Category: Real Estate

Texas Senate Bill 17: Implications for Real Property and Commercial Leasing Transactions

OverviewTexas Senate Bill 17 (SB 17), signed by Governor Greg Abbott on June 20, 2025, and effective September 1, 2025, establishes sweeping restrictions on the acquisition of real property interests by individuals and entities connected to certain “designated countries,” currently China, Russia, Iran, and North Korea. The law is codified in Subchapter H of Chapter 5 of the Texas Property Code and reflects the state’s stated national security concerns about foreign influence and ownership of land within its borders.
SB 17 applies prospectively only. The statute expressly provides that transactions occurring before September 1, 2025, are governed by prior law. However, acquisitions on or after the effective date (including new commercial leases of one year or more) fall squarely within the new restrictions.
Scope of the LawSB 17 prohibits the purchase or acquisition of any “interest in real property,” a phrase defined broadly to include fee simple title, leasehold interests of one year or more, easements, mineral and water rights, groundwater, standing timber, mines, quarries, agricultural land and improvements, commercial property, industrial property, and residential property. This expansive definition is identical to the statutory language and was emphasized in multiple industry commentaries.For commercial real estate practitioners, the most significant impact is the treatment of long-term leases as acquisitions of an interest in real property. Under SB 17, a commercial lease with a term of one year or longer is treated the same as a purchase for compliance purposes.
Who Is Prohibited?SB 17 prohibits the following persons and entities from acquiring interests in Texas real estate:

Governments of designated countries.
Entities headquartered in a designated country, directly or indirectly held or controlled by a designated-country government, designated by the governor as national security threats, or majority-owned by prohibited individuals.
Entities majority-owned by other prohibited entities.
Individuals who are:a. domiciled in a designated country (with a narrow homestead exception),b. citizens of a designated country residing abroad without naturalization in their country of residence,c. unlawfully present in the United States,d. acting as agents of a designated country, ore. members of the ruling political party of a designated country.

SB 17 also allows the governor, after consulting the Department of Public Safety (DPS) and the Homeland Security Council, to designate additional countries, transnational criminal organizations, or other entities as prohibited.
ExemptionsThe following are exempt from the law:

U.S. citizens and lawful permanent residents.
Entities owned or controlled exclusively by U.S. citizens or lawful permanent residents, provided no prohibited individual holds an interest or control.
Leasehold interests shorter than one year.
Individuals from designated countries who are lawfully present and residing in the U.S. acquiring a residential homestead.

The exemptions function as safe harbors, but they do not resolve certain ambiguities—particularly involving minority ownership or passive investment by foreign individuals in multilayered entity structures.
Enforcement and PenaltiesThe Texas Attorney General (AG) is responsible for implementing, investigating, and enforcing SB 17. The AG must establish procedures for reviewing real estate transactions, conducting investigations, and determining whether enforcement actions are appropriate.
If a violation is suspected or found:

The AG may bring an in rem action against the property in the district court of the county where it is located.
The AG must record notice of the action in the county property records.
If a court determines a violation occurred, it must order divestiture and appoint a receiver to manage and sell or dispose of the property interest.

Penalties include:

Civil penalties for companies and entities of the greater of $250,000 or 50% of the market value of the property interest.
 State jail felony charges for individuals who intentionally or knowingly violate the law.
Forced divestiture, with proceeds (after liens and state enforcement costs) returned to the violator.

Importantly, a purchase or acquisition that violates SB 17 is not automatically void. However, a leasehold interest of one year or more acquired in violation of the Act is void and unenforceable. This distinction creates elevated risk for commercial landlords and tenants.
Impact on Commercial Leasing TransactionsBecause commercial leases with terms of at least one year constitute an “interest in real property,” SB 17 has significant implications for Texas landlords, tenants, lenders, and property managers.
Key effects include:

Leases acquired by prohibited parties on or after September 1, 2025, are void and unenforceable.
While sellers and lessors bear no statutory duty to investigate a counterparty’s compliance, entering into a void lease can cause material disruption.
Renewals or extensions of leases may constitute new “acquisitions,” though the statute does not expressly address this. Lessors should assume that renewals require fresh compliance review.
Indirect ownership raises unresolved questions; for example, whether a minority investment by a prohibited individual in an upper-tier entity affects eligibility. Current statutory language suggests the prohibition applies only to entities majority-owned or majority-controlled by prohibited individuals, but this remains an area where AG rulemaking may provide further clarity.

