2026 California Real Estate Law Update: Key Changes Affecting Landlords, Tenants, and HOAs

As 2025 comes to a close, several new California laws are set to take effect that will directly impact real estate transactions, property management, and homeowner associations across the state.

These changes address emerging issues in real estate, including the use of artificial intelligence in property marketing, expanded disclosure obligations in residential sales, and new limits on how homeowners’ associations may impose fines. While the laws are technical in nature, their effects are very real for homeowners, buyers, landlords, tenants, and HOAs navigating California’s already complex real estate landscape.

This article breaks down the most important California real estate law changes taking effect in 2026 and explains what they mean in practical terms, so you can understand how these updates may affect your rights, responsibilities, and real estate decisions moving forward.

Why These 2026 Real Estate Law Changes Matter

California real estate law continues to evolve in response to technology, public health concerns, and homeowner protections. These new laws reflect three broader trends:

• Increased regulation of digital marketing and AI tools

• Expanded disclosure obligations in residential transactions

• Greater limits on HOA enforcement authority

For homeowners, buyers, landlords, tenants, and HOAs, understanding these changes early is critical to avoiding disputes, liability, and compliance issues in 2026.

New Disclosure Rule for Digitally Altered Real Estate Photos (Effective January 1, 2026)

Assembly Bill 723 – Business and Professions Code § 10140.8

Beginning January 1, 2026, California will require clear disclosures when real estate listings use digitally altered or AI-generated images.

The law applies to real estate brokers, agents, and anyone acting on their behalf who uses edited images in property advertisements.

What the New Disclosure Requires

When a digitally altered image is used to market a property, the following must be included on or directly next to the image:

• A clear and conspicuous statement that the image has been digitally altered

• A link, URL, or QR code directing viewers to the original, unedited photo

• A statement explaining that the original image can be viewed through the provided link or code

If the advertisement appears on a website controlled by the broker or agent, the requirement may be satisfied by displaying the unaltered image directly within the listing.

What Counts as a Digitally Altered Image

An image is considered digitally altered if it was:

• Created or edited by or under the direction of a real estate professional, and

• Modified using software or artificial intelligence to add, remove, or change visual elements

This includes changes to furniture, fixtures, appliances, paint colors, flooring, landscaping, facades, or exterior views such as neighboring buildings or cityscapes.

What Is Not Considered Digital Alteration

Minor adjustments such as lighting correction, color balance, exposure adjustments, or cropping are not considered digital alterations as long as they do not materially change the property’s appearance.

Does This Apply to Leases?

Yes. The disclosure requirement applies to leases longer than one year, not just sales.

Practical Risk to Sellers and Agents

While AI-generated staging and photo enhancements may reduce marketing costs, misleading images can expose agents and sellers to:

• Consumer protection claims

• Advertising law violations

• Disciplinary action by the California Department of Real Estate

Short-term savings can lead to long-term legal and reputational consequences.

New Disclosure Requirement for Tobacco and Nicotine Residue (Effective January 1, 2026)

Assembly Bill 455 – Business & Professions Code § 10084.2; Civil Code § 1102.6k; Health & Safety Code § 25417.2

Starting January 1, 2026, sellers of residential property in California must disclose any known tobacco or nicotine residue and any known history of smoking activity on the premises.

This requirement applies to transactions where a Transfer Disclosure Statement (TDS) is required.

What Sellers Must Disclose

Sellers must disclose in writing if they have actual knowledge of:

• Residue from smoking tobacco or nicotine products, or

• A history of occupants smoking tobacco or nicotine products on the property

This includes traditional cigarettes, electronic cigarettes, and vaping devices.

What Is Tobacco or Nicotine Residue?

Often referred to as “thirdhand smoke,” residue from smoking tobacco or nicotine products:

• Settles into carpets, walls, and furniture

• Penetrates building materials

• Can remain long after smoking has stopped

Residue may be detected by odor or by laboratory testing showing elevated nicotine levels on surfaces or in household dust.

Transactions Covered

This disclosure applies to:

• One-to-four unit residential property sales

• Manufactured and mobile home sales

• Leases longer than one year

Certain exemptions still apply, including probate sales, foreclosures, bankruptcy transfers, REO sales, and specific trust transfers.

Buyer’s Right to Cancel

Buyers retain the right to cancel the transaction within:

• Three days after personal delivery of the disclosure, or

• Five days if delivered electronically or by mail

Why This Matters for Sellers

Failure to disclose known defects has historically exposed sellers to claims for:

• Repair costs

• Diminished property value

• Legal fees

Although court interpretation of this new law is still developing, nondisclosure creates clear legal risk.

New Limits on HOA Fines in California (Effective June 30, 2025)

Assembly Bill 130 – Civil Code §§ 5850 and 5855

Assembly Bill 130 places new restrictions on how California homeowners’ associations impose fines on members.

New Fine Limits

• General cap: HOAs may not impose fines exceeding $100 per violation 

• Exception: Higher fines are permitted only if the board makes a written finding that the violation poses a health or safety risk

The written finding must be made during an open meeting and preserved in the association’s records.

Opportunity to Cure Before a Fine

Before imposing a fine, the HOA must give the homeowner a reasonable opportunity to correct the violation.

If the homeowner:

• Cures the violation, or

• Provides proof of a financial commitment to cure before the hearing

Then no fine may be imposed for that violation.

Notice and Dispute Resolution Changes

• Written notice of the disciplinary decision must be sent within 14 days

• Homeowners may request Internal Dispute Resolution (IDR)

• Any agreement reached through IDR must be signed in writing and is legally enforceable

Concerns Raised by Legal Commentators

Some legal professionals have noted ambiguities in the law, including:

• Lack of a clear definition of “health and safety”

• Uncertainty regarding repeated or ongoing violations• Unclear standards for post-hearing agreements

While the law increases homeowner protections, it may also reduce HOA enforcement leverage in some circumstances.

How These 2026 Changes Affect You

Homeowners and Sellers

• Increased disclosure obligations 

• Greater transparency requirements 

• Potential liability for nondisclosure

Buyers and Tenants

• Improved access to accurate property information

• Greater protections in transactions and leases

Landlords and HOAs

• New compliance requirements

• Reduced fine authority

• Greater emphasis on documentation and process

Final Takeaways

The 2026 California real estate law changes reflect a broader shift toward transparency, consumer protection, and limits on enforcement authority.

Understanding these laws early allows homeowners, landlords, tenants, and HOAs to:

• Avoid costly disputes

• Remain compliant

• Make informed real estate decisions

About Sara Naheedy

Sara Naheedy is a California attorney and real estate broker who advises homeowners, buyers, landlords, and HOAs on real estate transactions, compliance, and dispute resolution. Her practice focuses on helping clients understand the legal and financial implications behind real estate decisions before problems arise.

Learn more at saranaheedylaw.com.