Real Estate Law in California: A Complete Guide

Real estate is the single largest financial transaction most Californians ever make, and it sits at the crossroads of contract law, property law, tax law, and consumer protection. Whether you are buying your first condominium in San Diego, selling a family home in Sacramento, fighting a foreclosure in Riverside County, or arguing with a neighbor over a fence line in the Sierra foothills, California law shapes what you can do, what you must disclose, and what protections you carry. This guide explains the core rules of California residential real estate in plain English — from the disclosures a seller must hand over, to how escrow and title insurance protect you, to the nonjudicial foreclosure process, homeowners association governance, property taxes under Proposition 13 and Proposition 19, and disputes over easements and boundaries.

This guide is general legal information, not legal advice. Real estate law is fact-specific and changes frequently, and the value at stake is usually substantial. Before you sign a purchase agreement, respond to a notice of default, or file a lawsuit over your property, consult an attorney licensed by the State Bar of California who can review your particular situation.

California real estate law at a glance

How California treats real property ownership

Real property in California — land plus anything permanently attached, such as a house — is held through formal title recorded with the county recorder. How you take title matters enormously, because California is a community property state. Property acquired by a married person during the marriage is generally presumed to be community property owned equally by both spouses, regardless of whose name appears on the deed. Spouses commonly hold title as community property, as community property with right of survivorship, or as joint tenants. Unmarried co-owners may hold as joint tenants (with survivorship) or tenants in common (each owns a divisible share). Because the form of title affects what happens at death, divorce, refinancing, and reassessment, it is worth confirming the vesting before you close rather than discovering a problem later.

Seller disclosures: the Transfer Disclosure Statement

California imposes one of the most demanding seller-disclosure regimes in the country. Under Civil Code § 1102 et seq., a seller of residential property of one to four units must give the buyer a Transfer Disclosure Statement (TDS). On this statutory form, the seller describes the condition of the property and discloses known defects — the roof, plumbing, electrical and heating systems, the foundation, additions made without permits, neighborhood nuisances, deaths on the property within the past three years, and environmental hazards such as asbestos, radon, lead-based paint, or contaminated soil. The seller's real estate agent must also conduct a reasonably competent visual inspection of accessible areas and disclose what that inspection reveals.

The TDS must be delivered as soon as practicable and before transfer of title; the standard California Residential Purchase Agreement typically calls for disclosures within seven days of acceptance. A seller cannot waive the TDS requirement in most one-to-four-unit residential sales. Failing to disclose a known material defect is a frequent source of litigation, and a seller who conceals a problem can face damages for fraud or nondisclosure. Note that a new disclosure obligation took effect January 1, 2026, requiring sellers to disclose known third-hand tobacco residue and any history of smoking on the premises. For a deeper walkthrough of disclosures and the purchase process, see buying and selling a home in California.

The Natural Hazard Disclosure

Separately from the TDS, Civil Code § 1103 requires sellers to deliver a Natural Hazard Disclosure (NHD) statement telling the buyer whether the property sits within any state-mapped hazard zone. The statutory form covers six categories: special flood hazard areas, areas of potential flooding from dam failure, very high fire hazard severity zones, state responsibility areas for wildland fire, earthquake fault zones, and seismic hazard zones (including landslide and liquefaction risk). Sellers almost always purchase a third-party NHD report — typically costing roughly $50 to $150 — to satisfy this duty. Given California's exposure to wildfire, flood, and earthquake risk, the NHD has real consequences for insurance availability and cost, so buyers should read it carefully rather than treat it as boilerplate.

Real estate agency and dual agency

When you work with a real estate broker, California law (Civil Code § 2079.13 et seq.) requires a written disclosure of the agency relationship. An agent may represent the seller, the buyer, or — with the informed written consent of both — both parties as a dual agent. A dual agent owes a fiduciary duty of utmost care, honesty, and loyalty to each side, but is sharply limited: under Civil Code § 2079.21, a dual agent may not disclose to the buyer that the seller will accept less than the listing price, or to the seller that the buyer will pay more than the offer, without express permission. Dual agency is legal but creates obvious tension, so understand exactly whom your agent represents. As of January 1, 2025, buyers and brokers must generally sign a written buyer-representation agreement, capped at a relatively short term for residential transactions.

Escrow and title insurance

California closings almost universally run through a neutral third-party escrow holder, who holds the buyer's funds and the seller's deed and releases each only when every condition of the purchase agreement is satisfied. Escrow protects both parties: the seller does not hand over the deed until the money is confirmed, and the buyer does not release funds until clear title is ready to transfer. Alongside escrow, buyers and lenders rely on title insurance. A title company searches the public record for liens, easements, and competing claims, then issues a policy that protects against covered defects in title that existed before the policy date. An owner's policy protects your equity; a lender's policy protects the mortgage. Title insurance is a one-time premium paid at closing, and it is one of the most important — and most overlooked — protections in a California transaction.

