The start of the 2024 New Year is also the start of new California laws that may affect your real estate practice. Here are some of the highlights for 2024: 

• NHD Statement Updated to Include High Fire Zones: Starting January 1, 2024, the one-page NHD Statement will disclose whether a property is located in a High Fire Hazard Severity Zone (FHSZ). As background, 2 other laws require certain sellers of properties with one-to-four residential units (who are not TDS-exempt) to provide their buyers with C.A.R.’s Fire Hardening and Defensible Space Disclosure and Addendum (FHDS). The FHDS is generally required when the property is located in a High or Very High FHSZ. Yet, the pre-2024 NHD Statement only identified properties in a Very High FHSZ or Wildland Area, but not High FHSZ. Sellers now have the ease of referring to the updated NHD Statement to determine whether they need to comply with the FHDS requirement. Assembly Bill 1280.
• Listing Agreements Capped at 24 Months: Effective January 1, 2024, the listing period is capped for an exclusive listing agreement for a property with one-to-four residential units (including condos and mobilehomes). Under this new consumer-protection law, the maximum listing period is 24 months from the date the agreement is made. For listing renewals, the maximum cap is 12 months from the date the renewal is made. These maximum caps do not apply if the seller is a corporation, LLC, or partnership. The new law also prohibits automatic renewals for any exclusive listing agreement for any residential or commercial property. It also prohibits anyone from recording or filing with the County Recorder an exclusive listing agreement or any memorandum or notice of such an agreement. These new requirements were recently incorporated in December 2023 into C.A.R.’s Residential Listing Agreement (RLA) and Modification of Terms (MT). Any exclusive listing agreement that is made, or is presented for recording, in violation of this new law is void and unenforceable. An agent’s violation of this law is a DRE license violation subject to disciplinary action. Assembly Bill 1345.
• Flippers Must Disclose Renovation Matters When Selling: Starting July 1, 2024, certain sellers who recently acquired title themselves within the last 18 months must disclose certain renovation-related matters to their buyer. This new law applies to sellers who are subject to the TDS law for properties with one-to-four residential units if the seller accepts an offer to buy within 18 months from title transferring to the seller. Such sellers must: (1) Disclose any room additions, structural modifications, alterations, or repairs performed by a contractor, including the contractors’ names and contact info (for projects of $500 or more); and (2) Provide the buyer with copies of permits obtained, or if the seller does not have such copies, but had hired a contractor, give the buyer the contact info of the contractor who has the permit info. C.A.R. is likely to revise its standard-form Seller Property Questionnaire (SPQ) in June 2024 to include these new disclosure requirements. Assembly Bill 968.
• Small Claims Court Claims Increased to $12,500: Starting on January 1, 2024, the small claims court jurisdiction has generally been increased from $10,000 to $12,500 for an action brought by a natural person (up to 2 claims per year). The limit has also generally been increased from $5,000 to $6,250 for an action brought by a legal entity, such as a corporation or LLC. Senate Bill 71.
• Tenant’s Security Deposit Limited to One Month’s Rent: Commencing on July 1, 2024, the maximum security deposit that a residential landlord can generally demand or receive is the dollar equivalent of only one month’s rent, regardless of whether the property is furnished or unfurnished. The maximum amount that a landlord can collect upfront is the first month’s rent, plus a security deposit, however denominated, equal to one-month’s rent. A landlord cannot circumvent this law by labeling funds collected as things like cleaning fees, pet deposits, or last month’s rent. Certain small-time investors who are landlords can still collect a security deposit equal to 2 months’ rent (furnished or unfurnished) if all of the following requirements are met: (1) The landlord is a natural person, a family trust, or an LLC if every LLC member is a natural person; (2) The landlord owns no more than 2 residential rental properties with a collective total of no more than 4 units offered for rent; and (3) The tenant is not a service member. The new “one-month max” law is not retroactive. When the law comes into effect, landlords who already collected security deposits before July 1, 2024 do not have to return funds exceeding one month’s rent back to their existing tenants. Assembly Bill 12.
• Anti-Discrimination Protection for Section 8 Tenants: As background, a recent 2020 law already prohibits a residential landlord from refusing to rent to a Section 8 tenant. Starting on January 1, 2024, another new law further protects applicants who receive Section 8 or other government rent subsidy. Under the new 2024 law, a residential landlord is prohibited from using a Section 8 applicant’s credit history as part of the application process, unless the landlord first offers that applicant the option of providing alternative evidence of his or her reasonable ability to pay the tenant’s portion of the rent. If the applicant elects to provide alternative evidence, the landlord must give the applicant reasonable time to provide the alternative evidence, and the landlord must also reasonably consider that alternative evidence in lieu of the person’s credit history. Examples of alternative evidence are government benefit payments, pay records, and bank statements. The landlord is allowed to request information or documentation to verify employment, request landlord references, and verify the identity of the person. But the landlord can only consider whether the applicant financially qualifies to pay the portion of the rent that the applicant will be responsible for paying (and disregard the portion that will be government subsidized). Senate Bill 267.
• Statewide Rent Control Evictions Tightened: Beginning on April 1, 2024 for tenancies that fall under the Statewide Rent Control Law of 2020 (AB 1482), if a landlord fails to comply with any provision of the just-cause termination law, the written termination notice to the tenant shall be rendered void (CC 1946.2(g)). Additionally, a landlord who wrongfully attempts to recover possession in material violation of the just-cause requirements can be held liable to the tenant for: (1) Actual damages; (2) Attorney’s fees and costs; (3) Three times the actual damages for willfulness, oppression, fraud, or malice; and (4) Punitive damages. This new law also imposes much stricter requirements on landlords for 2 types of no-fault evictions. First, when evicting a tenant so the owner or owner’s family member can move in, the new occupant must intend to occupy the property as a primary residence for a minimum of 12 continuous months. The landlord must also give the tenant a written notice that includes, among other things, the new occupant’s name and relationship to the owner, an offer to provide proof of the new occupant’s ownership or relationship to the owner, and an offer to re-rent to the tenant at the same terms (and pay reasonable moving expenses incurred in excess of any relocation assistance paid) if the new occupant fails to occupy the property within 90 days, or fails to stay for 12 consecutive months. Other terms also apply. Second, for evictions for the landlord to demolish or substantially remodel the property, the intended work must be substantial enough that it cannot be reasonably accomplished in a safe manner with the tenant remaining for at least 30 consecutive days. Also, the landlord cannot require the tenant to vacate on any day that the tenant can continue living at the rental unit without violating health, safety, and habitability codes and laws. The landlord must also give the tenant a written statutory notice that, among other things, provides a description of the intended work, the approximate duration of the work, copies of permits or an executed contractor agreement, and specific language for offering to re-rent the unit to the tenant for the same terms if the intended work is not commenced or completed. Other terms also apply. Senate Bill 567.

Sources: These new laws and other new laws that may affect your real estate practice are available at C.A.R.’s 2024 New Laws webpage (password-protected for C.A.R. members only). The full text of each new law is available at the California Legislature website.

Copyright© 2024 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of January 8, 2024. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals. Written by Stella Ling, Esq.