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21 California Real Estate Laws You Need to Know
Real Estate

21 California Real Estate Laws You Need to Know

Whether you're looking to sell or buy property, there are certain California real estate laws to know about—both as a homeowner and a buyer.

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5 min read

February 12, 2021

Looking to buy a beach home in California or hoping to sell your house? You might want to familiarize yourself with the state’s regulations. Whether you’re searching for the best cities to start an Airbnb or the ideal place to buy a rental property, there are certain California real estate laws to be aware of—both as a homeowner and a buyer. 

Not only do these real estate laws protect tenants and homeowners in times of economic uncertainty, but they also help to preserve regulations regarding tenancy, housing, zoning, planning, and everything else in between. Before making any drastic decisions, get acquainted with the new laws, statutes, and regulations to help you with your real estate transactions. 


Must-Know Real Estate Laws In The Golden State

1. According to California’s real estate laws, selling a home requires using an escrow agent in order to facilitate the sale. After the buyer deposits the escrow funds, the seller deposits the deed, and the escrow company holds these items for safekeeping. When all conditions of the escrow are satisfied, the escrow agents transfer the funds to the seller and the deed to the buyer.  

2. Buyers have the right to sue for fraudulent misrepresentation if the seller concealed a known defect. Upon filing a lawsuit, the lawyer interviews relevant parties to establish whether the buyer was unaware of the known defect or the seller truly hid the information from them.

3. Upon selling a home in California, a title company conducts a title search to write a Preliminary Title Report (PTR). Based on the PTR, the title insurance company provides title insurance to the buyer.

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4. When a property is sold in California, a transfer tax is imposed by the county—sometimes also by the city. This refers to the property being transferred from a seller to a buyer. In Northern California, the buyer is normally the one who pays the transfer tax. But in SoCal, the seller is usually the one who pays. 

5. California real estate law dictates that potential buyers must be told whether the property contains lead paint and informed about its potential risks. Real estate agents are required to provide full documentation of the property’s paint history. A state-accredited inspection is also necessary.

6. According to real estate laws in the Golden State, all housing units need a minimum of one smoke detector outside each sleeping area. The seller or the agent is required to provide written evidence of the present smoke detectors.

7. California civil law mandates real estate agents to provide information regarding the property’s window security bars. Agents also have to tell the buyer how to remove them and describe any other safety mechanisms.

 

Real Estate Disclosure Laws

8. The person selling the property is obligated to disclose certain information specifically regarding the ownership and the physical condition of the home. This real estate disclosure law includes providing details on the property tax, known nearby military artillery locations, working condition of any and all appliances and features of the property, and presence of lead-based paint.

9. The real estate agent is required to provide a real estate transfer statement and reveal any agency relationship with the seller, negotiability of real estate commissions, and sales price information. The real estate disclosure law also requires agents to notify potential buyers if a death has occurred on the property in the past three years and to advise buyers to examine the national registry for the locations of sex offenders. 

10. As for required disclosures when financing a real estate property, the lender is obligated to give information regarding any advance fees, a notice of transfer of loan servicing, and the borrower’s right to a copy of the appraisal report. According to the real estate disclosure law, the lender is also required to mention lending credit terms and whether an agent receives compensation from a lender.

11. When the seller or real estate agent fails to provide the information required by the regulations, the real estate disclosure law holds them responsible for the damages that the buyer suffers. Omitting or providing false information to a potential buyer is prohibited. While the lack of disclosure won’t necessarily affect the sale, the accountability and obligation for repairs and damages fall on the seller. 

12. Buyers have the right to cancel the agreement at any given time if a disclosure statement isn’t provided. It’s always best to be upfront about possible issues instead of surprising the potential buyer later.

 

2020’s New California Real Estate Laws

13. A new California real estate law in 2020 prohibited home inspectors from giving an opinion of valuation on a property. This also prevents real estate appraisers from engaging in a home inspector’s activity. 

14. Homeowners are prohibited from enforcing or restricting the display of religious items on a property door. However, there are certain exceptions. If the religious displays threaten public health and safety; contain graphics; violate any federal, state, or local law; and hinder the entry door from opening and closing, the person is required to remove them. 

15. In 2020, it became legal for a tenant to allow occupancy to a person at risk of homelessness. This real estate law in California applies to tenants taking in the person with the written approval of the landlord, regardless of the terms of the lease or rental agreement. The California real estate law includes several provisions and protections for both the landlord and the tenant. 

16. Service members now have a reduced security deposit. According to this 2020 real estate law, landlords may collect only a one-month security deposit for an unfurnished unit or two months for furnished dwellings from a service member residing on the property. This California real estate law also prevents landlords from refusing to enter into a rental agreement with a possible tenant who’s a service member due to the law prohibiting them from demanding a higher security deposit.

 

California’s 2019 Real Estate Laws 

17. One of the most relevant California real estate laws in 2019 was the mandatory balcony inspection. This new law was put into effect after a balcony collapsed onto the street below. Due to the tragic accident, it’s now required to have an inspection of exterior elevated elements and associated waterproofing elements for buildings with three or more residences. A licensed civil engineer or a city inspector must examine and review the balcony—the inspection must be redone every six years. 

18. In 2019, a California real estate law was created to protect victims of domestic abuse. According to the new law, it’s illegal for a landlord to take any type of vindictive action or threaten tenants when they make an emergency 911 call. 

19. The destructive 2019 wildfires in California prompted the enactment of a new real estate law. Increasing the prices of certain goods and services by more than 10 percent became illegal during a state of emergency—increasing rental prices during these times is also now against the law. Moreover, it became a misdemeanor to evict a tenant and then rent out your property to another person at a higher price.

20. One 2019 California real estate law eased the strict payment regulations under specific circumstances—accepting third-party payments became possible in specific situations. It’s important to note that a third-party payment doesn’t establish tenancy in these cases; the person making the payment must acknowledge that the rent payment they’re offering for the premises doesn’t create a new tenancy.

21. A three-day notice bill was introduced as a new California real estate law in 2019. This bill changed the notice period to exclude judicial holidays, including Saturday and Sunday. The main goal of the law is to protect tenants from getting evicted unfairly.

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