SB658 - Real property impacted by the 2025 Eaton or Palisades Fires: notification of owner’s intent to sell.

Amended IN Senate April 10, 2025 Amended IN Senate March 26, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 658 Introduced by Senator Pérez February 20, 2025 An act to add and repeal Article 1.6 (commencing with Section 1102.50) to of Chapter 2 of Title 4 of Part 4 of Division 2 of, and to add Section 2923.56 to, of the Civil Code, relating to real property. LEGISLATIVE COUNSEL'S DIGEST SB 658, as amended, Pérez. Real property impacted by the 2025 Eaton or Palisades Fires: sale of rental properties: right of first refusal for governmental and nonprofit organizations. notification of owner’s intent to sell. Existing law establishes various real estate disclosure requirements applicable to the transfer of residential real property. On January 7, 2025, the Governor proclaimed a state of emergency to exist in the Counties of Los Angeles and Ventura due to fire and windstorm conditions that caused multiple fires, including the Eaton and Palisades Fires. This bill would provide require the County of Los Angeles to develop a process for specified governmental or nonprofit organizations a right to match the price and terms of an offer to purchase certain residential or fire-damaged commercial to notify the county of their interest in purchasing specified types of real property located within an area impacted by the Eaton or Palisades Fires. In this regard, the bill would require the cities that have jurisdiction in the area and the County of Los Angeles to develop a process for those organizations to notify the city or county of their interest in purchasing real property subject to the bill’s provisions and within the jurisdiction of that city or county. The bill would refer to an organization that has provided that notice as a “qualified entity,” and would require each city and the county to maintain on its internet website a list of those qualified entities on their internet websites. the organizations that have provided the county with that notification. By imposing new duties on those cities and the County of Los Angeles, the bill would impose a state-mandated local program. The bill would require allow the owner of property subject to the bill’s provisions, before taking certain actions to sell the property, provisions to notify each qualified entity the County of Los Angeles or an organization on the county’s list of the owner’s intent to sell the property. The bill would provide each qualified entity with 10 days to notify the property owner of their interest in purchasing the property and further provide a qualified entity with either 60 days or 40 days, depending on the number of units of the property, to submit an offer to purchase the property. This bill would allow a property owner to sell the property to any party if the property owner does not receive any interest to purchase the property from a qualified entity or receive an offer from a qualified entity within these timeframes. The bill would allow a property owner to reject any offer received from a qualified entity and sell to a party that is not a qualified entity, but would provide a qualified entity that submits a rejected offer with 10 days to invoke a right of first refusal to match a subsequent offer accepted by the property owner. This property, as specified. The bill would make the provisions described above effective for repeal its provisions 6 years following the expiration of a the last declared disaster or state of emergency resulting from the Eaton or Palisades Fires. The bill would exempt certain transfers of a residential real property from its provisions, including, among others, a transfer between spouses, domestic partners, or specified family members, a transfer pursuant to a court order, and a transfer by eminent domain. The bill would make related findings and declarations. This bill would require an owner that sells a property subject to the bill’s provisions to record, or cause to be recorded, a certification of compliance under penalty of perjury at the time of sale, as specified, and would make failure to file the certificate an infraction punishable as specified. By expanding the crime of perjury and creating a new crime, the bill would impose a state-mandated local program. This bill would impose additional requirements on a qualified entity that purchases, pursuant to these provisions, property that is, or was on January 7, 2025, occupied by tenants. In this regard, the bill would require the qualified entity to retain all existing tenancies and to restore tenancies terminated due to the Eaton or Palisades Fires, as specified. The bill would require the qualified entity to make vacant units of the property affordable to persons and families of specified income levels that would depend on the average rental rate or housing cost of the units, as specified. The bill would require these affordability requirements to be contained in a covenant or restriction recorded against the property at the time of sale. The bill would prohibit the qualified entity from selling the property except to a qualified purchaser, as provided. The bill would make these requirements applicable to successive owners. This bill, on or before July 1, 2026, would require the cities that have jurisdiction in the area and the County of Los Angeles to jointly convene a working group consisting of individuals and organizations representing individuals who were impacted by the fires, as specified, to provide input on the development of guidelines that, upon adoption by the city or county, would govern new development and disposition of single-family property that was damaged or destroyed by the fires and was used as the owner’s primary residence on January 7, 2025, or fire-damaged commercial real property that a qualified entity purchases. By imposing new duties on those cities and the County of Los Angeles, the bill would impose a state-mandated local program. The bill would require a qualified entity that purchases such property, and successive owners, to adhere to those guidelines. This bill would grant a private cause of action to specified entities to enforce the provisions of the bill, and would allow for civil remedies, as specified. Existing law imposes various requirements to be satisfied prior to exercising a power of sale under a mortgage or deed of trust. Existing law, with respect to residential real property containing up to 4 dwelling units, requires a mortgagee, trustee, beneficiary, or authorized agent to provide to the mortgagor or trustor a copy of the recorded notice of default and a copy of the recorded notice of sale. This bill would require a mortgagee, trustee, beneficiary, or authorized agent, within 3 business days of recording a notice of default against multifamily residential real property or fire-damaged commercial real property subject to the bill’s provisions described above, to provide to the mortgagor or trustor a list of qualified entities, and to post a copy of the notice of default in a conspicuous place on the property, as provided. The bill would make these provisions effective for 6 years following the expiration of a declared disaster or state of emergency resulting from the Eaton or Palisades Fires. The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities. This bill would make legislative findings and declarations as to the necessity of a special statute for the above-described cities and the County of Los Angeles. