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The Arizona Casita Law Explained: What HB 2720 Actually Lets You Build

Last updated September 2026 by Nick Calamia, REALTOR® and Licensed General Contractor (ROC 350115)

What is the Arizona casita law?

It's HB 2720, and it's the biggest change to Arizona residential zoning in a generation. Signed into law on May 21, 2024, House Bill 2720 requires Arizona cities with at least 75,000 residents to adopt regulations legalizing construction of accessory dwelling units on residential parcels. It took effect January 1, 2025, and every Arizona city over 75,000 people must permit at least one attached ADU and one detached ADU on any single-family residential lot. That list includes Phoenix, Scottsdale, Mesa, Chandler, Gilbert, Tempe, Glendale, Peoria and Surprise.

"Casita" is just the Arizona word for it. Your city's code calls it an accessory dwelling unit, or ADU, and it typically contains everything needed to operate as a fully independent dwelling: kitchen, bathroom, living area, and sleeping quarters . Guest house, mother-in-law suite, backyard cottage, converted garage. Same building, same rulebook.

Here's what the law stripped away from cities:

• Discretion. Cities can no longer require special use permits, variances, or public hearings for ADUs meeting the minimum standards, which means if your lot qualifies, approval is no longer a judgment call.
• Parking mandates. The law removes required off-street parking for ADUs. No new driveway pad eating your yard.
• Big setbacks. The largest setback a municipality can require is five feet. Setback, in plain terms, is how far the building has to sit from your property line.
• Design matching. An ADU's design no longer has to match the exterior of the single-family home.
• Owner occupancy and family requirements. The law explicitly bars requiring a familial or other preexisting relationship between the primary home occupant and the ADU occupant.

Then came the sequel. House Bill 2928 passed in 2025 and took effect January 1, 2026, extending the same framework to counties, so unincorporated Maricopa County and smaller cities under the population threshold are now covered too. Maricopa County adopted its own ordinance ahead of that deadline.

What does the City of Phoenix actually allow on my lot?

Two casitas, sized against your main house. When a lot has no more than one single-family detached primary dwelling, Phoenix permits two ADUs in addition to the primary dwelling, with a third allowed under certain circumstances. That third unit requires a lot of at least one acre with one of the ADUs qualifying as affordable housing.

The size math is where projects get redesigned. Each ADU may be up to 75 percent of the gross floor area of the main house, not to exceed 1,000 square feet on lots up to 10,000 square feet, or 3,000 square feet on lots over 10,000 square feet. On the larger lots the cap is the lesser of 3,000 square feet or ten percent of net lot area. So a 2,000 square foot ranch house in Camelback East supports a 1,000 square foot casita on paper. A 1,200 square foot bungalow supports 900.

Two more constraints that bite. Any ADU must comply with the lot coverage requirements applicable to the property , and lot coverage (the share of your parcel your buildings can occupy) is what actually stops most Arcadia projects once you add the main house, garage, covered patio and pool equipment pad. And a handful of zoning districts including RE-43, RE-24, RE-35 and R1-14 carry different rules, so checking your specific zoning district before drawing plans is a necessary first step . Lots that already hold a duplex or triplex are not eligible for an ADU at all.

Can my HOA still block a casita?

Yes, and this is the single most misunderstood part of the law. Both HB 2720 and HB 2928 explicitly preserve the enforceability of private restrictive covenants, so if your HOA's CC&Rs prohibit ADUs, detached structures, or additional dwelling units, the association can deny your request regardless of what city zoning allows. You can get full sign-off from the city, get your building permit approved, and still be violating your HOA the moment you break ground.

This matters enormously in the north Valley. HOA prevalence is high in Scottsdale, and many Scottsdale HOAs carry strict CC&Rs that may block ADUs regardless of city zoning. If you're shopping North Scottsdale 85255 specifically to add a casita, the CC&Rs are a due-diligence item, not a formality. Read them during your inspection period.

And one town sits outside the whole thing. Paradise Valley's population is roughly 12,658 per the 2020 Census, well below the 75,000 threshold, so the state law does not preempt its local zoning and the town code governs entirely. The size caps, setback minimums and parking prohibitions in HB 2720 do not automatically apply there, and the town can require larger setbacks, smaller ADUs, added parking and design review. Anyone planning a guest house in Paradise Valley 85253 should start at Town Hall, not the state statute.

How much does a casita cost to build in Phoenix in 2026?