Practical Guidance for Commercial Landlords and Counsel

Screen Tenants Early: Conduct due diligence on ownership, control, and beneficial owners before negotiating or executing any lease.
Add SB 17 Compliance Clauses: Include representations, warranties, covenants, and indemnification provisions tailored to SB 17.
 No Duty to Investigate, but Risk Remains: Although lessors are not required to verify compliance, prudent parties should adopt procedures to avoid entanglement with void leases or AG enforcement actions.
Track Rulemaking: The AG is required to adopt rules; guidance is expected in late 2025.
Coordinate with Lenders: Lenders may require compliance certifications as conditions precedent in financing transactions.
Monitor Renewals: Treat renewals and extensions as potential new acquisitions requiring updated compliance review.

Litigation and Constitutional Challenges
On July 3, 2025, the Chinese American Legal Defense Alliance (CALDA) filed a federal lawsuit challenging SB 17 on multiple grounds, including:

Equal Protection and Due Process violations,
federal preemption under FIRRMA and CFIUS authority,
Fair Housing Act violations, and
vagueness regarding key statutory terms such as “domicile.”

The outcome of this litigation could significantly affect enforcement, particularly in the context of commercial leasing and entity ownership.
ConclusionSB 17 represents a major shift in Texas property law and applies far beyond traditional land purchases. Commercial leases of one year or more, easements, and other partial interests are now regulated acquisitions. While the law aims to address national security risks, it introduces new compliance obligations and substantial uncertainty into Texas real estate markets, particularly for commercial landlords and tenants.
Until further rulemaking and judicial interpretation occur, prudent parties should adopt enhanced due diligence and robust contractual protections when engaging in commercial leasing transactions involving any foreign individuals or entities.

The CCPA and Automated Decision-Making Technologies (ADMT)

As artificial intelligence (AI), particularly generative AI, becomes increasingly woven into our professional and personal lives—from personalized travel itineraries to reviewing resumes to summarizing investigation notes and reports—questions about who or what controls our data and how it’s used are ever present. AI systems survive and thrive on information and that intersection of AI and privacy elevates the need for data protection.
Recent regulations issued by the California Privacy Protection Agency (CPPA) under the California Consumer Privacy Act (CCPA) begin to erect those protections. Among its various provisions, the CCPA now specifically addresses automated decision-making technologies (ADMT), attempting to bring transparency and consumer rights to, among other things, push back on algorithms making significant decisions about them.
As a starting point, it is important to define ADMT. Under the CCPA, it means any technology that processes personal information and uses computation to replace human decision-making or substantially replace human decision-making. For this purpose, “replace” means to make decision without human involvement. To be considered human involvement, a human must:

know how to interpret and use the technology’s output to make the decision;
review and analyze the output of the technology, and any other information that is relevant to make or change the decision; and
have the authority to make or change the decision based on their analysis in (B).

CCPA-covered businesses that use ADMT to make “significant decisions” about consumers have several new compliance obligations to navigate. A “significant decision” is defined as a decision that has important consequences for a consumer’s life, opportunities, or access to essential services. CCPA regulations define these decisions as those that result in the provision or denial of:

Financial or lending services (e.g., credit approval, loan eligibility)
Housing (e.g., rental applications, mortgage decisions)
Education enrollment or opportunities (e.g., admissions decisions)
Employment or independent contracting opportunities or compensation (e.g., hiring, promotions, work assignments)
Healthcare services (e.g., treatment eligibility, insurance coverage)

These decisions are considered “significant” because they directly affect a consumer’s economic, health, or personal well-being.
When such businesses use ADMT to make significant decisions, they generally must do the following:

Provide an opt-out right for consumers.
Provide a pre-use notice that clearly explains the business’s use of ADMT, in plain language.
Provide consumers with the ability to request information about the business’s use of ADMT.

