Inspired by shuttered Fair Oaks company, new bill aims to stop fraud from ADU builders
Inspired by a now-shuttered Fair Oaks company, a new state bill aims to make it harder for Accessory Dwelling Unit building companies to “defraud” homeowners.
Assemblymember Marc Berman, D-Menlo Park, Tuesday introduced a bill that would limit the amount contractors can charge upfront for the construction of Accessory Dwelling Units, or ADUs, a news release from Berman’s office stated. It would also increase penalties for contractors who violate those protections.
“California is in the midst of a severe housing crisis, and ADUs are a critical part of the overall effort to build more housing units,” Berman said in the release. “Unfortunately, as demand for ADUs has grown, so too has exploitation of homeowners by unscrupulous contractors. AB 559 will ensure that homeowners are not scammed out of their life savings or left abandoned with unfinished ADUs.”
The bill is sponsored by the Contractors State License Board. That entity has received over 400 complaints regarding contractors failing to complete ADU construction projects, the release stated.
Homeowners across the country have sued Fair Oaks-based Anchored Tiny Homes in Sacramento Superior Court, including Oak Park retirees Kate Brolan and Sydney Brown. The pair in 2022 hired the company to construct an ADU in their backyard that they could rent out, near the corner of 4th Avenue and Stockton Boulevard, their lawsuit filed in August alleged. After paying the company at least $344,000, their ADU has issues that would cost over $70,000 to repair, according the the lawsuit.
A Facebook group called “Scammed by Anchored Tiny Homes” has over 1,000 members. One of them is a Roseville homeowner who said she paid the company $40,000, never received her ADU, and only got $5,000 back, she told The Sacramento Bee in August.
Colton Paulhus of Anchored Tiny Homes did not immediately respond to an email seeking comment.
The company is now closed and filed for bankruptcy in October.
Gov. Gavin Newsom has signed laws aimed to make it faster and easier for homeowners to build ADUs, and state leaders have been urging homeowners to still build them despite the stories of Anchored Tiny Homes customers. The state’s Department of Housing and Community Development webpage states that ADUs are, “an innovative and effective option for adding much needed housing in California.”
This story was originally published February 19, 2025 at 12:07 PM.
