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6 California Real Estate Laws Buyers Need to Know About

Gavel and "REAL ESTATE" word writing on sound block to show real estate lawsFrom taxes to disclosure requirements, California real estate laws include some unique practices

Whether you plan to purchase your own home or buy investment property in the sunshine state, California Real Estate laws affect your transaction. Buying a home in California is different than buying a home in another state. The key is knowing what to expect in advance. That way, you will have a smooth and successful experience.

The good news is, our laws are very friendly to home buyers. While some states require that each party in a real estate transaction retain a lawyer to represent their interests at closing, California does not. That means you need to hire a Realtor with substantial experience: one who knows what he or she are doing.

You also need to know these 6 key California Property and real estate laws:

  1. Property and real estate contracts must be in writing 
    This law includes everything from leases, contracts for sale, commission agreements, licenses, and many other property related documents. Everything must be in writing to be considered valid.
  2. Property disclosures must include all known defects 
    In California, material defects must be disclosed prior to closing with prospective buyers or even with renters and leasers. This information includes deaths that occurred in the property within the past three years. California law places an unusually high level of responsibility on home sellers to inform prospective buyers about the property’s physical condition including pest problems, environmental concerns, and any other material defects. 
  3. Legal protection of your real estate holdings
    As I explained in my blog post, 4 Elements of Legal Protection, the value of your real estate holdings may be significant and can be used to cover damages awarded in a lawsuit. The 4 elements I discussed in that post are: privacy of ownership, asset and liability protection, equity stripping, and estate planning; all designed to help protect your investment in order to minimize risk. You’ll find all the details in the original post.
  4. After 3 years, abandoned property will be automatically turned over to the government 
    If a property is abandoned in the sunshine state, it is considered “unclaimed property.” If it remains unclaimed for a period of 3 years, that property will automatically be ceded to the government. In order to stop this from happening, an owner must reclaim their property before it becomes an unclaimed property.
  5. Sellers and buyers can be represented by the same agent
    When a seller and buyer are both represented by the same Realtor or are represented by 2 agents from the same brokerage firm, this is called a dual agency relationship. Dual agency is legal in California as long as both buyer and seller agree to the arrangement in writing. They must fill out a form titled, “Disclosure Regarding Real Estate Agency Relationships,” which identifies the broker and agents involved in the transaction, and the parties they represent.
  6. Limited security deposits are allowed for rentals 
    If you own rental property, you can require a security deposit, but the amount cannot exceed 2 months’ rent (3 months in the case of furnished properties). This money must be refunded in full when the renter leaves, unless there’s unpaid rent, damage beyond normal wear and tear, or need major cleaning. The same is true for pet security deposits. 

These 6 California real estate laws don’t cover everything, but they’re a good place to start. To ensure that you are complying with all relevant property laws, I recommend you consult with an experienced California real estate lawyer. Don’t have one? Check out this list of top Santa Barbara real estate lawyers.

Listing to show real estate lawsMeanwhile, if you haven’t found the right property in Montecito, Hope Ranch or any of Santa Barbara’s upscale communities yet, I recommend you take a look at my amazing listing in my portfolio. I have many including this breathtaking Montecito Estate, for example, where provenance and pedigree meet comfort and contemporary conveniences. The next step is to call me at 805.886.9378 or email me at I can also sell your house when you’re ready!

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