Housing developments: urban lot split: owner-occupancy.

The owner-occupancy requirement was expanded from a single option (applicant must occupy one unit for 3 years) to a choice between two options: (1) the applicant occupies one unit as principal residence for 3 years, or (2) the applicant sells both parcels after certificate of occupancy and requires the buyer to maintain owner-occupancy for 3 years, with recording and deed restriction requirements attached to option 2.

Added provisions allowing a managing or authorized member of an LLC (who is a natural person) or the trustee/beneficiary of a living trust of a natural person to qualify as an applicant for an urban lot split, except that an LLC managing member cannot be an applicant if the parcel is within the boundaries of the 2025 Palisades or Eaton Fires in Los Angeles County.

Added civil penalty liability for an applicant who is a managing or authorized member of an LLC and violates the owner-occupancy provisions.

Added a prohibition on local agencies adopting or imposing any requirement, process, practice, procedure, or course of conduct that applies to a project solely or partially on the basis that it is an urban lot split, including restricting applicant eligibility.

Two new Senate coauthors (Senators Arreguin and Wiener) were added to the bill, which previously listed only Senator Cortese as coauthor.

Added a legislative finding that the bill incorporates additional changes to Section 66411.7 proposed by AB 2601, operative only if both bills are enacted and this bill is enacted last.

The term 'homebuyer' was changed to 'home buyer' (two words) throughout the summary section, likely to align with statutory drafting conventions.

A home buyer designated by the applicant to satisfy the second owner-occupancy requirement must now provide an affidavit or declaration, under penalty of perjury, stating they intend to occupy the parcel or unit as their primary residence for three years from the date of conveyance. The applicant may reasonably rely on this affidavit, and a failure to comply does not invalidate any transfer of title or affect the validity of the parcel.

The definition of who qualifies as an applicant is expanded. Previously, an applicant could be the managing or authorized member of an LLC or the trustee or beneficiary of a living trust of a natural person. The amendment clarifies that a trustee of a living trust of a natural person OR a limited liability company of a natural person can serve as an applicant under both owner-occupancy options.

The civil penalty provision for LLC applicants is revised to clarify that the entity (the LLC) itself, not just the individual managing or authorized member, is subject to civil penalties for violations of the owner-occupancy requirements.

The cross-reference in the new Civil Code section 1102.6l is corrected from 'subparagraph (B) clause (ii) of subparagraph (A)' to 'clause (ii) of subparagraph (A),' fixing an incorrect citation to the Government Code provision it references.

A sunset provision was added: Section 1102.6l (Civil Code) and Section 66411.7 (Government Code) will both be repealed on January 1, 2032, making the entire urban lot split framework temporary.

A new restriction bars a managing or authorized member of a limited liability company from being an applicant for an urban lot split if the parcel is within the boundaries of the 2025 Palisades or Eaton Fires in Los Angeles County. This targets fire-affected areas where LLC ownership could complicate recovery and occupancy.

The definition of eligible entity applicants was tightened: a managing or authorized member of an LLC must be a natural person, and a trustee of a living trust must be a trustee of a natural person's trust. This closes potential loopholes for non-natural-person entities.

The recording requirement for the second owner-occupancy option was clarified: the local agency must now record the notice of the owner-occupancy requirement on both resulting parcels (previously just a general notice requirement).

Legislative findings and declarations were added stating the necessity of a special statute for the boundaries of the 2025 Palisades and Eaton Fires in Los Angeles County, providing legal justification for the geographic restriction.

The bill's structure was reorganized to amend, repeal, and re-add Section 66411.7 of the Government Code, with the re-added version appearing to contain a simplified single-affidavit owner-occupancy requirement rather than the two-option system.

The second owner-occupancy option now requires the applicant to sell both parcels within 3 years from the date of approval of the urban lot split, rather than simply 'after issuance of a certificate of occupancy' with no time limit. This creates a hard deadline that prevents applicants from holding onto both parcels indefinitely.

An applicant for an urban lot split may now be the trustee OR beneficiary of a living trust of a natural person, expanding who qualifies beyond just the trustee. This broadens the pool of potential applicants who can use entity structures to apply for urban lot splits.

Senators Arreguin and Wiener were added as coauthors alongside Senator Cortese, indicating broader Senate sponsorship of the bill.

The second owner-occupancy option (Section 66411.7(g)(1)(A)(ii)) was narrowed from requiring 'all of the units on both parcels' to remain owner-occupied for three years to requiring only 'all one of the units on both parcels' to remain owner-occupied. This reduces the scope of the restriction from every unit across both parcels to a single unit, giving developers more flexibility to sell units as investment properties.

Fiscal committee review changed from 'no' to 'yes,' meaning the bill now requires fiscal analysis by the Legislative Fiscal Council before it can proceed.

State-mandated local program designation changed from 'no' to 'yes,' acknowledging that the owner-occupancy requirements impose a state-mandated program on local agencies, which has implications for potential state reimbursement obligations.

The legislative counsel's digest was updated to remove language describing the change as 'nonsubstantive' and now describes it as requiring the owner-occupancy condition, reflecting that this is a substantive policy change. The digest title also dropped 'parcel maps' from the subject line.

Both owner-occupancy affidavit options now require the applicant to sign 'under penalty of perjury,' expanding the scope of the crime of perjury to cover false statements in these affidavits.

The second owner-occupancy option (sale-based) now requires the applicant to affirm under penalty of perjury that they intend to sell both parcels after issuance of a certificate of occupancy, in addition to imposing the 3-year owner-occupancy condition on buyers. The language was also corrected from 'all one of the units' to 'one of the units.'

A new subparagraph (C) makes an applicant who is the managing or authorized member of a limited liability company liable for civil penalties if they violate the owner-occupancy provisions, creating a direct enforcement mechanism against LLC-based applicants.

A second Section 3 was added providing that no state reimbursement is required because costs may be incurred due to the act creating a new crime or infraction, changing a penalty, or changing the definition of a crime - addressing the fiscal impact of the expanded perjury provisions.

The bill's short title was revised (with an apparent drafting error duplicating the reference to adding Section 1102.6l to the Civil Code), and page numbers were corrected from 97 to 96.

The owner-occupancy requirement in Section 66411.7(g)(1) was changed from a single mandatory affidavit (applicant must personally occupy one unit for 3 years) to a choice between two options: (i) the original personal occupancy affidavit, or (ii) requiring all units on both parcels to remain owner-occupied for 3 years after conveyance to homebuyers, with recorded deed restrictions and notices.

New recording and notice requirements were added for the second owner-occupancy option: the local agency must record a notice as a condition of approval, a recorded deed restriction must bind subsequent buyers during the 3-year period, and each homebuyer must record a notice of owner-occupancy as a condition to acquiring title.

New provision (g)(1)(B) clarifies that an applicant may be the managing or authorized member of a limited liability company or the trustee of a living trust for purposes of either owner-occupancy requirement.

New Section 1102.6l added to the Civil Code requiring sellers of urban lot split units subject to the second owner-occupancy option to disclose, in writing, any owner-occupancy requirement for three years after conveyance.

New Section 66411.7(n)(2) prohibits local agencies from adopting or imposing any requirement, process, practice, procedure, or course of conduct that applies to a project solely or partially on the basis that it is an urban lot split, including restricting applicant eligibility.

The bill now imposes a state-mandated local program (previously none) and requires fiscal committee review. A new Section 3 states no reimbursement is required because local agencies have authority to levy service charges, fees, or assessments sufficient to pay for the mandated program.