to their backyards, even if they don’t use them,” he said. “You’re asking them to carve off a piece of the American dream.”

To help potential clients overcome this hurdle, Yardsworth introduced a new offer earlier this month: The company will fund the down payment on a new home in exchange for a portion of the homebuyer’s yet-to-sentimentalized backyard. Lucido said that can help solve two problems simultaneously — adding housing amid a shortage and helping renters become owners.

Homeowners leverage their lots

For those willing to take on an SB 9 project, the leaders of BuildCasa and Yardsworth said their clients tended to fall into two categories: retirees looking to downsize in place — similar to the Tremaines in San José — or younger homeowners hoping to leverage the equity in their properties without taking on debt.

The latter was the case for one of Yardsworth’s clients, former Olympian Jamele Mason, who competed in the 2012 Summer Games in the men’s 400-meter hurdles. Mason bought his South Los Angeles home in February 2020, right before the pandemic lockdowns.

At first, he thought maintaining the large backyard, with its lemon tree and pergola, would be a fun pastime. But, he quickly realized it was more work than pleasure.

“So, I ripped up all the grass that was in the back. I put in artificial turf to try to make it as low maintenance as possible,” he said. “Turns out there is still maintenance that needs to be done.”

He learned about Yardsworth while researching ways to pull equity out of his house without having to sell and contacted the company last fall to begin the process. In January, he began working for Yardsworth as a sales manager.

Mason, 34, said he plans to use the $135,000 he got from Yardsworth to buy an investment property in Houston, where he grew up. He hopes the additional property will set him up for a more comfortable retirement, something he admitted was a constant worry.

“I put everything I had into purchasing this house,” Mason said. “So, when I found out that I could pull the money out, I was like, ‘Wow, that’s actually a really cool way to leverage what I have.’”

In other cases, homeowners opt to keep their split lots vacant as an investment — either to pass down to their children or sell later. Such was the case with roughly half of Peter Riechers’ 80 or so clients, who are spread out across the state, he said. The president of civil engineering firm Riechers Engineering said he was so motivated by SB 9’s potential that he came out of a 15-year retirement when the law went into effect.

“It was so exciting — still is very exciting,” he said. “You’ve got all this land sitting there, not being used … when it could be used for this housing crisis we have in California.”

Easton McAllister, the owner of DeBolt Civil Engineering, which is based out of Danville, said his company has taken on at least 50 lot splits. In roughly a dozen cases, he said he’s also offered to complete the work for free in exchange for an option to purchase the newly split lot.

It is unclear whether these companies’ models of shepherding property owners through the process — and then selling the newly split lots or developing them themselves — are in keeping with the spirit of SB 9’s anti-speculation protections. Atkins declined to be interviewed and didn’t respond to a request for comment via email.

But both Mason and the Tremaines said their projects wouldn’t have happened without some kind of professional assistance. Brian Tremaine said he wouldn’t even have known where to start.

“If you ever go to the county, it’s impossible. … Who do you talk to?” he said. “That would have taken months — probably years, literally — just to figure it out.”

In Los Angeles, Mason is bracing for a duplex to be built behind his single-story home, while the Tremaines said they don’t yet know what kind of home might be built in their backyard.

But that’s not what worries Gail Tremaine. The law requires at least 40% of the existing lot to be sectioned off, which, in the Tremaines’ case, made for an awkward gerrymandering of the property. It meant they not only had to carve off the unused portion of their backyard but a portion of their front yard, as well.

“That kind of tugs at my heart a little,” she said. “You know, change is always hard. And the older you get, the harder change is.”