SB 1116 Amended to Fast-Track California Starter Homes

What happened: On August 20, 2026, the California Senate amended SB 1116 (Caballero) to refine planning and zoning rules that aim to lower costs and speed up the construction of smaller, for-sale starter homes. The bill passed the legislature on August 26 but, as of early September 2026, is not yet law and awaits the Governor's signature. If enacted, its rules would apply to applications filed on or after January 1, 2027.

On August 20, 2026, the California legislature took another step toward streamlining the development of small starter homes. SB 1116, a bill authored by Senator Anna Caballero, was amended to clarify and strengthen rules that allow for smaller lot sizes, reduced setbacks, and more predictable approvals for for-sale housing projects. This bill builds on previous efforts like the Starter Home Revitalization Act to address California's housing shortage by focusing specifically on entry-level homeownership.

For real estate agents, developers, and landowners in Los Angeles, this pending legislation could significantly change the math for infill development. It creates a state-level framework that can override restrictive local zoning for qualifying projects. Here is what we know about the bill's latest version and what it could mean for deals in the South Bay and Westside.

What changed with the August 2026 amendment?

The August 20, 2026 amendment to SB 1116 refined several key provisions designed to make small-lot starter homes easier to entitle and build. The core changes focus on creating objective, statewide standards that limit a local government's ability to block these projects.

Key technical changes in the amended bill include:

• Minimum Parcel Sizes: On land zoned for multifamily housing, new for-sale parcels can be as small as 480 square feet, provided the average size of all new parcels in the project is at least 600 square feet. On land zoned for single-family homes, the minimum is 960 square feet, with an average of at least 1,200 square feet.
• Lot-Size Averaging: To achieve these smaller lot sizes, developers can average sizes across a project. However, the bill places limits on this, with some analyses noting a cap where no new lot can be more than 150% of the average lot size. The final text must be checked for the controlling language.
• Height Limits: Local height limits must be defined in feet, not by the number of stories. This gives architects more design flexibility to create functional living spaces within a set building envelope, without being arbitrarily restricted by a floor count.
• Setback Restrictions: The bill would prohibit cities from imposing most front or internal setbacks on qualifying starter home projects beyond what state law allows. This is critical for making very small lots functional.
• Ministerial Approvals: SB 1116 strengthens the requirement for ministerial, or “over-the-counter,” approval for compliant projects. It adds a directive that all provisions must be “interpreted liberally in favor of producing the maximum number of total housing units,” giving local planners less discretion to deny or delay a project that meets the technical rules.
• Technical Definitions: The bill clarifies the definition of “net habitable square feet” to exclude stairs and enclosed bicycle parking, and it updates the definition of “vacant” property to encourage redevelopment of underused parcels.

When does it take effect?

SB 1116 is not yet law, so its provisions are not currently in effect. The timeline below tracks its progress through the legislature and its prospective effective date if signed by the Governor.

What this means in the South Bay and on the Westside

If SB 1116 becomes law, it will have direct consequences for development in the dense, high-cost markets of coastal Los Angeles. The bill is designed for infill locations, which perfectly describes many neighborhoods in the South Bay and on the Westside.

In the South Bay, cities like Torrance and Redondo Beach have many underutilized commercial and industrial lots that could be candidates for small-lot townhouse projects. A developer could use SB 1116's ministerial approval path to bypass lengthy local review processes, making these projects more financially viable. For title insurance, this means we will be examining subdivision maps that create fee-simple lots far smaller than what local zoning has historically allowed. Our underwriting will need to be based on the state law's preemption, not just the city's code.

On the Westside, the impact could be even more pronounced. In Venice and Westchester, areas with many older homes on deep lots, a property owner could potentially use SB 1116 to subdivide their parcel and build several small, for-sale starter homes where only one house stood before. In high-cost areas like Santa Monica and Culver City, the bill's rules on height (measured in feet) and reduced setbacks could allow developers to build more efficient and appealing for-sale units on small, expensive lots that were previously only feasible for rental apartments.

For our work at Fidelity National Title, this means preparing for a new type of subdivision. We anticipate seeing more parcel maps creating fee-simple lots under 1,000 square feet, particularly in places like El Segundo and Culver City. We will need to review project CC&Rs and map notes carefully to ensure they align with the state's mandatory standards, as any conflict could cloud title.

What agents and homeowners should do now

With the bill on the Governor's desk, now is the time to prepare for its potential enactment.

1. Track the Bill's Final Status: The most important step is to confirm if and when the Governor signs SB 1116. You can track its official status on the California Legislative Information website. The deadline is September 30, 2026.
2. Identify Potential Properties: Developers and agents should begin identifying underutilized parcels in multifamily or single-family zones that could be candidates for a small-lot project. The financial analysis for these sites will change dramatically if SB 1116 becomes law.
3. Educate Your Clients: Inform landowner clients about this pending legislation. A property they thought was only suitable for one home might soon have the potential for a small, multi-unit for-sale project. This could affect listing strategies and property valuations.
4. Prepare for New Disclosures: If you are working on a small-lot infill project, be prepared for disclosures to evolve. Buyers will want to see documentation confirming the project's compliance with SB 1116 and any related ordinances reviewed by the state's Department of Housing and Community Development (HCD).
5. Review Preliminary Title Reports Carefully: For any transaction involving a potential subdivision, review the preliminary title report for existing restrictions, easements, or CC&Rs that might conflict with a future small-lot project. Early identification is key.

Open questions

As of early September 2026, several key points remain unconfirmed.

• The Governor's Signature: The bill is not yet law. It is awaiting action from the Governor, who has until the end of September to sign or veto it. All impacts are contingent on his approval.
• Final Statutory Language: There are minor discrepancies in secondary-source summaries of the bill's technical details, such as the exact cap on lot-size averaging. The controlling language will be in the final, chaptered version of the bill posted on the state's legislative website.
• Local Implementation: If enacted, cities will need to adjust their own processes and ordinances. How quickly and effectively local planning departments, like those in Los Angeles County, adapt to these state-mandated rules is an open question.

Sources

• California Legislative Information: SB 1116
• Office of the Governor of California

FAQ

Is SB 1116 a law yet?

No. As of early September 2026, SB 1116 has passed the California Legislature but is awaiting the Governor's signature to become law. The deadline for the Governor to act is September 30, 2026.

What is the smallest lot SB 1116 would allow?

If enacted, the bill would allow for-sale lots as small as 480 square feet on land zoned for multifamily use and 960 square feet on land zoned for single-family use. These minimums are contingent on the project's overall average lot size meeting a higher threshold.

How does SB 1116 affect Los Angeles?

SB 1116 would directly impact Los Angeles by creating a more predictable, state-mandated path for developing small-lot starter homes. It could speed up infill projects in high-demand areas like the South Bay and Westside by reducing local government discretion to delay or deny them.

When would SB 1116 take effect?

If signed into law, the bill's key provisions would apply to all new development applications submitted on or after January 1, 2027.

Does SB 1116 apply to ADUs?

No, SB 1116 is focused on creating new, fee-simple for-sale lots through subdivision. Accessory Dwelling Units (ADUs) are governed by a separate set of state laws and typically cannot be sold separately from the primary residence.

This is a significant and evolving piece of housing legislation. If you have a potential development deal or a transaction involving a land subdivision in the South Bay or Westside, the details matter. Contact us at Fidelity National Title to discuss how this pending law could impact your specific file. We're here to help you get ahead of the changes — call Matt Goeglein and Xavier de la Piedra IV today.