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What the New California Real Estate Transaction Fee for Affordable Housing Means

by October 4, 2017Latest News & Reports

A legislation that Californian renters and homeowners need to be aware of is the Senate Bill 2, otherwise known as The Building Homes and Jobs Act

The legislation states that real estate transactions in California shall be charged additional transaction fee on certain types of recorded documents starting at $75 but not exceeding $225 per single transaction. This came into effect on January 1, 2018. 

What is the additional fee for and will this be favorable for Californians? 

Senate Bill 2 Aims to Help Raise Funds for Affordable Housing Projects

There’s a good cause behind this law. Senate Bill 2 is a measure to provide permanent funding for affordable housing through the newly legislated transaction fees. There are several exclusions to the fees including home sales and commercial real estate sales transactions. 

This bill was passed by the California legislature in September 2017 as a much-needed response  to the constant cries from tenant’s rights groups to solve California’s housing issue. Read more about how tenant’s rights groups in California assembled to enact rent control.

This legislation can promote job creation as more housing projects can mean more work in the area.  As more homes become available for sale or rent, it will help set a fair market price for tenancy.

Senator Toni-Arkins from the District of San Diego estimated it can generate $200-$300 million per year for affordable housing. Over $5 billion more would be generated over the next five years once the new fees are matched with federal, local, and private matching funds.

The forecasted impact for real estate agents and investors is absolutely nothing.

“I love it. It’s going to increase supply, decrease demand, makes more jobs and starts people off to a better life. Society benefits. In other parts of the country there are taxes related to real estate sales that can exceed 4% of the sale price.

This is nothing. No one would feel it.”

Fred Glick
Onerent Property Management Broker of Record
CNBC Contributor

What Real Estate Transactions Are Exempt From The Fees

All real estate recordings — instruments, papers, and notices — permitted by law will incur an additional fee of $75  per transaction per parcel of real property unless otherwise exempt. 

The exemptions include:

  • Transfer of real property subject to the imposition of transfer tax
  • Transfer of real property that is residential dwelling to an owner-occupier
  • Any instrument, paper, or notice not related to real property
  • The maximum fee of $225 per transaction has been reached

To be exempted from the fee, a signed declaration of exemption must be presented in a cover page, and attached to the document that will be deposited to the recorder. This statement of exemption will be used for assessment of the total transaction fee. 

Related: High Demand and Low Inventory Depress San Francisco Homeownership

Up Next: Renters Get Priced Out of Bay Area

What’s Up Ahead

Along with Senate Bill 2, 14 other housing bills were approved in September, which would help Californians pay rent or purchase a home. In the short run, real estate investors may not feel the effects of these bills.

Governor Jerry Brown supports all these bills, which he tweeted earlier.


california governor jerry brown senate bill


The California Association of Realtors supports this bill, along with the Silicon Valley Leadership Group and California Housing Consortium. Most real estate investors are backing this bill as well.

The forecasted impact for real estate agents and investors is absolutely nothing.

Fred brings up an interesting point of how this $225 is a nominal fee per transaction will almost be unnoticeable. This fee paired with the other Senate Bills will play a large role in building affordable housing for the masses in California.

It’s important to stay up to date with the new housing legislation and the reasons behind them are signed into a law. Not being aware of such might affect your current or future real estate plans. Always seek the advice of your legal counsel if any of these housing laws confuse you to avoid getting into legal trouble later on. 

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