California real estate law is a stack of rules that follow a property from the day it goes on the market through ownership, rental, inheritance, and, if things go wrong, foreclosure. The state requires sellers to disclose known defects and hazards, caps most property tax increases at 2% a year, limits annual rent hikes on covered rentals, protects a slice of home equity from judgment creditors, and bars lenders from chasing most homeowners for leftover loan balances after a foreclosure sale. Those pieces interact, and which ones matter depends on whether you are buying, holding title, renting the place out, or inheriting it.
Buying a Home: What Sellers Must Tell You
Every contract for the sale of real property in California has to be in writing to be enforceable under Civil Code Section 1624. The heavier lift sits in the disclosure package. A seller of residential property must give the buyer a Transfer Disclosure Statement covering known defects in the roof, plumbing, electrical, foundation, and appliances, and that duty cannot be waived by contract.1California Legislative Information. California Code Civil Code 1102
A Natural Hazard Disclosure also has to accompany the sale, flagging whether the home sits in a flood zone, fire hazard area, earthquake fault zone, or other mapped risk area.2California Department of Real Estate. Disclosures in Real Property Transactions If the property falls inside a Mello-Roos Community Facilities District, the seller must disclose the special tax assessments that fund local roads, sewers, and schools. Those assessments stay with the property, and buyers who skim past the notice sometimes meet them for the first time on their opening tax bill.
Who the Agent Actually Represents
Real estate agents in California have to confirm in writing, as early as possible, whether they represent the buyer, the seller, or both as a dual agent. The confirmation has to appear in the purchase contract or in a separate signed document before the contract is executed.3California Legislative Information. California Code Civil Code 2079.17 Dual agency is legal, but it narrows what the agent can share with each side, since the same person owes duties to both.
Contingencies, Escrow, and Title Insurance
Most residential purchase contracts carry contingency periods letting the buyer back out without losing the deposit if certain conditions fail. Loan contingencies cover financing. Appraisal contingencies cover the risk of overpaying. Inspection contingencies give the buyer time to assess condition and negotiate repairs. A neutral escrow holder manages funds and documents until the conditions are met. Title insurance, purchased during escrow, protects the buyer against undisclosed liens, recording errors, and competing ownership claims. Lenders require a separate policy of their own.
Transfer Taxes and the 3⅓% Withholding
Counties impose a documentary transfer tax of $0.55 per $500 of the sale price, or $1.10 per $1,000.4California Legislative Information. California Code Revenue and Taxation Code 11911 Cities can layer their own transfer tax on top, often at half the county rate, though some cities have adopted far higher rates by voter approval. On a $900,000 sale, the base county tax alone is $990, and the combined bill in a city with a supplemental tax can be several times that.
Buyers also have to withhold 3⅓% of the sale price on sales over $100,000 from certain sellers and remit it to the Franchise Tax Board, so the state captures income tax on the gain.5California Legislative Information. California Code Revenue and Taxation Code 18662 Sellers can certify a lower amount based on their actual expected gain, but the default rate surprises sellers who did not plan for a chunk of proceeds to be held back at closing.
How You Hold Title
The way title is held decides what happens to the property on death, divorce, or a creditor claim. Joint tenancy carries a right of survivorship, so the surviving owner takes the deceased owner’s share automatically, outside probate. Tenancy in common allows unequal shares and lets each owner leave an interest to anyone by will. Married couples often use community property with right of survivorship, which combines community property treatment with automatic transfer to the surviving spouse.
Ownership transfers officially when a properly executed deed, acknowledged before a notary, is recorded at the county recorder’s office. Recording gives public notice and establishes priority over later-filed claims. An unrecorded deed leaves the buyer exposed to anyone who records first.
Easements and Shared Walls
Easements grant someone else the right to use part of your property for a defined purpose, most often utility access or shared driveways. They attach to the land and survive a sale, so the title report should be read closely before closing. Boundary encroachments between neighbors are typically resolved under the relative hardship doctrine, which weighs the cost of removal against the harm the encroachment causes.
HOAs and the Davis-Stirling Act
Condominiums, planned developments, and other common interest communities are governed by the Davis-Stirling Common Interest Development Act, beginning at Civil Code Section 4000.6California Legislative Information. California Code Civil Code 4000 The HOA’s authority flows from its recorded CC&Rs, which set rules on paint colors, pets, and assessments. Davis-Stirling regulates how the HOA runs elections, adopts rules, manages finances, and levies assessments, and it gives owners rights to inspect association records and attend board meetings.
