California’s real estate industry has always been subject to change, driven by shifts in market conditions, economic factors, and evolving legal requirements. In 2025, several important updates to real estate law will impact how real estate professionals—agents, brokers, and lawyers—operate within the state. These changes aim to streamline business practices, enhance consumer protections, and improve transparency across the industry. For real estate professionals, it’s essential to stay informed about these new regulations in order to provide quality service to clients while remaining compliant.
AB 2992: Changes to Commission Structures in Dual Agency
One of the most significant changes in 2025 is Assembly Bill (AB) 2992, which addresses the way commission structures are handled in dual agency transactions. Dual agency occurs when a single agent or broker represents both the buyer and the seller in the same real estate transaction. While dual agency is legal in California, it has been under increasing scrutiny due to concerns that the agent or broker might have a conflict of interest.
Under AB 2992, new regulations require agents to disclose in writing the exact commission split between themselves and the parties they represent in dual agency deals. This bill mandates that the terms of commission arrangements be discussed at the beginning of the contract and must be fully agreed upon by both the buyer and seller. Furthermore, these agreements must be transparent and signed in writing at the time of the transaction. The intention of AB 2992 is to promote transparency, mitigate the potential for conflicts of interest, and protect both consumers and real estate professionals.
For agents, these changes will require more meticulous documentation and communication with clients to ensure transparency. Real estate agents will need to adjust their contract practices, ensuring that commission structures are clear from the outset and that their clients are informed at every stage of the transaction.
SB 164: Updates to Property Disclosure Requirements
In 2025, Senate Bill (SB) 164 amended California’s real estate disclosure requirements, making it mandatory for sellers to provide more comprehensive information to potential buyers. The law is aimed at protecting buyers by ensuring they are aware of any environmental hazards present in a property. These hazards could include radon, lead-based paint, asbestos, and other potential dangers that could affect a buyer’s health or the property’s condition.
The law also stipulates that sellers must disclose if they are aware of any major property damage, including foundation issues or water intrusion problems, which can affect the home’s integrity. While these disclosures are not new to California’s real estate laws, SB 164 goes a step further by extending the disclosure timeline and requiring sellers to provide more detailed reports. Agents representing sellers will need to ensure that sellers are fully compliant with these disclosure rules to avoid potential litigation.
For buyers, these changes provide greater peace of mind, knowing they have more complete information about the property before they make a purchase. Agents working with buyers should be prepared to thoroughly review these disclosures, ensuring that clients understand any potential risks associated with a property.
AB 2533: Simplification of ADU Permitting
Assembly Bill 2533, passed in 2025, focuses on easing the process of obtaining permits to build Accessory Dwelling Units (ADUs) in residential areas. As California continues to grapple with its housing shortage, ADUs have become a crucial part of the solution, providing homeowners with the ability to build additional living spaces on their properties, such as in-law units, guest houses, or small rental properties.
Previously, the permitting process for ADUs was cumbersome and varied widely by city or county. AB 2533 simplifies these procedures, offering a streamlined, standardized process for homeowners across the state. The new law reduces bureaucratic red tape and accelerates the timeline for permit approval, making it easier for property owners to add ADUs and increase the overall housing supply.
Real estate professionals can expect an increase in ADU construction inquiries, particularly from homeowners who are looking to add rental units or housing for extended family members. As the demand for affordable housing grows, the ability to quickly build an ADU will be seen as a significant advantage for homeowners and investors alike.
Fair Housing and Anti-Discrimination Measures: Strengthening Protections
In 2025, California implemented additional regulations under the California Fair Employment and Housing Act (FEHA) aimed at strengthening protections against discrimination in housing. These regulations include broader protections for tenants, increased penalties for violations, and enhanced training requirements for real estate professionals to recognize and combat discriminatory practices in housing transactions.
The state’s commitment to eliminating discrimination in housing transactions remains a core tenet of California’s housing policy. As part of these efforts, agents and brokers are now required to undergo mandatory diversity and anti-discrimination training. This training aims to ensure that real estate professionals are not only aware of discriminatory practices but also understand how to effectively combat them in everyday business operations.
Realtors will need to take this training seriously and incorporate its principles into their practices. It’s essential that real estate professionals uphold the integrity of fair housing laws and work proactively to ensure that all clients—regardless of their race, gender, sexual orientation, or other protected status—are treated with respect and fairness.
Conclusion: Adapting to Change
California’s 2025 real estate law changes present both challenges and opportunities for real estate professionals. While these changes increase the administrative burden on agents and brokers, they also promote a more transparent, fair, and compliant industry. Agents who stay informed, proactively adjust their practices, and continue to prioritize their clients’ needs will be well-positioned to succeed in a rapidly changing real estate environment. Ensuring compliance with these new laws will be crucial for maintaining credibility and avoiding potential legal pitfalls in the future.