Businesses using ADMT for significant decisions before January 1, 2027, must comply by January 1, 2027. Businesses that begin using ADMT after January 1, 2027, must comply immediately when the use begins.
Businesses will need to examine these new requirements carefully, including how they fit into the existing CCPA compliance framework, along with exceptions that may apply. For example, in the case of a consumer’s right to opt-out of ADMT, a business may not be required to make that right available.
If a business provides consumers with a method to appeal the ADMT decision to a human reviewer who has the authority to overturn the decision, opt-out is not required. Additionally, the right to opt-out of ADMT in connection with certain admission, acceptance, or hiring decisions, is not required if the following are satisfied:

the business uses ADMT solely for the business’s assessment of the consumer’s ability to perform at work or in an educational program to determine whether to admit, accept, or hire them; and
the ADMT works as intended for the business’s proposed use and does not unlawfully discriminate based upon protected characteristics.

Likewise, the right to opt-out of ADMT is not required for certain allocation/assignment of work and compensation decisions, if the business:

uses the ADMT solely for the business’s allocation/assignment of work or compensation; and
the ADMT works for the business’s purpose and does not unlawfully discriminate based upon protected characteristics.

As many businesses are realizing, successfully deploying AI requires a coordinated approach to achieve more than getting the desired output. It includes understanding a complex regulatory environment of which data privacy and security is a significant part.

New York Tax Court Approves Section 1031 “Drop & Swap” Transactions

Earlier this year, a New York City Administrative Law Judge found that the taxpayers’ sale of a tenancy-in-common (“TIC”) interest in real estate qualified for section 1031 “like-kind exchange” treatment even though the underlying property had been owned that very same day by a partnership, which distributed the property to its partners on the day of the sale in a “drop & swap” transaction.[1]  The IRS did not audit the transaction. Although this is only a New York Division of Tax Appeals administrative law judge opinion, the decision (which is based entirely on federal authorities) is thoughtful,[2] and the fact pattern is very common.
 
I.          Facts.
Benjamin Hadar, Ruth Shomron, and a third, unnamed partner were partners in a partnership called “Upwest”.  Upwest held a rental apartment building on Central Park West that was purchased in the 1980’s.  The building had appreciated significantly but was not producing a lot of revenue. Hadar and Shomron wanted to do a like-kind exchange, but the third partner wanted to cash out.  (She had a higher basis in her partnership interest because she had inherited that interest from her brother, who had died in 2002.)  The three partners agreed to have Upwest distribute the property to the partners as TIC interests, and each would sell their TIC interest.  Hadar worked with a broker to find a purchaser but made clear that the individual partners would be the sellers, and not Upwest.  On June 9, 2015, Sugar Hill Capital Partners (“Sugar Hill”) agreed to buy the building for $65 million.  The letter of intent was not addressed to Upwest.  The offer was accepted.
Upwest entered into a sale contract with an LLC organized by Sugar Hill.
The three partners formed single-member LLCs to receive their TIC interests, and Hadar and Shomron each found replacement properties for purposes of their respective like-kind exchanges (Hadar and Shomron wished to invest in different properties). Shomron notified the bank holding a mortgage on the property of the plan to sell the property as TIC interests, and the bank did not object.
On January 28, 2016, the LLCs entered into a TIC agreement.
On February 1, 2016, Upwest distributed TIC interests to the LLCs and assigned the sale contract to those LLCs. In addition, a deed for the transfer from Upwest to the LLCs was recorded with the NYC Department of Finance. Hadar’s and Shomron’s TIC interests were transferred to a qualified intermediary.
The same day, the TIC interests were sold to Sugar Hill for $65 million.  Sugar Hill wired Hadar’s and Shomron’s shares of the proceeds to the qualified intermediary.  The qualified intermediary subsequently purchased replacement properties for each of Hadar and Shomron. 
II.        The Decision.
The judge held that section 1031 requires that the taxpayer in a like-kind exchange must continuously hold its interest in the exchanged property for investment but found that this continuing investment requirement was satisfied by the TIC interests, and the fact that the property was distributed on the same day as the sale did not invalidate the like-kind treatment.
The NY Division of Tax Appeals argued that the distribution immediately before the sale did not convey the “benefits and burdens” (the TICs did not receive any of the rental income or incur any of the rental expenses) and that Upwest should be treated as the owner.  (The Division argued that the partners should have held the property for a minimum of two months before selling.)  The judge rejected this argument because (i) section 1031 does not impose a holding period requirement, (ii) the partners followed the form of their transaction (“during the brief moment that the Tenants in Common held title to the CPW property, they assumed all obligations of Upwest arising under the Sale Contract pursuant to the Assignment of Contract of Sale”), and (iii) the purchaser had been informed that the sellers were the Tenants in Common, and not Upwest.
The Hadar case is noteworthy in its statement that section 1031 does not require a minimum holding period, as well as its focus on the taxpayers’ adherence to their form for each step of the transaction. However, Hadar is a New York case and has no precedential value in other states or for federal income tax purposes. The IRS has never directly addressed the issue and, therefore, taxpayers and their advisors should approach these transactions with caution.