When Co-Owners Cannot Agree: Partition
Any co-owner can file a partition action to force a resolution when co-owners deadlock on selling or using the property. Under the Partition of Real Property Act, which applies to tenants in common without a written partition agreement, the court appoints an appraiser to determine fair market value first.7California Legislative Information. California Code Code of Civil Procedure 874.311 The non-filing co-owners then get a window to buy out the filer’s interest at that value. If no buyout happens, the court orders a sale, usually on the open market, with proceeds split by ownership share and adjusted for co-owners who paid more than their share of mortgage, taxes, or necessary repairs.
Property Taxes Under Proposition 13 and Proposition 19
California’s property tax rules start with Proposition 13, a 1978 constitutional amendment that caps the base property tax rate at 1% of assessed value and limits annual assessment increases to 2%. A property is only reassessed to full current market value when it changes ownership or undergoes new construction. That is why two identical homes on the same block can carry very different tax bills: an owner from 1990 might pay $3,000 a year while a new neighbor pays $12,000.
Portability for Owners 55 and Older
Proposition 19, effective April 1, 2021, lets homeowners age 55 or older, people with severe disabilities, and victims of wildfire or natural disaster transfer their existing property tax base to a replacement home anywhere in California. Under the earlier rules, transfers were limited to the same county or a short list of participating counties. Any of California’s 58 counties is now eligible.8California Legislative Information. California Code Revenue and Taxation Code 69.6
The replacement home has to be bought within two years of selling the original, and the benefit can be used up to three times. If the replacement costs the same or less than the sale price of the original, the old tax base transfers directly. If it costs more, the difference between the original sale price and the new purchase price is added to the transferred base.8California Legislative Information. California Code Revenue and Taxation Code 69.6
Inheriting a Parent’s Home
Proposition 19 also tightened the rules on inherited property. Before February 2021, children who inherited a parent’s home could keep the parent’s low tax base whether or not they lived in it. Under current law, the inherited home must become the child’s principal residence within one year of transfer to preserve any tax base exclusion, and the child must file for a homeowner’s exemption within that same one-year window.9California Legislative Information. California Code Revenue and Taxation Code 63.2
Even moving in does not guarantee the full break. If the home’s current market value exceeds the parent’s taxable value by more than $1 million (adjusted every two years for inflation), the excess over that threshold is added to the new assessed value. Investment properties and second homes inherited from parents no longer qualify for any exclusion and get reassessed to full market value at transfer.9California Legislative Information. California Code Revenue and Taxation Code 63.2 The change hit families in high-value coastal markets hardest, where even a modest home can clear the threshold.
Homestead Protection Against Judgment Creditors
The California homestead exemption shields a slice of equity in your primary residence from most unsecured creditors who get a court judgment against you. The protected amount is the greater of a statutory floor or the countywide median sale price for a single-family home in the prior calendar year, up to a statutory cap. The base figures written into the statute are $300,000 (floor) and $600,000 (cap), both adjusted annually for inflation.10California Legislative Information. California Code of Civil Procedure 704.730 For 2026, the inflation-adjusted floor is approximately $371,500 and the cap is approximately $743,500. In expensive counties the exemption tops out at the cap; in cheaper counties the floor still protects that minimum.
The exemption applies automatically if a creditor tries to force a sale, and the protected amount comes off the top of the proceeds before the creditor is paid. It does not protect against mortgage foreclosure, tax liens, or mechanic’s liens for work done on the property.
If You Rent Out Property, or Rent One
Security Deposits and the 21-Day Rule
Security deposits are capped at one month’s rent, furnished or not. The exception is for small landlords who are natural persons (or LLCs made up entirely of natural persons) and own no more than two rental properties totaling four or fewer units; those landlords can collect up to two months’ rent.11California Legislative Information. California Code Civil Code 1950.5
After move-out, the landlord has 21 calendar days to return the deposit or send an itemized statement for every deduction. Deductions are allowed for unpaid rent, cleaning to restore move-in condition, and damage beyond normal wear and tear.11California Legislative Information. California Code Civil Code 1950.5 Missing the 21-day deadline exposes the landlord to the full deposit plus statutory penalties.
