Selling a house in California means delivering a detailed set of written disclosures to the buyer, certifying that the smoke alarms and water heater meet state safety rules, signing the standard purchase agreement, and closing through a 30 to 45 day escrow that handles the money, the deed, and the tax withholding. The state treats profit on the sale as ordinary income at rates up to 12.3%, on top of any federal capital gains tax, so the net check at the end can be meaningfully smaller than the sale price suggests. Here is how to sell a house in California, step by step, with the legal requirements and costs that actually drive the timeline.
Disclosures You Must Give the Buyer
California’s disclosure rules are among the strictest in the country, and failing to disclose a defect you knew about can expose you to a lawsuit after closing or let the buyer unwind the sale entirely.
The core document is the Transfer Disclosure Statement, required by California Civil Code starting at Section 1102. You report the condition of the home’s major systems and features (roof, foundation, plumbing, electrical, built-in appliances) and flag any known problems.1California Legislative Information. California Civil Code Article 1.5 – Transfer Disclosure
A supplementary questionnaire covers the home’s history: past insurance claims, whether anyone died on the property within the last three years, and whether the home was ever used to manufacture illegal drugs.2California Legislative Information. California Civil Code 1710.2 – Disclosure of Information Upon Transfer of Residential Property You answer each question “yes,” “no,” or “unknown” based on what you actually know. You don’t have to investigate or hire an expert. You cannot conceal what you already know.
Natural Hazard Disclosure
You must provide a Natural Hazard Disclosure report showing whether the property sits in a flood zone, a very high fire hazard severity zone, an earthquake fault zone, or another mapped hazard area. Most sellers order this from a third-party disclosure company, review it for accuracy, and deliver it to the buyer.
Lead-Based Paint (Homes Built Before 1978)
If the home was built before 1978, federal law requires you to disclose any known lead-based paint or lead hazards, hand over any lead inspection reports you have, and give the buyer the EPA pamphlet “Protect Your Family From Lead in Your Home.”3eCFR. 40 CFR Part 745, Subpart F – Disclosure of Known Lead-Based Paint Hazards Upon Sale of Residential Property The buyer then has 10 days (unless both sides agree to a different window) to conduct their own lead inspection before the contract becomes binding.
HOA Documents (Condos and Planned Communities)
If the property is in a common interest development, Civil Code Section 4525 requires you to provide the association’s CC&Rs, bylaws, rules, the most recent annual budget report, the annual policy statement, information on any regular or special assessments, and disclosure of any delinquent assessments, unpaid fines, or unresolved violations tied to your unit.4California Legislative Information. California Civil Code 4525 – Required Documents for Prospective Purchasers The HOA must produce the packet within ten days of your written request and can only charge the actual cost of copying.
Safety Items You Must Certify Before Closing
Two safety compliance forms travel with every California home sale, and forgetting either can delay your closing.
Smoke detectors: Health and Safety Code Section 13113.8 requires at least one in each bedroom, one in the hallway outside the bedrooms, and one on each floor of a multi-story home. Hardwired or battery-powered both qualify.5Ceres Department of Public Safety Emergency Services. Information Bulletin on Residential Smoke Detectors You certify this in writing.
Water heater: Health and Safety Code Section 19211 requires every residential water heater to be braced, anchored, or strapped against earthquake movement. You sign a written statement confirming the water heater complies.
Clearing the Title
Early on, order a preliminary title report. It lists anything recorded against your property: unpaid property taxes, a second mortgage, contractor’s liens, easements that give others access to the land, and deed restrictions on how the property can be used. Any financial claim against the title has to be paid off or resolved before ownership transfers. Finding these items early gives you time to clear them rather than fighting fires in the last week of escrow.
The Purchase Agreement
The California Residential Purchase Agreement, published by the California Association of Realtors and used by most agents in the state, sets the price, financing terms, contingency deadlines, and each side’s responsibilities through closing.
Earnest Money and Liquidated Damages
The buyer puts down an earnest money deposit, commonly 1% to 3% of the purchase price, held in escrow and applied toward the down payment at closing. If the buyer walks after removing all contingencies, the standard liquidated damages clause lets you keep the deposit. Under California Civil Code Section 1675, a liquidated damages amount up to 3% of the purchase price is presumed reasonable in a residential sale. Anything above 3% shifts the burden to you to prove the amount is justified, and a court can strike it down as an unenforceable penalty otherwise.
Contingency Periods
The standard form gives the buyer 17 days to inspect, review your disclosures, and get an appraisal, and 21 days to finalize their loan. Both timeframes are negotiable in writing. Once the period expires, you can send the buyer a formal notice giving them two more days to remove contingencies. If they don’t respond, you get the right to cancel.