[1] All references to section are to the Internal Revenue Code.
[2] Because the starting point of determining an individual’s New York personal income tax liability is the taxpayer’s federal gross income, the ruling found it appropriate to look to federal law in addressing the substantive questions at issue in the case.

SETTLEMENT REJECTED- $700k TCPA/CEMA Resolution Deemed Insufficient by Court

A common TCPA issue when state Mini-TCPA statutes are involved is determining who is subject to the state laws given that cell phone users might use area codes for a state but not live in that state.
This issue (among others) just sunk a TCPA class action up in Washington state– the Court was not convinced it could identify class members based on the area code of phone numbers in a data set!
In Kovanen v. Assert Realty, LLC 2025 WL 3123993 (W.D. Wash. Nov. 7, 2025) the parties reached a settlement whereby Defendant would pay $700k to resolve the claims of Washington resident’s to whose telephone numbers Defendants sent text messages for the purpose of promoting Asset Realty LLC d/b/a Century 21 Northwest’s real estate services without consent.
The data set supplied to the court, however, relied on expert analysis to identify phone numbers with Washington state area codes. The Court was unimpressed:
Plaintiff does not explain (1) why it is reasonable to apparently assume that individuals with area codes associated with states outside Washington could not have been Washington residents at the time the text messages were sent; 1 or (2) why [Expert] and not Defendants are tasked with supplying “the names and contact information of the subscriber or ordinary user of the telephone numbers at the time the text messages at issue in this case were sent,” given that it appears Plaintiff may not have access to it, see Dkt. No. 37 at 8 (only requiring this information “to the extent Plaintiff has access to [it]”). 2 Based on the current definitions, it appears that there may be individuals in the Settlement Class—which includes persons who received a relevant text message “while such person was a Washington resident,” Dkt. No. 37 at 6—who are not on the Class Lis —which encompasses only telephone numbers “contain[ing] Area Codes within the State of Washington,” Dkt. No. 19-2 at 1124. In other words, Washington residents with out-of state area codes could be Settlement Class Members but would not appear on the Class List. If there is no reliable method to identify whether a given text was sent to a Washington resident, the class definition needs to be narrowed. 3 Otherwise, the parties need to revise the Settlement Agreement to ensure that notice is reasonably calculated to reach all class members who would be bound by the proposal.
Get it?
There is a mismatch between the data set and the settlement class definition. The Court seems willing to approve a class of individuals with Washington area codes, but not a definition of Washington residents where the data is limited to area code information.
This makes sense because otherwise Washington residents who did not have Washington area codes would end up releasing Defendant without any notice of the class settlement.
So good on the court for paying attention here!
The Court also rejected the settlement because of uncertainty in how the class was to be treated in the payment of claims:
Furthermore, while the Agreement states that “Claimant Awards” will be paid “pro rata,” Dkt. No. 37 at 14, the Agreement does not describe exactly how that will work. This leaves various unanswered questions. Will Settlement Class Members with more than one device that received texts be entitled to multiple payments? Assuming that claimants who received disproportionately more text messages than others are not entitled to a greater payment, see id. at 46, is that a fair result? Is it equitable to pay the holders of the 27,436 “unique numbers” that had been listed on the DNC Registry for more than 30 days at the time they received the texts (thus providing them with a TCPA claim), Dkt. No. 19-2 at 1309; Dkt. No. 1-1 at 29–30, 35–36, the same as other Settlement Class Members? Mr. Kovanen does not explain how the chosen approach “treats class members equitably.”
Very interesting questions that most courts do not pose.
Will pay close attention here.