Plan on $150,000 to $250,000 for a mid-range detached unit. Industry cost guides published in 2026 put a garage conversion at $80,000 to $150,000, a mid-range new detached casita of 500 to 800 square feet at $150,000 to $250,000 in the Phoenix metro, and a custom luxury casita with premium finishes at $250,000 to $400,000 or more. Per square foot, new detached ADU construction runs $200 to $400 and up depending on finish level and site conditions. Luxury Scottsdale casitas with premium finishes on a difficult lot pass $400 per square foot.

Two line items get underestimated on almost every job I bid. Site work and utilities, meaning trenching for water, sewer and electric, commonly adds $10,000 to $30,000 and surprises more budgets than anything else. Permits and fees typically run $3,000 to $15,000 in the Southwest.

Path	2026 cost per sq ft	Typical total	My read at resale
Garage conversion	$100 to $175	$80,000 to $150,000	Cheapest entry, but losing covered parking in 115 degree summers costs you buyers
Attached casita	$175 to $275	$120,000 to $220,000	Cheaper utility tie-ins, weakest privacy, softest rent premium
Detached casita, mid-range	$200 to $300	$150,000 to $250,000	The sweet spot for rental income and buyer appeal
Detached casita, luxury	$300 to $400+	$250,000 to $400,000+	Only pencils above roughly $2M where buyers expect a true guest house

An attached casita shares at least one wall with the main home and ties into existing plumbing and electrical, which lowers cost because less new utility work is required. A detached unit costs more and rents for more. That's the whole tradeoff.

The Arizona site costs nobody budgets for

Caliche is the first one. Caliche is a naturally cemented layer of calcium carbonate in our desert soil, and it can be as hard as concrete. When your trench for water, sewer and power hits it, you're renting a jackhammer attachment and your $12,000 utility run becomes $25,000. I price caliche risk into every Valley casita bid, and I still get surprised occasionally.

Then the panel. A full second dwelling with its own HVAC, range, and water heater frequently pushes an older 100 or 150 amp service past capacity, and a service upgrade with APS or SRP coordination adds real money and real weeks. Check load calculations before you fall in love with a floor plan.

Then water. Metro Phoenix runs some of the hardest water in the country at roughly 15 to 25 grains per gallon, which shreds fixtures, water heaters and glass shower doors in a rental unit you aren't living in and won't be watching. I install a loop for a softener on every casita I build, even when the owner says they'll skip it. And orientation matters more here than in any other climate: a west-facing casita wall with unshaded glass is a summer utility bill that will haunt whoever rents it. Deep overhangs, low-SHGC glazing and correct HVAC sizing are not upgrades in Phoenix. They're baseline.

Does a casita actually add value at resale?

Usually, but almost never dollar for dollar, and the appraisal is the bottleneck. Published estimates generally show ADUs add 20 to 35 percent of their construction cost to property value in strong markets , though I'd treat higher published claims with real skepticism. Here's the honest mechanic: an appraiser needs a comparable sale with a permitted casita to credit yours. In neighborhoods where guest houses are normal, like Arcadia 85018 and much of Old Town-adjacent Scottsdale, those comps exist. In a 1990s tract subdivision where yours is the first, they don't, and the credit shrinks.

What consistently protects the value: a permit and a certificate of occupancy, a full kitchen rather than a kitchenette, a real bathroom, separate exterior access, and a finish level that reads as part of the same house. An unpermitted "bonus room with a hot plate" is a disclosure problem, not an asset, and I've watched those cost sellers more in negotiation than they ever cost to build. This is exactly the fix-or-skip call a Builder's Eye report is built for: real contractor pricing on the work, and an honest read on whether your neighborhood's buyers will pay for it. If you're weighing a casita against other projects before listing, my breakdown of how to increase home value before selling in Phoenix covers the cheaper moves that often return more per dollar.

Can I rent a casita out short term?

Long term rental is protected. Short term is city-by-city and it is the piece you must verify in writing before you build. Phoenix prohibits ADUs from operating as short-term rentals while permitting long-term leases. Scottsdale's ordinance carries an owner-occupancy requirement for short-term rentals: if you plan to rent either the main home or the ADU short term, the owner must live on-site in the other unit.