The nonjudicial foreclosure process

The overwhelming majority of California home loans are secured by a deed of trust containing a "power of sale," which lets the lender foreclose nonjudicially — without going to court — under Civil Code § 2924. The process moves on a strict timeline. After a borrower defaults, the trustee records a Notice of Default (NOD) and mails it to the borrower. At least three months must pass before the trustee may record a Notice of Trustee's Sale (NTS), which must be recorded, posted, published, and mailed at least 20 days before the auction. From the NOD to the sale, the process runs roughly 120 days at a minimum. The borrower generally has the right to reinstate the loan — cure the default by paying the arrears plus costs — up to five business days before the sale (Civ. Code § 2924c).

Lenders may also foreclose judicially, through a lawsuit, but they rarely do because nonjudicial foreclosure is faster and cheaper. The tradeoff is significant: after a nonjudicial foreclosure, the borrower has no right of redemption, but the lender generally cannot pursue a deficiency judgment for any shortfall (CCP § 580d). Judicial foreclosure preserves the lender's ability to seek a deficiency on some loans but gives the borrower a redemption period of three months or one year. California's anti-deficiency protections are explained in detail in the California foreclosure process guide.

The Homeowner Bill of Rights

California's Homeowner Bill of Rights (HBOR), codified at Civil Code § 2923.4 et seq., adds borrower protections on top of the § 2924 timeline for owner-occupied one-to-four-unit homes. Before recording a notice of default, the servicer must contact the borrower (or make diligent attempts) to discuss alternatives to foreclosure (Civ. Code § 2923.5). HBOR also restricts dual tracking — the practice of pursuing foreclosure while a complete loan-modification application is pending — and requires the servicer to give a single point of contact and a written explanation if it denies a modification. A 2025 reform also pauses a foreclosure sale for a period if the borrower lists the home for sale shortly before the auction. These protections do not guarantee a modification, but they slow the process and give borrowers a genuine chance to be heard.

Homeowners associations and the Davis-Stirling Act

Millions of Californians live in condominiums, planned developments, and other common interest developments governed by a homeowners association (HOA). These communities are regulated by the Davis-Stirling Common Interest Development Act, Civil Code § 4000 et seq. The HOA collects regular assessments (dues) to maintain common areas and may levy special assessments for unexpected costs — though a special assessment exceeding 5% of the budgeted gross expenses generally requires member approval (Civ. Code § 5605). Davis-Stirling also governs board elections, requires open board meetings with advance notice (the Open Meeting Act), guarantees members access to association records, and requires the association to offer internal dispute resolution before imposing many penalties. When assessments go unpaid, the HOA can record a lien and, within limits, foreclose. The full framework is covered in the California HOA law guide.

Easements and boundary disputes

An easement is a right to use someone else's land for a specific purpose — a shared driveway, a utility line, a path to a landlocked parcel. Easements can be created expressly (by written grant), by implication, by necessity, or by prescription (open, continuous, adverse use for five years). A neighbor who actually occupies part of your land may, in narrow circumstances, claim ownership through adverse possession — which in California requires five years of open, continuous, hostile possession plus payment of all property taxes during that period (CCP § 325). Disputes over the exact location of a property line, fences, and structures that cross the line (encroachments) are common, and they are often resolved by a quiet title action (CCP § 760.010 et seq.) that asks a court to declare who owns what. The cost-sharing rules for boundary fences appear in the Good Neighbor Fence Act (Civ. Code § 841). These topics are explored further in boundary and easement disputes in California.

Property taxes: Proposition 13 and Proposition 19

California property taxes are anchored by Proposition 13, the 1978 measure that caps the general property tax rate at 1% of a property's assessed value and limits annual increases in assessed value to no more than 2% per year — until a change in ownership or new construction triggers reassessment to current market value. Because of this, two identical homes on the same street can carry wildly different tax bills depending on when each owner bought. The base-year value, locked in at purchase and growing slowly, is one of the most valuable financial assets a long-term California homeowner holds.

Proposition 19, effective February 16, 2021, reshaped two areas. First, it lets eligible homeowners — those 55 or older, severely disabled, or victims of wildfire or other disaster — transfer their low base-year value to a replacement home anywhere in California, with the difference added to the base if they buy up. Second, it narrowed the parent-to-child (and grandparent-to-grandchild) exclusion: an inherited home keeps the parent's base value only if the child makes it a primary residence within a year and files the required forms, and even then the exclusion is capped (the inflation-adjusted ceiling exceeds $1 million in 2026). Inherited rentals and vacation homes are reassessed to market value. These tax rules interact closely with estate planning, so coordinate with both a real estate and an estate planning attorney before transferring title.