Are Lessors Risk-Only Endorsements Effective in Florida?

This article addresses the purpose and effectiveness of a Lessors Risk-Only Endorsement (LRO), which is designed to shift coverage from a commercial premises owner to its commercial tenants.
Standard LRO LanguageA typical LRO provides as follows:
LESSORS RISK-ONLY ENDORSEMENTThis Endorsement Changes the Policy. Please Read It Carefully.This endorsement modifies insurance under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PARTFor any Lessors Risk-Only classifications on this policy, coverage is written and priced on the basis that your “tenant(s)” carry liability insurance to protect you as well as them.
Within the lease agreement between you and the “tenant(s)” there must be a requirement that the “tenant(s)” carry Commercial General Liability insurance that provides:
(a) Limits greater than or equal to your limits on this policy, and
(b) Names you as an Additional Insured on their policy. 
Parking Lot(s) or other land or premises owned by you and leased to “tenant(s)” must be included in such “tenant(s)” insurance.
Failure to comply with this/these term(s) and/or condition(s) shall render coverage under this policy null and void.
“Tenant(s)” is defined as Commercial tenant(s) only and does not apply to residential tenant(s). 
This language imposes the following requirements in order to trigger coverage under the policy: (1) the leases between the insured and its tenants must require that the tenants name the insured as an additional insured on their policies, (2) the tenants’ policies must have limits greater than or equal to the insured’s limits, and (3) the tenants must actually purchase insurance that names the additional insured on their policies.
Under Florida law, an insurer may deny coverage where an insured “breaches policy provisions under which, but for the breach, coverage would otherwise exist.”1 Such policy provisions are known as conditions precedent and conditions subsequent.
A condition precedent is one that is to be performed before the contract becomes effective.2 The requirement to timely notify an insurer of a claim is generally held to be a condition precedent. A condition subsequent is a condition that provides “that a policy shall become void or its operation defeated or suspended, or the insurer relieved wholly or partially from liability upon the happening of some event, or the doing or omission to do some act. …”3 The requirement to cooperate in the insurer’s investigation of a claim is generally held to be a condition subsequent.4
Applying this Florida framework, the requirements in the LRO should be considered conditions precedent to trigger coverage. Thus, where the conditions precedent in the LRO are not met, the policy’s commercial general liability coverage should not be triggered. This, however, raises the question of whether the LRO applies where there is no tenancy.
TenancyUnder Florida law, commercial tenancies are governed by Florida Statutes, Chapter 83, Part I, and commercial relations are governed by Florida Statutes, Chapter 680, section 83.01, which address commercial tenancies as follows:
Fla. Stat. § 83.01 Unwritten lease tenancy at will; duration.Any lease of lands and tenements, or either, made shall be deemed and held to be a tenancy at will unless it shall be in writing signed by the lessor. Such tenancy shall be from year to year, or quarter to quarter, or month to month, or week to week, to be determined by the periods at which the rent is payable. If the rent is payable weekly, then the tenancy shall be from week to week; if payable monthly, then from month to month; if payable quarterly, then from quarter to quarter; if payable yearly, then from year to year.
Pursuant to section 680.1031(1)(q), the term “lessor” means “a person who transfers the right to possession and use of goods under a lease.”
Considering these statutory provisions in conjunction with one another, a commercial tenancy exists only where there is a lease (written or at will) that transfers the right of possession of the property from the owner to the occupant in exchange for the payment of rent. Therefore, to establish the existence of a tenancy, the threshold issue is whether there is an agreement between the owner and the entity in possession of a commercial space under which the entity in possession pays rent for the right to possess the space. If there is no exchange of rent, then there is no tenancy. Thus, in situations where there is no agreement between the insured and the occupant that the insured is to receive payment of rent in exchange for possession of the insured premises, the entity in possession of the space may not qualify as a tenant. To the extent no tenancy exists, the LRO may not apply to that occupant.
Priority of CoverageIf the LRO cannot be enforced against an occupant of the insured premises, but can be enforced against a tenant, the next question is whether the LRO actually shifts coverage to the tenant. Under Florida law, priority of coverage is dependent on analysis of the “Other insurance” provisions in all competing policies.5
“There are three types of other insurance clauses6:

Pro rata or proportionate recovery clauses. A “pro rata other insurance” clause is described as “a provision to the effect that in the event of other insurance, the loss shall be borne pro-rata dependent upon monetary limits of coverage.”7
Excess insurance clauses. An “excess other insurance” clause is described as “a provision that the policy shall be excess over any other valid and collectible insurance applicable to the liability” at issue.8
Escape or no liability clauses. An “escape other insurance clause” is “a provision that if there is other valid and collectible insurance the policy shall not apply[.]”9  

Under Florida law, “where two or more policies that apparently cover the same loss both contain excess ‘other insurance’ provisions, the clauses are deemed ‘mutually repugnant’”10 and therefore cancel each other out and such that both policies are each “liable for a pro rata share in accordance with their policy limits.”11 In other words, even assuming compliance with the LRO, where the policy on which the insured premises owner has been included as an additional insured contains an excess clause and the insured premises owner’s policy also contains an excess clause, the two clauses may cancel each other out such that each insurer has a duty to defend the insured on a pro rata share. Consequently, the LRO may not actually serve its purpose of fully shifting the risk to the tenant and its insurer. Insurers should be mindful of these risks when operating in Florida._______________________________________________________________________________________________
1 “Coverage Defenses” and the Claims Administration Statute, 1 LNPG: New Appleman Florida Insurance Law §8.24.
2 State Farm Mut. Auto. Ins. Co. v. Curran, 135 So. 3d 1071, 1078 (Fla. 2014) (quoting 31 FLA. JUR.2D INSURANCE § 2686 (2013)).
3 United States Aviation Great Lakes, Inc. v. Sunray Airline, Inc., 543 So. 2d 1309, FN 5 (Fla. 5th DCA 1989).
4 State Farm Mut. Auto. Ins. Co. v. Curran, 135 So. 3d 1071, 1078 (Fla. 2014) (quoting 31 FLA. JUR.2D INSURANCE § 2686 (2013)).
5 Privilege Underwriters Reciprocal Exch. V. Hanove Ins. Grp., 304 F. Supp. 3d 1300 (S.D. Fla. 2018).
6 Am. Cas. Co. of Reading, Pa. v. Health Care Indem., Inc., 613 F.Supp.2d 1310, 1318 (M.D. Fla. 2009) (citing Sentry Ins. Co. v. Aetna Ins. Co., 450 So. 2d 1233, 1236 (Fla. 2d DCA 1984)). 
7 Auto-Owners Ins. Co. v. Palm Beach County, 157 So. 2d 820, 822 (Fla. 2d DCA 1963).
8 Id.
9 Id.
10 Keenan Hopkins Schmidt & Stowell Contractors, Inc. v. Cont’l Cas. Co., 653 F. Supp. 2d 1255, 1263 (M.D. Fla. 2009).
11 Rockhill Ins. Co. v. Northfield Ins. Co., 297 F.Supp.3d 1279 (M.D. Fla. 2017) (citing Keenan, 653 F.Supp.2d at 1263) (internal citations omitted) (“By contrast, where each policy contains an excess ‘other insurance’ clause, so that giving each policy’s clause effect would leave the insured without primary insurance, the clauses are deemed to cancel each other out, and the insurers are required to cover the loss on a pro rata basis.”)