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that with regard to certain mandates no reimbursement is required by this act for a specified reason. With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. Article 1.6 (commencing with Section 1102.50) is added to Chapter 2 of Title 4 of Part 4 of Division 2 of the Civil Code, to read: Article 1.6. Post Disaster Community Stabilization Act 1102.50. The Legislature finds and declares all of the following: (a) On January 7, 2025, a state of emergency was declared in the Counties of Los Angeles and Ventura due to the Palisades Fires and severe windstorm conditions, which resulted in multiple additional wildfires, including the Eaton, Hurst, Lidia, Sunset, Woodley, and Hughes Fires. These wildfires devastated communities across the greater Los Angeles area, burning over 47,900 acres and destroying or damaging more than 16,250 structures, including homes, small businesses, schools, childcare facilities, and places of worship. (b) These fires have destroyed entire neighborhoods and communities, uprooting families that have called these places home for generations, destroying businesses that owners have struggled and sacrificed to build, and disrupting community ties that cannot be easily reestablished. (c) Recovery from this disaster requires more than just rebuilding homes, structures, and the physical infrastructure that has been lost, but also entails preservation of community ties and the culture that grew and flourished in neighborhoods devastated by these fires. (d) Homeowners, faith leaders, and business property owners have reported receiving unsolicited offers to purchase their property, which in many instances represent their life savings and family legacies. (e) Real estate investment firms are seeking to buy distressed properties from fire victims who are currently overwhelmed by the overlapping hardships of bureaucratic hurdles, financial burdens, and the trauma of destruction, displacement, and profound loss. (f) If land is lost to speculation, the communities harmed by these fires risk losing their unique assets and culture, which only exacerbates an already disproportionate impact on Black families who built generational wealth and created a sanctuary in Altadena after being redlined out of other parts of the region. (g) Local residents and organizations are already working to acquire and temporarily steward land until a community-driven plan is in place, offering a community-based option for those who decide to sell their property. (h) California has an interest in preventing displacement and loss of community assets and culture following a disaster, and ensuring community-based organizations have opportunities to acquire and hold property to increase access to affordable housing, homeownership opportunities, and community-serving small businesses. (i) The anticommunity displacement mechanism and protections contained in the provisions of this act are necessary to assure that communities are kept whole following catastrophic wildfires and to prevent permanent displacement of communities following these devastating events. 1102.50. 1102.52. For purposes of this article, the following definitions apply: (a) “2025 Los Angeles Fire Impact Area” means the ZIP Codes within or adjacent to the fire perimeter of the Eaton or Palisades Fires, as determined by the Department of Forestry and Fire Protection in consultation with the Office of Emergency Services pursuant to subdivision (j) of Section 1102.52. Protection’s disaster assessment maps. (b) “Affordable” in reference to housing cost, including in the case of resident-owned housing units, has the same meaning as in Section 50052.5 of the Health and Safety Code. (c) “Affordable” in reference to rent has the same meaning as in Section 50053 of the Health and Safety Code. (d) “Area median income” has the same meaning as in Section 50093 of the Health and Safety Code. (e) (b) “Declared disaster” or “state of emergency” includes any of the following: (1) A state of emergency or disaster declared by the federal government. (2) A state of emergency proclaimed by the Governor pursuant to Section 8625 of the Government Code. (3) A local emergency proclaimed by a local governing body or official pursuant to Section 8630 of the Government Code. (f) “Fire-damaged commercial real property” means commercial real property located in the 2025 Los Angeles Fire Impact Area that was damaged or destroyed by the Eaton or Palisades Fires. (g) “Local authority” means the city that has jurisdiction of the area in which the property is located or, for an unincorporated area in which the property is located, the County of Los Angeles. (h) “Lower income households” has the same meaning as in Section 50079.5 of the Health and Safety Code. (i) “Persons and families of low or moderate income” has the same meaning as in Section 50093 of the Health and Safety Code. (c) “Real property” means any of the following: (1) A single-family residential property. (2) A multifamily residential property. (3) A mobilehome park, as defined in Section 798.4. (4) A manufactured housing community, as defined in Section 18210.7 of the Health and Safety Code. (5) A mixed-use residential and commercial property. (6) Commercial property. (j) (d) “Qualified entity” means an organization that has provided notice to the local authority County of Los Angeles, pursuant to Section 1102.56. (k) (1) “Residential real property” means any of the following: (A) A single-family residential property that meets any of the following criteria: (i) The property is occupied by a tenant. (ii) The property was damaged or destroyed by the Eaton or Palisades Fires and was occupied by a tenant as of January 7, 2025. (iii) The property was damaged or destroyed by the Eaton or Palisades Fires and was used as the owner’s primary residence on January 7, 2025. (B) A multifamily residential property that meets either of the following criteria: (i) The property is vacant or occupied, in whole or in part, by tenants. (ii) The property was damaged or destroyed by the Eaton or Palisades Fires and was occupied by a tenant as of January 7, 2025. (C) A mobilehome park, as defined in Section 798.4. (D) A manufactured housing community, as defined in Section 18210.7 of the Health and Safety Code. (E) A mixed-used property that meets either of the following crit [Text truncated for display. 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