California Real Estate Laws for 2026: Key Changes Buyers, Sellers & Agents Must Know
California’s real estate landscape is shifting in important ways for 2026. From expanded disclosure obligations to updated compliance forms and new marketing requirements, these changes affect residential real estate transactions, rental properties, and how real estate professionals document and present information to clients. Staying up-to-date now protects you from compliance risk and helps you better advise your clients.
1. Expanded Disclosure Requirements in the TDS & SPQ
Third-Hand Smoke / Nicotine Residue Disclosure
Effective January 1, 2026, a new tobacco/nicotine exposure disclosure is required in transactions where a Transfer Disclosure Statement (TDS) is used (typically 1-4 unit residential properties and mobilehomes). Sellers must disclose known tobacco or nicotine residue, third-hand smoke odors, and any history of smoking activities on the property. Steve Lopez Law
This requirement is integrated into the TDS and the Seller Property Questionnaire (SPQ), meaning agents and sellers must provide this information as part of standard transaction disclosures. The California Association of Realtors (C.A.R.) will update SPQ forms to reflect this new disclosure. Steve Lopez Law
Electrical System & Gas Appliance Future Compliance Notice
Another TDS-related requirement becoming effective in 2026 instructs sellers (or their agents) to disclose:
The existence of any state or local requirements regarding future replacement of gas-powered appliances being transferred with the property.
A statutory notice recommending an electrical system inspection by a qualified professional, with detailed language about inspecting the electrical service panel(s), wiring, and related components. Pasadena-Foothills REALTORS®
These additions apply where the seller or agent is aware of such requirements or restrictions. They will become part of the SPQ and must be delivered with the TDS. Buyers may have statutory termination rights (typically up to 5 days after delivery) tied to receiving this information. Pasadena-Foothills REALTORS®
2. The TDS & SPQ — What Still Matters in 2026
The Transfer Disclosure Statement (TDS) remains a foundational disclosure form in California residential sales. It requires sellers to disclose known material facts about the property’s condition — including structural issues, systems, fixtures, environmental hazards, and more — before a sale closes. Vokshori Law Group
The Seller Property Questionnaire (SPQ) goes beyond the TDS, covering additional items like known repairs, remodels, disputes between owners, and other material information that may not be reflected in the TDS itself. Accredited Real Estate Schools Inc.
Both forms are required (unless exempt) in most one-to-four unit residential sales, leases longer than one year, and mobilehome sales — and agents are still obligated to ensure they’re completed accurately and delivered in a timely manner. Steve Lopez Law
Note: Even in “as-is” transactions, the TDS can’t usually be waived, and sellers must deliver it before transfer of title. Justia Law
3. New & Updated Compliance Documents (Forms)
C.A.R. Updates for 2026:
The California Association of Realtors (C.A.R.) has released new and revised forms ahead of 2026 that reflect legislative changes. These include updates to:
SPQ (Seller Property Questionnaire)
Buyer & Seller agreements
Buyer Representation forms
Notice and compliance forms
These form updates ensure that required disclosures — like nicotine residue, electrical inspection recommendations, and compliance with new laws — are captured properly in transactions. Tyler Law LLP
Agents should review and adopt 2026 versions of these mandatory and recommended forms in all new transactions.
4. Transparency in Marketing & Advertising
Digital Image Disclosure (AB 723):
California now requires disclosure whenever property images are digitally altered (including AI enhancements, virtual staging, adding/ removing fixtures, etc.). This goes into effect January 1, 2026.
Altered photos must include a clear disclosure near the image.
Agents must provide access (via link, URL, or QR code) to the original, unedited photos. Lewis Brisbois
Standard photo adjustments like exposure, lighting, and cropping are not considered alterations that require disclosure. Lewis Brisbois
Updating MLS processes and marketing templates now will help avoid compliance issues when publishing listings.
5. Habitability & Rental Unit Changes
While this is focused mostly on residential sales disclosure, it’s important for investor clients and property managers:
Stove & Refrigerator Habitability Requirement:
A new habitability standard effective in 2026 requires rental units to include working stoves and refrigerators unless narrowly exempt. This change affects lease negotiations and habitability documentation. California Apartment Association
6. Other Document & Transactional Requirements to Watch
Written Buyer Representation Agreements:
Although this rule became effective in 2025, it continues to impact 2026 transactions: buyer brokers must have signed written representation agreements outlining services and compensation before earning a commission. BakerHostetler
Natural Hazard & Supplemental Disclosures:
Standard required disclosures — like the Natural Hazard Disclosure Statement (NHDS) covering fire, flood, earthquake, and other mapped hazards — remain integral and must still be delivered alongside TDS and SPQ documents. Wikipedia
7. Why These Changes Matter
These updates reflect California’s push toward greater consumer protection and transactional transparency. For agents and brokers, understanding and incorporating these changes into your workflow:
Reduces risk of liability and disputes
Improves client trust
Helps you operate with modern compliance standards
For sellers, complying with expanded disclosures helps avoid post-close disputes. For buyers, these documents and notices ensure they’re fully informed before entering into a binding contract.
8. Practical Takeaways for 2026
✔ Review and adopt updated TDS and SPQ forms early.
✔ Train your team on new disclosures — especially nicotine & electrical/gas appliance notices.
✔ Update marketing policies to comply with digital image disclosure rules.
✔ Ensure written buyer representation agreements are in place as required.
✔ Stay current on updated C.A.R. forms and DRE guidelines.