Streamlining Middle Housing: The Latest in Small-Site Development Reforms

California continues its legislative push to address the state’s housing crisis, particularly focusing on “middle-housing” projects that bridge the gap between single-family homes and large apartment buildings (e.g., duplexes, triplexes, townhomes, cottage clusters, etc.). 
Recent legislation broadens the small lot subdivision framework under SB 684 and SB 1123 (previously analyzed here), strengthens SB 9 duplex and lot-split rights, accelerates ministerial permitting timelines, and further liberalizes ADU development. As we previously reported, SB 79 (signed October 10, 2025) also increases density around transit, including on small parcels in single-family zones.
This alert summarizes the most significant newly enacted state laws affecting small-site residential development.
Expanded Opportunities for Small Lot Subdivisions With Remainder Parcels
The Starter Home Revitalization Act — amended and expanded by SB 684 (multi-family zoned sites) and SB 1123 (single-family zoned sites) — continues to evolve through legislative clean-up efforts. This Act provides ministerial approval of projects consisting of no more than 10 units on up to 10 parcels (essentially, smaller, more affordable “starter” homes).
AB 130 expands this framework in two key ways:
Remainder Parcels that Do Not Count Toward the 10-Lot Cap
AB 130 authorizes creation of a “remainder parcel” that is excluded from the Act’s 10-lot limit, provided that the remainder parcel:

contains no new residential units, and
is not exclusively dedicated to serving the new housing development (consistent with Gov. Code § 66499.41(a)(1)(B)).

This change expands site eligibility by allowing an additional parcel for existing uses, utilities, or other non-exclusive functions.

Restrictions on Sale, Lease, or Financing of Newly Created Parcels
Except for the remainder parcel, newly created lots may not be sold, leased, or financed unless the parcel:

includes a Building Standards Code-compliant residential structure with at least one dwelling unit;
contains an existing legally permitted residential structure;
is reserved for circulation, open space, or common area; or
is the final undeveloped parcel within the subdivision that has yet to be improved with a code-compliant residential structure.

While the remainder parcel option increases flexibility, these new post-subdivision restrictions may complicate financing and phasing for some projects.
Bolstering SB 9 Duplexes and Lot Splits (With Notable Exception)
SB 9 (2021) legalized ministerial duplexes and urban lot splits statewide. New legislation clarifies and strengthens its application:
SB 450 (Effective Jan. 1, 2025)

Applies SB 9 to charter cities, closing the loophole created by a Los Angeles Superior Court ruling (City of Redondo Beach, et al., v. Rob Bonta, in his capacity as California Attorney General, Case No. 22STCP1143 (2024), pending appeal)  
Limits additional local standards, preventing jurisdictions from imposing requirements beyond base zoning and SB 9’s statutory criteria.
Creates a firm 60‑day approval deadline, after which SB 9 applications are deemed approved.
Raises the bar for denials, requiring specific findings of an adverse impact to public health and safety, not generalized environmental concerns.
Expands HCD enforcement authority over local SB 9 compliance.

