Key Changes to California Real Estate Laws in 2026

California's real estate landscape continues to evolve at a rapid pace. In 2025, the Legislature enacted a new slate of laws that will shape housing development, land use, and project approvals across the state into 2026 and beyond.

This article highlights the most significant of these changes, with a particular focus on housing and development-related legislation. We summarize what is new, explain how these updates fit into California's already complex regulatory framework, and outline some of the implications for property owners and developers.

CEQA Reforms

Some of the laws that will have the biggest impact this year address the California Environmental Quality Act (CEQA). For years, critics have argued that CEQA complicates and prolongs the development process, making building in California more expensive and difficult than it already is. To address some of these concerns, California enacted two key pieces of legislation: AB 130 and SB 131.

• AB 130 – Assembly Bill 130 (AB 130) is a comprehensive housing budget trailer bill signed by Governor Newsom on June 30, 2025, that took effect immediately as part of the state's effort to address California's housing crisis. The bill makes sweeping reforms to CEQA, the Permit Streamlining Act, and the Housing Accountability Act.
  
  Key provisions include:
  
  
  • New CEQA Exemption for Infill Housing: The bill creates a statutory CEQA exemption for qualifying housing projects on sites up to 20 acres (or up to five acres for "builder's remedy" projects) that are in urban areas, previously developed or surrounded by urban uses, consistent with local plans, and avoid environmentally sensitive lands.
  • Building Code Freeze: The bill prohibits cities and counties from modifying building code standards applicable to residential units between October 1, 2025, and June 1, 2031, except for emergency health/safety standards, home hardening, or certain other limited exceptions. 
  • Permanent Housing Law Extensions: The bill removes sunset dates from SB 330's five-hearing limit on housing projects, the Housing Crisis Act of 2019, Permit Streamlining Act timelines, and Housing Accountability Act vesting provisions, making these protections permanent.
  • Permit Streamlining: The bill establishes a 60-day deadline for approval or disapproval of ministerial housing projects and a 30-day deadline for projects qualifying for the new CEQA infill exemption.
  • Coastal Act Modifications: The bill exempts residential development projects from certain Coastal Commission appeal provisions.

• SB 131 – California Senate Bill 131, also signed into law on June 30, 2025 with immediate effect, is a companion budget trailer bill that focuses primarily on CEQA reforms and new exemptions for community-serving infrastructure projects.
  
  Key provisions include:
  
  
  • "Near Miss" CEQA Streamlining: For housing projects that would qualify for a CEQA exemption but for a single disqualifying condition, the bill limits environmental review only to the effects caused by that single condition and waives requirements to analyze project alternatives, cumulative impacts, and growth-inducing effects.
  • New Exemptions for Community Facilities: The bill exempts from CEQA specific facilities, including daycare centers (not in residential zones), federally qualified health centers and rural health clinics under 50,000 square feet, nonprofit food banks/pantries on industrial-zoned land, and advanced manufacturing facilities on industrial-zoned sites.
  • Agricultural/Farmworker Housing Exemption: The bill exempts from CEQA new agricultural employee housing projects and repair/maintenance of existing farmworker housing.
  • Housing Element Rezoning Exemption: The bill exempts from CEQA rezoning actions that implement a schedule of actions contained in an approved housing element.
  • Wildfire, Water, and Park Exemptions: The bill exempts from CEQA wildfire risk reduction projects (prescribed burns, defensible space, fuel breaks), certain disadvantaged community water system projects (extended to 2032), and publicly funded park and trail facilities.
  • Streamlined CEQA Records: The bill excludes staff notes and internal agency communications from the CEQA record of proceedings, except for projects involving distribution centers or oil/gas infrastructure, thereby limiting administrative records to expedite any appeals.
  • Homeless Housing Funding (Round 7): The bill establishes Round 7 of the Homeless Housing, Assistance, and Prevention (HHAP) program with a $500 million appropriation for homeless initiatives effective July 1, 2026, contingent on specified conditions being satisfied.