Financing, deeds of trust, and mortgages

Most California home purchases are financed, and the loan is almost always secured by a deed of trust rather than a traditional mortgage. The difference matters. A deed of trust involves three parties — the borrower (trustor), the lender (beneficiary), and a neutral trustee who holds title to the security interest and can conduct a nonjudicial sale if the borrower defaults. This three-party structure is what makes California's fast, out-of-court foreclosure process possible. When you refinance, you replace the existing deed of trust with a new one, and you should understand whether the new loan keeps or loses the anti-deficiency protections that attach to purchase-money loans. Junior financing — a second mortgage or home-equity line — sits behind the first deed of trust in priority, which affects who gets paid in a foreclosure and which lender can pursue what remedy. Before signing any loan document, confirm the interest rate, whether the rate is fixed or adjustable, the prepayment terms, and how the loan is secured.

California also regulates the people and companies in the lending and brokerage chain. Real estate brokers and salespersons are licensed and regulated by the California Department of Real Estate, and mortgage originators face additional licensing requirements. If you believe a broker, lender, or loan servicer has treated you unfairly — through misrepresentation, hidden fees, or a botched modification — you may have remedies, and an attorney can help you evaluate them. Recording matters too: deeds, deeds of trust, liens, and easements are recorded with the county recorder, and the recording date generally establishes priority among competing interests. Keeping your recorded documents organized and confirming that releases are recorded when loans are paid off prevents title problems down the road.

Common California real estate disputes

Beyond the categories above, California real estate lawyers regularly handle breach-of-contract claims when a buyer or seller fails to perform; specific-performance suits seeking to force a sale to close; nondisclosure and fraud claims over hidden defects; construction-defect litigation; partition actions to divide or sell co-owned property; and disputes with contractors, lenders, brokers, and title companies. Many purchase agreements require mediation or arbitration before a lawsuit, and most real estate claims carry strict statutes of limitations — often as short as two to four years depending on the theory. If you believe you have a claim, talk to a lawyer promptly so a deadline does not quietly extinguish your rights.

Buying a home in a community interest development

A large share of California homes — especially condominiums and newer planned developments — are part of a community interest development governed by a homeowners association. Buying into one of these communities adds an extra layer of due diligence. The seller must deliver the association's governing documents, current budget, reserve study, and a statement of any pending special assessments or litigation before the sale closes, and you should read them carefully. Pay attention to the monthly assessment amount, the health of the reserve fund (an underfunded reserve signals future special assessments), any restrictions on rentals or pets, the rules on architectural changes, and whether the association is involved in litigation. You are not just buying a home; you are agreeing to be bound by the CC&Rs and to pay assessments that the board can increase and, in limited circumstances, enforce through a lien and foreclosure. The full framework is covered in the California HOA law guide, but the time to understand it is before you close, not after.

Title vesting, transfers, and reassessment

How and when title changes hands has tax consequences that ripple for years. Because of Proposition 13, a property's assessed value is reset to market value upon a change in ownership, so transfers — even seemingly minor ones like adding a co-owner or moving a home into or out of a trust — can trigger reassessment and a higher tax bill. Some transfers are excluded from reassessment, such as transfers between spouses, certain transfers into revocable living trusts, and the narrowed parent-child exclusion under Proposition 19 when the child occupies the home and files the right forms. Because the rules are technical and the dollar stakes large, coordinate any title change with a real estate or estate planning attorney and, where relevant, the county assessor before you record a new deed. A transfer made for convenience can quietly cost thousands of dollars a year in added property tax if it is not structured to qualify for an available exclusion.

Leases, options, and other ways to transfer property

A sale is the most common way property changes hands, but California recognizes several others, each with its own legal rules. An installment land sale contract lets a buyer pay the purchase price over time while the seller keeps legal title until the balance is paid — a structure that carries risks for buyers and is subject to specific consumer protections. A lease with an option to purchase combines a rental with a right to buy at a set price within a set period, and the option terms must be clear about price, deadline, and how rent credits apply. A ground lease lets someone build on and use land they do not own for a long term. Gifts, inheritances, and transfers into or out of trusts move property without a sale but can still trigger reassessment unless an exclusion applies. Because each of these arrangements affects title, taxes, and the parties' rights differently from a straightforward sale, have the documents reviewed before you sign — the labels matter, and a poorly drafted option or land contract can leave a buyer with little protection if the deal sours.

