2026 Real Estate Legal Alert
California’s real estate landscape is undergoing a massive shift toward "Radical Transparency." This week, I attended a briefing with Neil Kalin, Assistant General Counsel for the California Association of REALTORS® (C.A.R.), to break down the regulations that will define transactions in 2026.
1. Marketing: The "Digital Alteration" Rule (AB 723)
As of January 1, 2026, "prettying up" a listing with software or AI now requires a legal disclaimer.
The Mandate: Any image where you have added, removed, or changed material elements (e.g., painting walls, changing flooring, removing power lines, or virtual staging) must be labeled as "Digitally Altered" or "Virtually Staged."
The "Original" Link: You are now legally required to provide a link or QR code so buyers can see the original, unedited photo.
What’s Exempt? Standard professional enhancements like lighting, color balance, and sharpening do not require a label.
2. Landlord Mandate: Stoves & Fridges (AB 628)
Effective January 1, 2026, the definition of a "habitable" home in California has expanded.
The Law: Landlords must now provide a working stove and refrigerator in every rental unit.
The Trigger: This applies to all leases signed, renewed, or amended after the first of the year.
Tenant Opt-Out: A tenant can still use their own appliance, but it must be documented in writing at the time of lease signing. Without that document, the repair and supply burden sits entirely with the landlord.
3. The HOA "Balcony Safety" Certificate (SB 326)
The grace periods are ending. While the initial deadline for Condos was 2025, many associations are only now seeing the consequences of non-compliance.
Closing Delays: Lenders and insurers are now "blacklisting" buildings that cannot produce a valid Balcony Safety Certificate.
Seller Tip: If you are listing a condo, we must verify the HOA has completed their Exterior Elevated Element (EEE) inspection. Without this document, your buyer’s loan may be rejected mid-escrow.
4. FinCEN: New Federal Reporting (Effective March 1, 2026)
This is the most significant change for the high-end and investor markets. Nationwide reporting is now required for non-financed (all-cash) transfers to entities or trusts.
Who is Reported: Escrow must report the "Beneficial Owners" (the real people behind the LLC or Trust) to the Treasury Department.
The Scope: This applies to 1-to-4 family homes, condos, and vacant land intended for residential use.
The Consequence: If a buyer refuses to provide identifying data (DOB, ID, etc.), escrow cannot legally close.