Together, AB 130 and SB 131 represent a welcome continuation of California's efforts to significantly increase housing stock and build infrastructure by reforming CEQA while maintaining core environmental protections. Property owners and developers can expect more certainty in the development process and a shorter development timetable overall, thereby increasing property values. For developers of projects now exempt from CEQA, significant time savings will be achieved with a material reduction of CEQA litigation risk.

For a more detailed summary of the recent updates to CEQA, please review this article by Harvest Partner Cheryl Nieman Brechlin.

Transit-Oriented Housing Development (SB 79)

Effective July 1, 2026, SB 79 – the "Abundant and Affordable Homes Near Transit Act" – expands where multifamily housing may be developed in certain transit-rich counties. It makes qualifying multifamily housing developments an allowed use on sites that are zoned for residential, mixed-use, or commercial development if those sites are located near major transit stops (e.g., rail stations, bus rapid transit). This applies in California counties with more than 15 passenger rail stations, such as Alameda, San Francisco, San Mateo, and Santa Clara counties. The law establishes statewide minimum development standards (including height limits ranging from 55 to 95 feet and densities of 80 to 160 dwelling units per acre) that vary based on proximity to the transit stop and the tier of transit service (i.e., Tier 1 for heavy rail/high-frequency commuter rail; Tier 2 for light rail and bus rapid transit). Projects with more than 10 units must include affordable housing (7-13% of units depending on affordability level), and local governments retain some flexibility to adopt alternative local transit-oriented development (TOD) plans that maintain equivalent housing capacity. Qualifying projects may also be eligible for streamlined ministerial approval under SB 35/SB 423. 

For a more detailed summary of SB 79's provisions and the implications for property owners and developers, please review this article by Harvest Partner Cheryl Nieman Brechlin.

Clearing Outdated Private Restrictions (AB 1050)

Effective January 1, 2026, Assembly Bill 1050 (AB 1050) amends California Civil Code Section 714.6 to expand the ability of property owners and developers with pending housing project applications to remove recorded restrictive covenants that block residential development on commercial properties.

Previously available only to 100% affordable housing developments, AB 1050 streamlines the process for any housing development on commercial property, regardless of affordability. The law covers residential restrictions in CC&Rs, deeds, contracts, security instruments, REAs, and other recorded documents. The removal process is not automatic.

To invoke the law's protections, the applicant must:

1. Own or control the commercial property.
   1. "Controlled" is defined as "includ[ing], without limitation, the right to acquire the property under an option agreement, purchase and sale agreement, or similar agreement."
   2. The individual or entity that submits the request is prohibited from recording the modification until they close escrow on the property and become its record title owner.
2. Submit a restrictive covenant modification document to the appropriate county recorder along with the original restrictive covenant and documentation establishing that the property qualifies as a housing development under Section 714.6.
3. The county recorder must then submit the materials to county counsel for review within five (5) business days.
4. County counsel must determine within 15 days whether the restrictive covenant is covered by the law, whether the property qualifies, and whether the modification document may be recorded.
5. Upon approval and recording by the county, the owner may provide optional notice to interested parties, who then have 35 days to file any legal challenge.

For a more detailed summary of AB 1050's provisions and the implications for property owners and developers, please review this article by Harvest Partner Cheryl Nieman Brechlin.

Required Appliances in Rental Units (AB 628)

California Assembly Bill 628 (AB 628), authored by Assembly Member Tina McKinnor, requires landlords to provide and maintain a working stove and refrigerator in residential rental units as a condition of habitability. The law amends Civil Code Section 1941.1 and applies to leases that are entered into, amended, or extended on or after January 1, 2026.

This addresses a long-standing practice where landlords often did not provide these appliances, forcing tenants to purchase and install their own refrigerators or stoves. Under AB 628, a stove must be capable of safely generating heat for cooking, and a refrigerator must be capable of safely storing food; any appliance subject to a manufacturer recall does not meet these standards and must be repaired or replaced within 30 days of the landlord receiving recall notice.