On the income side, treat the big numbers carefully. One 2026 Phoenix-area analysis put realistic short-term monthly gross for ADUs at roughly $2,500 to well over $7,500 in premium neighborhoods at high finish levels, with operating expenses running 25 to 40 percent of gross. That's gross, before your mortgage on the build, before vacancy, before the AC compressor that fails in July. A long-term tenant at a steadier number is how most of my clients actually pencil this, and it's the math I'd want any investment property buyer to run before signing a construction contract.

The permitting sequence in Phoenix

The order matters, because doing step four before step two is how people lose $15,000 in design fees.

1. Confirm your zoning district. Phoenix publishes My Community Map for exactly this, and each zoning district has lot coverage guidelines defining how much of your property can be covered by buildings .
2. Read your CC&Rs and get written HOA architectural approval if an association governs the lot.
3. Run feasibility: setback fit, lot coverage headroom, panel capacity, sewer or septic capacity, trench route.
4. Design to the size cap, not to the wish list.
5. Prepare a site plan showing size, location and planned utilities, then submit through the Shape Phoenix online portal or in person at Phoenix City Hall.
6. Plan review follows, and revisions are common, so build time for at least one resubmission into your schedule.
7. Build through staged inspections, then get the certificate of occupancy after final inspection confirms the unit is safe and code-compliant.

That certificate is the document that turns your casita from a shed with plumbing into a value line an appraiser can defend. Don't skip it to save six weeks. If you're comparing this project against other spends, my list of the renovations that add the most value is a useful gut check.

The Bottom Line

HB 2720 genuinely opened the door. Two casitas by right on most Phoenix single-family lots, no hearing, no parking mandate, five foot setbacks. That's a real property right you didn't have three years ago, and on the right lot it's one of the strongest value plays available to a Valley homeowner.

But the law gives you permission, not a business case. Your HOA can still say no. Caliche can eat $15,000. And if no comparable home in your zip has a permitted casita, the appraiser will struggle to pay you for it. Before you commit, get someone who reads both the construction cost and the comps to look at your specific lot. That's the whole reason I carry both licenses, and I'm happy to walk your backyard and tell you honestly whether it pencils.

Frequently Asked Questions

What is the Arizona casita law?

The Arizona casita law is House Bill 2720, codified at A.R.S. 9-461.18. Signed in May 2024 and effective January 1, 2025, it requires every Arizona city with more than 75,000 residents to allow at least one attached and one detached accessory dwelling unit on any lot where a single-family home is allowed. Cities cannot require public hearings, special use permits, extra parking, owner occupancy, or setbacks greater than five feet.

How many casitas can I build on my lot in Phoenix?

Two. The City of Phoenix allows two accessory dwelling units in addition to the primary home on a single-family detached lot. A third is permitted on lots of at least one acre when at least one unit qualifies as affordable housing under a recorded restriction. Lots that already hold a duplex or triplex are not eligible. Lot coverage limits for your zoning district still apply on top of all of that.

How much does it cost to build a casita in Phoenix in 2026?

A garage conversion typically runs $80,000 to $150,000. A mid-range detached casita of 500 to 800 square feet runs about $150,000 to $250,000, and a custom luxury build with premium finishes runs $250,000 to $400,000 or more. Per square foot, new detached construction in metro Phoenix generally lands between $200 and $400. Utility trenching commonly adds $10,000 to $30,000 on its own.

Can my HOA stop me from building a casita in Arizona?

Yes. Neither HB 2720 nor the 2025 follow-up HB 2928 overrides private recorded covenants. If your HOA's CC&Rs prohibit detached structures, second dwelling units, or rentals, the association can deny your casita even after the city approves your plans. In Scottsdale and Mesa in particular, master-planned communities frequently carry those covenants. Pull and read your CC&Rs before you spend a dollar on design.

Does a casita add value to a Phoenix home?

Usually yes, but rarely dollar for dollar. Published estimates commonly put the value added at roughly 20 to 35 percent of construction cost, with stronger results in high-demand areas. The bigger variable is appraisal support. If no comparable sale in your neighborhood has a permitted casita, an appraiser has thin ground to credit it. Permitted, separately metered, full-kitchen units appraise far better than unpermitted bonus rooms.

Nick Calamia is a licensed REALTOR® brokered by RETSY | Forbes Global Properties and a licensed General Contractor (Everhome LLC, ROC 350115). Statutory, zoning, cost and rental figures cited reflect sources published through 2026 and are subject to change; verify current requirements with your municipality, county and HOA before design or construction. Content is for informational purposes only and should not be construed as construction, legal, or investment advice.