The Warranty of Habitability
Every residential landlord has to keep the unit habitable. Civil Code Section 1941.1 sets minimums: weatherproofing, working plumbing and gas, functioning heat, adequate electrical, and proper sanitation.12California Legislative Information. California Code Civil Code 1941.1 The obligation cannot be waived by contract. If the landlord does not act on reasonable notice, the tenant can make repairs and deduct the cost from rent (up to one month’s rent) or withhold rent until conditions are corrected.
Rent Caps and Just Cause Under AB 1482
The Tenant Protection Act of 2019 set statewide rent caps and just cause rules for covered properties. Annual rent increases cannot exceed 5% plus the local Consumer Press Index, with an absolute ceiling of 10%, whichever is lower.13California Legislative Information. California Code Civil Code 1947.12 The cap applies to the lowest rent charged during the prior 12 months, so a brief dip cannot be ignored when setting the baseline.
Once a tenant has lived in a covered unit for 12 months, the landlord can end the tenancy only for a legally recognized just cause. At-fault causes include nonpayment of rent, lease violations, criminal activity, and refusal to allow lawful entry. No-fault causes include the owner moving in, substantial renovation requiring vacancy, and withdrawal of the unit from the rental market. No-fault terminations require the landlord to pay relocation assistance equal to one month’s rent.14California Legislative Information. California Assembly Bill 1482 Tenant Protection Act of 2019
Not every rental is covered. The law exempts housing built within the last 15 years on a rolling basis, single-family homes and condos owned by individuals who provide written notice of the exemption, owner-occupied duplexes, and deed-restricted affordable housing.13California Legislative Information. California Code Civil Code 1947.12 The single-family exemption does not apply if the owner is a corporation, a REIT, or an LLC with a corporate member. These statewide provisions are set to expire on January 1, 2030, unless the legislature extends them.
The Costa-Hawkins Rental Housing Act separately limits local rent control. Cities with rent control cannot apply their local price caps to single-family homes, condominiums, or housing first occupied after February 1, 1995. Costa-Hawkins also guarantees vacancy decontrol, letting landlords reset rent to market when a tenant voluntarily leaves, even in rent-controlled units. In cities with local rent control, some tenants are covered by both AB 1482 and the local ordinance, with the stricter limit controlling.
Eviction Notices
A landlord cannot lock a tenant out. Every eviction has to start with the right written notice. A 3-day notice covers nonpayment of rent or lease violations. A 30-day notice applies to tenants of less than a year, and a 60-day notice is required for tenants of one year or more.15California Courts. Types of Eviction Notices Tenants If the tenant does not comply, the landlord files an unlawful detainer suit, and the tenant has only five days (excluding weekends and court holidays) after service of the summons and complaint to file a written response.
If You Fall Behind on the Mortgage
The Non-Judicial Foreclosure Timeline
Most California foreclosures run outside court through a power-of-sale clause in the deed of trust. The lender records a Notice of Default, which starts a minimum three-month waiting period during which the borrower can reinstate the loan by paying the overdue amount plus fees and costs.16California Legislative Information. California Code Civil Code 2924c
If the borrower does not catch up, the lender records a Notice of Trustee’s Sale at least 20 days before the auction. The earliest an auction can happen is three months and 20 days after the Notice of Default. The right to reinstate continues until five business days before the sale. After the auction the sale is final and the former owner must vacate. From first missed payment to sale, the process typically runs at least five to seven months, and delays are common.
Why the Lender Usually Cannot Chase You for the Shortfall
California offers some of the strongest anti-deficiency protections in the country. When a property is sold at a non-judicial trustee’s sale, the lender cannot pursue the borrower for any remaining loan balance. The debt is extinguished by the sale, even if the property sold for less than what was owed.17California Legislative Information. California Code Code of Civil Procedure 580d
A separate protection covers purchase-money loans. If you took out a mortgage to buy a home of one to four units that you occupy, the lender can never obtain a deficiency judgment against you on that loan, whether the foreclosure is judicial or non-judicial.18California Legislative Information. California Code of Civil Procedure 580b For loans refinanced on or after January 1, 2013, the protection extends to refinances of the original purchase-money loan, but not to any new cash taken out during the refinance. The portion that represents fresh borrowing beyond the original balance loses the anti-deficiency shield.
These protections do not reach guarantors or obligations secured by additional collateral beyond the foreclosed property.17California Legislative Information. California Code Code of Civil Procedure 580d A co-signer on someone else’s mortgage, or a borrower who pledged a separate asset as added security, can still be pursued personally after foreclosure.