The law does permit a tenant and landlord to mutually agree (at the time of lease signing) that the tenant will provide their own refrigerator but no such agreement is allowed for stoves. Certain housing types are exempt, including permanent supportive housing, single-room occupancy units, residential hotels, and dwelling units with shared or communal kitchens (such as assisted living facilities).

Apartment owners must be cognizant of these new requirements to ensure their units and their form leases meet AB 628’s new requirements.

Mandatory Disclosure Requirements Regarding the Use of AI (AB 723)

Effective January 1, 2026, California Assembly Bill 723 (AB 723) requires real estate brokers and salespersons to disclose when they use digitally altered images (including AI-generated or virtually staged photos) in advertisements or promotional materials for the sale of real property. Under the new law, which adds Section 10140.8 to the Business and Professions Code, any digitally altered image must include a conspicuous disclosure statement and a link, URL, or QR code directing consumers to the original, unaltered version of the image. The law defines "digitally altered images" as those modified to add, remove, or change elements such as furniture, fixtures, landscaping, paint colors, or views, but explicitly exempts common photo editing adjustments like lighting, cropping, color correction, and exposure. While the bill does not impose any penalties on property owners, they should ensure their brokers comply with these requirements to avoid ensnaring a transaction in needless litigation.

Social Security Tenant Protection Act (AB 246)

AB 246, which was signed on October 10, 2025 with immediate effect, provides an affirmative defense to eviction for nonpayment of rent where a tenant's Social Security benefits are interrupted due to federal agency action or delay, conditioned on the tenant documenting the interruption and curing arrears after benefits resume.

For owners and operators, this introduces a documentation-sensitive exception in unlawful detainer matters and will require property management teams to update intake, notice, and repayment-plan protocols to verify benefit interruptions and to structure arrearage cures tied to restoration of benefits. In senior and workforce housing assets, expect temporary cashflow timing impacts and a greater premium on contemporaneous records to withstand court scrutiny.

Looking into 2026, courts and industry forms are expected to converge on standardized proof requirements (e.g., SSA notices and reinstatement confirmations), making early, well-documented engagement with affected tenants the most reliable way to control timeline risk and limit litigation expense. In practice, owners should consider standardized hardship addenda, temporary rent deferral agreements that automatically reinstate regular rent upon benefit restoration, and escrow-like treatment of partial payments to preserve accounting clarity. Mixed-use projects with residential components should ensure on-site staff are trained to spot qualifying documentation and to avoid fair housing pitfalls in how the defense is communicated. Cash management, receivables forecasting, and lender reporting may need modest adjustments to reflect longer collection cycles on a small cohort of units. It would be wise for landlords to inquire as to whether Social Security benefits may have been interrupted prior to brining an action for the nonpayment of rent.

Emergency Rebuilding Measures & Disaster Recovery

AB 818 –Effective as of its signing on October 10, 2025, AB 818 provides that during declared local emergencies, agencies must act on permit applications on compressed timelines, materially accelerating post-disaster reconstruction.

For developers and owners, the opportunity is speed, but the risk shifts to application completeness: plan for pre-coordinated, permit-ready submittals and tighter consultant calendars to capitalize on shortened clocks.

In fire-impacted markets such as Los Angeles, underwriting models can reflect shorter downtime and faster revenue restoration, provided diligence confirms local adoption and agency readiness. Practically, expect streamlined intake, triage of life-safety scopes, and greater use of over-the-counter reviews and field approvals for like-for-like replacement, with discretionary actions generally deferred in favor of restoring habitability and business operations. Fees and inspection sequencing may also be adjusted under emergency orders, which can pull forward cash flows for retail, industrial, and hospitality assets that are able to reopen sooner, while leaving more complex redesigns to standard timelines once emergency declarations lapse.

AB 1007 – Effective as of January 1, 2026, AB 1007 shortens early-stage agency review periods, effectively front-loading entitlement and plan-check dialogue.

