Real Property Law Developments
New Laws from the 2021 Legislative Cycle

Unlawful Restrictive Covenants, ADUs, and Real Property Inheritance

This year saw the collision of racial justice and real property law. SB 796 allowed the return of valuable LA County real estate to the heirs of its original owners, a black family pushed out under the pretense of eminent domain. And AB 1466 helps shift the expense of recording a Restrictive Covenant Modification away from individual homeowners. Other key developments include a reduction in obstacles to Accessory Dwelling Units, significant changes to the RTODDs statutes in the California Probate Code, new partition procedures for “Heirs Property,” and more.

Redaction of Unlawful Restrictive Covenants

Existing law specifically authorizes a homeowner to record a modification striking offensive language contained in a racial covenant. AB 1466 helps shift the onus and expense of recording a Restrictive Covenant Modification (RCM) away from individual homeowners. AB 1466 includes a mandatory $2 fee on each real property transaction, with the funds to be deposited in a newly created Unlawfully Restrictive Covenant Redaction Trust Fund administered by the Department of Housing and Community Development. The revenues deposited in the fund will be used for the development of a task force to coordinate the identification and redaction of unlawfully restrictive covenants in the records of the county recorder’s offices throughout the state.

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Beachfront Property Returned to Descendants of Original Black Owners

SB 796 allows Los Angeles County to return a segment of beachfront property in Manhattan Beach to the heirs of its original owners. The property was taken from them by the Manhattan Beach City Council in 1924, under the pretense of eminent domain. According to the initial bill analysis, the Bruce family and their Black patrons were harassed and threatened from the outset by white residents and the Ku Klux Klan. Despite this, the Bruce family continued to grow their thriving business into the 1920s. Not only were several statutory exceptions needed in order to convey the beachfront property, which is held in trust for the people of the State, to the Bruce family, but changes were also needed to confer value in the property to be returned to the Bruces.

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Conveying ADUs Under AB 345

Accessory Dwelling Units (ADUs) — otherwise known as “in-law units,” “granny units,” “casitas,” or “ohanas” — have been gaining traction as a way to alleviate the affordable housing crisis in California. Recent legislation has reduced obstacles to the approval, construction, leasing, and even separate conveyance of ADUs. Effective Jan. 1, 2022, Assembly Bill 345 further reduces the control and discretion of local governments when it comes to the separate conveyance of ADUs.

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Revocable Transfer on Death Deed

SB 315 makes significant changes to the Revocable Transfer on Death Deeds (RTODDs) statutes in the California Probate Code. RTODDs transfer ownership of real property to a named beneficiary upon the transferor’s death, without needing a will, trust, or probate proceeding. Before SB 315 was introduced, the RTODD statutes were criticized due to their complexity, the lack of guidance regarding correcting errors or resolving ambiguities in RTODDs, and the potential for fraud, undue influence or duress in the creation of an RTODD. SB 315 addresses the Commission’s comments and incorporates all of its substantive recommendations.

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Uniform Partition of Heirs Property Act

AB 633 grants a person who gained in interest in real property from a relative the ability to buy out the interest of any co-owner filing an action for partition of the property by sale, and sets a procedure to determine the buyout price. The Act goes into effect on Jan. 1, 2022. The act adds new sections to the Code of Civil Procedure governing partition actions. (Current Code Civ. Proc., §§ 872.010-874.240, subsequent undesignated citations are to Code Civ. Proc.) It creates a new partition procedures for “Heirs Property.”

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10 Important Housing Bills Enacted in 2021

The California Legislature introduced a number of bills this year aimed at creating more housing stock — and specifically small/mid-sized housing, or smaller affordable housing projects — including SB 7 (extends CEQA expedited review process to smaller affordable housing projects), SB 478 (removes some obstacles to building mid-sized housing), and AB 803 (the ‘Starter Home Revitalization Act’). Other key statutes cover zoning to allow more buildings and reforming the Density Bonus Law.

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