Financing and Who Pays What
The agreement spells out whether the buyer is paying cash or using a conventional, FHA, or VA loan. Loan type affects your closing requirements, so read this section carefully. The contract also assigns each closing cost: title insurance, escrow fees, and the county documentary transfer tax. In many California deals the seller pays for the owner’s title insurance policy, but every line here is negotiable.
What the Sale Will Actually Cost You
Agent Commissions
Commissions are usually the single biggest cost. California commissions average roughly 5% of the sale price, split between the listing agent and the buyer’s agent. On a $750,000 home, that is about $37,500. Rates are always negotiable; nothing sets them by law.
After a 2024 settlement involving the National Association of Realtors, sellers and buyers now sign separate agreements with their own agents, and offers of compensation to the buyer’s agent can no longer be advertised through the Multiple Listing Service. Many sellers still agree to cover or contribute toward the buyer’s agent fee as a concession, because requiring buyers to pay their agent out of pocket on top of a down payment can shrink the pool of interested buyers. Settle this with your listing agent before you set the asking price.
Documentary Transfer Tax
Under Revenue and Taxation Code Section 11911, counties charge $0.55 for every $500 of the sale price, which comes out to $1.10 per $1,000.6California Legislative Information. California Revenue and Taxation Code 11911 – Documentary Transfer Tax On a $750,000 sale the county tax is $825. Some cities, including Los Angeles, San Francisco, Oakland, and San Jose, impose additional city transfer taxes that can run much higher than the county portion.
Prorations and Other Closing Costs
The escrow officer divides ongoing expenses like property taxes and HOA dues between you and the buyer based on the closing date. Your closing statement itemizes the sale price minus your mortgage payoff, commissions, escrow fees, and any other negotiated costs.
Taxes on the Sale
California Withholding at Closing
California requires income tax withholding on real estate sales under Revenue and Taxation Code Section 18662. The default rate is 3⅓% of the total sale price, collected at closing and sent to the Franchise Tax Board.7Cornell Law School. California Code of Regulations Title 18 18662-3 – Real Estate Withholding You report your status on California Form 593, which determines whether you owe the full amount or qualify for an exemption.8Cornell Law School. California Code of Regulations Title 18 18662-1 – Withholding Generally Common exemptions include selling a principal residence at a loss or selling for less than the current exclusion amount. If you qualify, nothing comes out at closing. If you don’t, the withheld amount counts as a prepayment toward your state income tax for the year.
Federal Capital Gains Exclusion
Federally, you can exclude up to $250,000 of gain if you file single, or up to $500,000 if you file jointly, provided you owned and used the home as your principal residence for at least two of the five years before the sale. A surviving spouse can still claim the full $500,000 if the sale happens within two years of the spouse’s death and the joint requirements were met before that date.9Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence Gain above the exclusion is taxed at federal capital gains rates.
California Capital Gains
California has no separate capital gains rate. The Franchise Tax Board taxes any gain as ordinary income at 1% to 12.3% depending on your total taxable income. California conforms to the federal Section 121 exclusion, so gain within the $250,000 or $500,000 limit is also excluded from your state return. Anything above the exclusion gets added to your other California income and taxed at your marginal rate.
FIRPTA for Foreign Sellers
If you are not a U.S. citizen or resident, the Foreign Investment in Real Property Tax Act requires the buyer to withhold 15% of the sale price and send it to the IRS.10Internal Revenue Service. FIRPTA Withholding An exception applies when the buyer plans to use the home as a personal residence and the sale price is $300,000 or less. FIRPTA is on top of California’s state withholding, so a foreign seller faces a combined upfront tax hit of roughly 18⅓% of the sale price at closing.
1099-S Reporting
The closing agent files IRS Form 1099-S reporting the sale. Even if your gain is fully excluded under Section 121, the sale is reportable unless you give the closing agent a written certification that the home was your principal residence and your gain is within the $250,000 or $500,000 limit.11Internal Revenue Service. Instructions for Form 1099-S (Rev. December 2026) Without the certification, the full sale price gets reported to the IRS and you account for the exclusion on your tax return.
Escrow and Closing
After you and the buyer sign the purchase agreement, the deal moves into escrow, a neutral holding period managed by a third-party escrow officer. The officer collects all documents (your disclosures, the buyer’s loan paperwork, the signed deed) and holds all funds until every contract condition is met. A typical California escrow runs 30 to 45 days from accepted offer to recording.
Once the buyer completes a final walkthrough and all funds are in, the escrow officer sends the signed grant deed to the county recorder’s office. Recording transfers ownership and puts the sale in the public record. Your net proceeds are then distributed, usually by wire the same day or the next business day.
If you need extra time to move after closing, you and the buyer can sign a post-closing occupancy agreement, essentially a short-term lease at a daily rate, with the terms written down before closing to avoid later disputes.