SB 1116 Amendments Signal Change for CA Housing Development

What happened: On August 20, 2026, the California Assembly passed an amended version of SB 1116, a bill designed to streamline the development of smaller, lower-cost starter homes. The legislation, which now heads back to the Senate for a concurrence vote, refines state housing law to ease zoning rules, reduce setbacks, and speed up project approvals. It is not yet law.

On August 20, 2026, the California Legislature took a significant step toward addressing housing affordability by advancing an amended version of Senate Bill 1116. Authored by Senator Anna Caballero, the bill aims to reduce development costs and accelerate the construction of starter homes by changing key planning and zoning regulations. While the bill is not yet law, its latest amendments provide a clear picture of how the state intends to promote modest-scale housing projects, with direct implications for infill development in Los Angeles County.

As title professionals, we track these legislative changes closely because they directly impact land use, subdivision mapping, and property rights. Understanding the direction of state law helps us advise our clients—agents, developers, and homeowners—on future risks and opportunities.

What changed?

The August 20, 2026 amendments to SB 1116 refine several aspects of the state's Planning and Zoning Law. The goal is to remove local barriers to the creation of small, entry-level homes. As of August 26, 2026, the bill's status is "In Progress," awaiting a final vote in the Senate to approve the Assembly's changes.

The key proposed changes include:

• Ministerial Approvals: The bill strengthens provisions for ministerial ("over-the-counter") approval for qualifying housing projects on subdivided lots. It mandates that these provisions be "interpreted liberally in favor of producing the maximum number of total housing units," reducing the ability of local agencies to use discretionary processes to block or delay projects.

• Setbacks and Height Limits: SB 1116 would prohibit local agencies from imposing certain front or internal setback requirements. It also clarifies that height limits apply only to the physical height of a building, not the number of floors, giving architects more design flexibility.

• Minimum Parcel Sizes: For properties zoned for multifamily housing, the bill would permit the creation of new parcels as small as 480 square feet, or 960 square feet if specific conditions are met. This is a substantial change that could unlock development potential on thousands of sites.

• Density and Lot Averaging: The bill modifies rules related to density and lot size averaging. When a larger lot is split, the new rules would prevent any one of the newly created residential parcels from being more than 50% of the original parcel's size, ensuring a more equitable subdivision.

• Updated Definitions: The legislation revises key definitions to close loopholes. "Net habitable square feet" is updated to exclude stairs and enclosed bicycle parking. A property is considered "vacant" if it has no permanent structure, unless that structure is officially abandoned or untenantable, making it easier to redevelop underutilized lots.

When does it take effect?

SB 1116 is not yet law. Its effective date is contingent on passing the Senate concurrence vote and being signed by the Governor. The bill text specifies that its provisions would apply to development applications submitted on or after January 1, 2027. This gives local agencies time to adapt their procedures.

Here is a timeline of key dates, both completed and projected:

What this means in the South Bay and on the Westside

If enacted, SB 1116 will have tangible effects on real estate in our core markets. The changes are particularly relevant for the infill-heavy neighborhoods of the South Bay and Westside, where land values are high and opportunities for new construction are often limited to redevelopment.

In the South Bay, cities like Lawndale, Hawthorne, and parts of Torrance and Redondo Beach have many mid-sized lots with older R-3 (multifamily) zoning. SB 1116's provisions for 480-square-foot minimum parcels could transform the development potential of these properties. A single lot that previously held a duplex could potentially be subdivided to support several small, individually-owned starter homes or townhomes. This will likely increase land assembly activity and place a premium on well-located multifamily-zoned parcels.

On the Westside, areas like Venice, Santa Monica, and Culver City are defined by high demand and a mix of single-family and multifamily housing stock. The bill's emphasis on ministerial approval and reduced setbacks could make it easier for small developers to pursue projects that are currently non-starters due to local opposition or cumbersome discretionary reviews. We anticipate seeing more interest in small-lot subdivisions for condo-mapped or fee-simple townhomes in these neighborhoods.

From a title perspective, these changes mean more complexity. Subdividing one parcel into four, six, or more smaller ones creates intricate legal descriptions, new easements for access and utilities, and detailed CC&Rs that must be drafted and recorded correctly. Our job is to ensure that the title to each new, small parcel is clean and marketable—a task that requires heightened diligence.

What agents and homeowners should do now

While it is too early to act definitively, proactive agents and owners can begin preparing for these potential changes.

1. Track the Bill's Final Status. The next step is the Senate concurrence vote. You can follow the bill's progress by searching for "SB 1116" on the California Legislative Information website. Do not make any financial decisions based on the bill until it is signed into law.

2. Identify Potential Properties. Agents can begin identifying properties in their farm areas that might benefit from these rule changes—specifically, underutilized lots zoned for multifamily use. This creates a future opportunity to advise clients on the updated highest and best use of their property.

3. Review Private Restrictions. Remember that state law does not override private contracts. Homeowners associations (HOAs) and existing CC&Rs may contain restrictions that prohibit subdividing a lot, even if SB 1116 would otherwise allow it. We can help you and your clients pull and review these documents.

4. Consult with a Title Team. If you or a client are considering a land acquisition for a small development project, engage your title team early. We can help investigate existing zoning, recorded easements, and other factors that will be critical under the new legal framework.

Open questions

As of August 26, 2026, several key elements remain unconfirmed. It is important to distinguish between what the bill proposes and what is currently enforceable.

• Final Passage and Signature: The bill is not yet law. It must still pass the Senate concurrence vote and be signed by the Governor. There is no guarantee this will happen, although its progress signals strong legislative support.

• Local Government Implementation: Even if SB 1116 becomes law, each city will need to interpret its requirements and update its own municipal code. How quickly and effectively cities like Los Angeles, Santa Monica, or Torrance adapt their processes is a major unknown.

• Judicial Interpretation: New laws are often tested in court. The mandate to "interpret liberally" in favor of housing production will almost certainly face legal challenges, and the outcomes will further shape the law's practical impact.

• Market Reaction: The actual economic viability of building 480-square-foot-lot homes will depend on construction costs, financing availability, and buyer demand. It is unclear how quickly the development community will embrace these new opportunities.

Sources

• SB 1116 Bill Text and History, California Legislative Information
• CalMatters Digital Democracy Bill Tracker for SB 1116

FAQ

Is SB 1116 law in California yet?

No. As of August 26, 2026, SB 1116 has been amended and passed by the Assembly but is not yet law. It must still pass a final concurrence vote in the Senate and be signed by the Governor to become effective.

What is the smallest lot size SB 1116 would allow?

If enacted as written, SB 1116 would allow newly created parcels on land zoned for multifamily housing to be as small as 480 square feet, or 960 square feet if certain other conditions are met.

How does SB 1116 help create starter homes?

SB 1116 aims to create starter homes by making it easier and cheaper to subdivide existing residential parcels into smaller, more affordable lots. It achieves this by limiting local government restrictions on lot size, setbacks, and density, and by streamlining the approval process for qualifying projects.

Where would SB 1116 apply?

SB 1116 would apply statewide in California. However, its impact will be felt most in urban and suburban infill areas where land costs are high and existing parcels are zoned for multifamily use, such as many neighborhoods in the Los Angeles South Bay and Westside.

Legislative changes like SB 1116 can shift the foundation of real estate development. If you have questions about how these potential new rules could affect a property you are selling, buying, or developing, please contact us. Call Matt Goeglein or Xavier de la Piedra IV at Fidelity National Title to get clear answers for your specific transaction.