Developers should expect fewer, denser comment cycles; projects with complete initial packages and early utility/fire signoffs will benefit most. This favors disciplined design management. Applicants that front-load completeness and consolidate review cycles will see the greatest schedule gains, while incomplete submittals face proportionally greater timing risk as agency windows tighten.

Developers should expect entitlement schedules to compress where applications are high quality, with more variance attributable to applicant preparedness than to agency slippage. For commercial programs, the biggest gains appear in infill and tenant-improvement scopes that can be fully documented up front, particularly in office-to-lab conversions, light industrial upgrades, and retail reconfigurations. Because agency review windows are shorter, coordination with utilities, fire, and environmental health must begin earlier; where those third-party inputs slip, the overall schedule advantage can narrow.

In 2026, expect agencies to normalize to the shorter timelines with more standardized completeness checklists, which will reward projects that adhere to consistent submittal formats and predictable phasing.

AB 301 – Effective on signing in October 2025, AB 301 imposes state "shot clocks" on post-entitlement permits, including prompt completeness determinations and defined approval windows that vary by project size. For sponsors, this reduces uncertainty between land use approvals and building permits, often the most volatile carry-cost period, and supports more reliable construction mobilization dates. Teams should manage plan check tightly to avoid "resets" that can erode the statute's timing protections.

In practical terms, expect completeness reviews in roughly two weeks and approval windows measured in one to two months depending on project scale. The business impact is greater predictability between land use approvals and building permits, enabling firmer mobilization dates, clearer carry-cost assumptions, and more reliable procurement timelines. Conversely, significant mid-review scope changes can still extend schedules despite statutory clocks. The clocks are particularly consequential for shell and core permits, phased foundation packages, and heavy Tenant Improvement programs, where clearer approval horizons support earlier procurement of long-lead equipment like electrical gear and mechanical units, and more accurate rent commencement forecasting in pre-leases.

Developers should also anticipate closer tracking of plan-check rounds, as additional cycles may pause or restart timelines; projects with robust quality control and limited deferred submittals will capture the most benefit in 2026 as agencies adopt the new cadence.

AB 851 –Effective as of October 10, 2025, AB 851 temporarily prohibits unsolicited purchase offers in specified wildfire-impacted ZIP codes in Los Angeles and Ventura counties through January 1, 2027, and requires a seller attestation that any accepted offer was solicited. Acquirers should pivot to brokered channels, auctions, or documented seller outreach, and ensure there is clear evidence that any accepted offer was solicited by the owner.

For sellers, the attestation requirement effectively makes solicitation part of the deal narrative and timing, and participants should expect heightened scrutiny of sourcing representations in covered areas through January 1, 2027. Off-market pipelines will be constrained, favoring transparent marketing and publicly verifiable outreach to mitigate enforceability and reputational risks.

HOA Fine Limits (AB 130)

Effective as of June 2025, California imposed new limits and process requirements on HOA fines, including a general cap (with the potential for higher fines only if the board makes a written health-or-safety finding in an open meeting), a meaningful opportunity-to-cure requirement, and prompt written disciplinary decisions, with Internal Dispute Resolution (IDR) access and enforceability for IDR agreements.

For commercial and mixed-use portfolios subject to common interest regimes, this reduces enforcement leverage for recurring, non-safety violations and may affect operating plans where compliance historically depended on escalating fines. Boards and community managers should ensure their fine practices align with the cap and process requirements, including making any health/safety findings in an open meeting and providing meaningful opportunities to cure before imposing discipline.

From a transactions perspective in 2026, buyers and lenders should view fine policy compliance as part of governance risk: persistent non-conforming practices can signal heightened dispute risk and weaker recoverability of assessments in common-interest projects.

With any legislative shift comes both new opportunities and added complexities. California continues its push to streamline and shorten the development process, which should be welcome news to California landowners and developers. As these changes take effect this year, our team will continue to closely monitor their implementation and impact so that we can remain a practical, reliable resource for our clients. We are committed to helping clients navigate the evolving landscape and move their deals forward with clarity and confidence.