Construction defects and new-home purchases

Buyers of newly built homes have special protections. California's "Right to Repair Act" sets out construction standards for new residential construction and a process that generally requires a homeowner to notify the builder and give it an opportunity to repair alleged defects before filing suit. Construction-defect claims — covering problems like water intrusion, foundation movement, defective roofing, or faulty plumbing — are subject to strict deadlines, including an outside limit measured from the date of substantial completion, after which most claims are barred regardless of when the defect appears. These cases are document-intensive and often involve multiple parties (the builder, subcontractors, designers, and their insurers). If you discover a serious defect in a newer home, document it carefully, avoid making repairs that could destroy evidence, and consult an attorney promptly so you do not miss a deadline. The same urgency applies to disputes with contractors on a remodel, where mechanics' liens and licensing rules add further complexity.

Frequently asked questions

Does the seller have to fix problems disclosed in the TDS?

No. The Transfer Disclosure Statement requires honesty, not repairs. A seller must disclose known material defects, but the parties negotiate who fixes what (or adjusts the price) in the purchase agreement. A buyer who is unhappy with a disclosed condition can ask for repairs, a credit, or can cancel within a contingency period — but the seller is generally not obligated to remedy a problem it honestly disclosed.

Can a lender come after me personally after foreclosing on my home?

Usually not. Under CCP § 580b, a lender cannot obtain a deficiency judgment on a purchase-money loan used to buy an owner-occupied one-to-four-unit home, and under CCP § 580d a lender that forecloses nonjudicially cannot pursue a deficiency on any deed of trust. There are exceptions — some refinanced or junior loans behave differently — so confirm your situation with an attorney.

What is the difference between an easement and adverse possession?

An easement gives someone a right to use your land for a limited purpose; you still own it. Adverse possession transfers ownership of the land itself to the possessor. Adverse possession is much harder to prove because it requires exclusive possession and payment of the property taxes for five years, while a prescriptive easement does not.

Can my HOA really foreclose on my house over unpaid dues?

Yes, but the law limits it. Under the Davis-Stirling Act, an HOA generally cannot foreclose on an assessment lien unless the delinquent assessments total at least $1,800 (excluding late fees, interest, and collection costs) or are more than 12 months past due. Even then, the homeowner has a right of redemption for 90 days after a nonjudicial HOA foreclosure sale.

Will my property taxes go up if I add my child to the deed?

It depends. Adding a child to title can be a change in ownership that triggers reassessment, and Proposition 19 sharply narrowed the parent-child exclusion. Some transfers qualify for an exclusion if the child occupies the home as a primary residence and files the right forms; others do not. Because the stakes are high, get advice before changing how title is held.

Do I need an attorney to buy or sell a home in California?

California does not require an attorney to close a residential sale — escrow and licensed brokers handle most transactions. But an attorney is well worth it when the deal is unusual, the contract terms are disputed, there are title or boundary problems, or significant money is at stake. For high-value or contested transactions, legal review is inexpensive insurance.

How does community property affect how my spouse and I hold title?

Because California is a community property state, property acquired during marriage is generally presumed to belong to both spouses equally, regardless of whose name is on the deed. Spouses can hold title as community property, community property with right of survivorship, or joint tenants — and the choice affects what happens at death, in divorce, and for tax purposes. Holding title as community property with right of survivorship can offer favorable tax treatment on the death of a spouse, so it is worth getting advice before vesting title.

What is the difference between a mortgage and a deed of trust?

In California, home loans are almost always secured by a deed of trust, which adds a neutral trustee to the borrower-lender relationship and includes a power of sale. That power of sale is what lets a lender foreclose nonjudicially — quickly and outside of court — rather than filing a lawsuit. The practical effect for borrowers is a faster foreclosure timeline but, in exchange, strong anti-deficiency protection after a nonjudicial sale.

How long do I have to sue over a real estate problem?

It depends on the type of claim. California sets different statutes of limitations for different theories — for example, written contracts, fraud, and certain construction-defect claims each have their own deadline, and some run from when the problem was discovered rather than when it occurred. Because missing a deadline can permanently bar an otherwise strong claim, and because the rules are nuanced, talk to an attorney as soon as you suspect a problem rather than waiting to see whether it resolves on its own.

What is title insurance and do I really need it?

Title insurance protects you against covered defects in the property's title that existed before you bought — undisclosed liens, forged deeds, errors in the public record, or competing ownership claims. Lenders require a lender's policy, and an owner's policy protects your equity for as long as you own the home, for a one-time premium paid at closing. Given how much can go wrong with title and how expensive it is to fix, an owner's policy is one of the best-value protections in a California purchase.

Find a California real estate attorney

Real estate problems are rarely small, and the right advice early can save you years of conflict and thousands of dollars. Our directory lists attorneys licensed by the State Bar of California across all 58 counties who handle residential and commercial real estate, foreclosure defense, HOA disputes, and boundary and title litigation. Searching is free and carries no obligation. Connect with a California real estate attorney who can review your disclosures, contract, notice, or dispute and advise you on your options.