AB 1061 (Effective Jan. 1, 2026)
AB 1061 extends SB 9 to historic districts, provided the resulting duplexes and lot‑splits do not alter or demolish any historic structure.
Governor’s Executive Order Carve-OutA July 2025 Executive Order (N-32-25) authorizes local agencies in Los Angeles County to restrict or suspend SB 9 projects in high fire‑hazard areas undergoing post‑fire rebuilding (including Pacific Palisades, Malibu, and Altadena), citing evacuation and wildfire safety concerns.
Doubling Down on Accessory Dwelling Units (ADUs)
California’s ADU laws have evolved to produce tens of thousands of small but flexible housing units in the last decade. Recent legislative changes further reduce barriers, making ADU construction an increasingly viable option for homeowners, developers, and investors. Key updates include:
Elimination of Owner-Occupancy Requirements:
AB 976 permanently eliminates owner-occupancy requirements for ADUs. 
AB 1154 eliminates owner-occupancy requirement for Junior ADUs (JADU) (defined as a dwelling unit up to 500 square feet contained within the existing space of a single-family home) that do not share a bathroom with the primary unit.
Separate Sale of ADUs as Condominiums:
AB 1033 authorizes local agencies to permit the separate sale of ADUs from the primary residence as individual condominium units. Major jurisdictions such as San Jose, Los Angeles, San Diego, San Francisco, Berkeley, and Sacramento have opted in.
More ADUs for Multifamily Buildings:
SB 1211 allows up to eight detached ADUs on multifamily properties, or as many ADUs as there are existing primary dwelling units — whichever is fewer.
Relaxed Parking Requirements:
SB 1211 also prohibits local agencies from requiring replacement parking where uncovered spaces are removed to construct an ADU.
Pre-Approved Plans:
AB 1332 requires every city to establish a pre-approved ADU plan program by January 1, 2025, streamlining design and permitting.
Legalization of Unpermitted ADUs:
AB 2533 extends the amnesty date for legalization of unpermitted ADUs from January 1, 2018, to January 1, 2020, allowing more homeowners to legalize units with reduced penalties.
ADU/JADU Consistency and Clarification:
SB 543 aligns JADU rules with ADU rules and clarifies square‑footage standards and permitting timelines.
Automatic Statewide ADU Rules (Noncompliant Cities):
Under the newly enacted SB 9 (distinct from the 2021 SB 9), state‑level ADU standards automatically apply when local jurisdictions fail to timely update their ADU ordinances.
ADUs in the Coastal Zone:
SB 1077 (effective July 1, 2026) directs the Coastal Commission and HCD to prepare new streamline ADU guidance for the Coastal Zone. However, Coastal Zone ADUs will continue to face heightened restrictions and longer review timelines as compared to those in inland areas.
New “Shot Clocks” Tighten Approval Deadlines
Recent laws impose strict deadlines (shot clocks) on local agencies reviewing middle‑housing projects.
Permit Streamlining Act (PSA) Now Applies to Ministerial Projects:
For the first time, AB 130 applies the Permit Streamlining Act (PSA) to ministerial projects — including ADUs, SB 9, SB 684, and SB 1123 projects. Local agencies must:

act within 30 days of deeming the application complete (unless a shorter timeline applies by statute), and
issue a decision within 60‑days, except for projects under AB 2011/2243.

Some conflict may arise with other ministerial streamlining statutes (e.g., SB 35/423 or SB 6), which impose their own timelines.
Third‑Party Review of Delayed “Post‑Entitlement” Permits:
AB 253 allows applicants for residential projects with 10 or fewer units and four or fewer stories to hire licensed third‑party plan-check reviewers when local agencies exceed the 30‑day review deadline.
Mandatory Final Inspections Within 10 Days:
AB 1308 requires local agencies to complete final inspections within 10 business days of receiving notice of completion for applicable residential projects of 10 units or fewer.
Local Initiatives
Not to be outdone, several jurisdictions have adopted their own small-to-middle housing development incentives:  

Berkeley Middle Housing Ordinance (effective Nov. 1, 2025):

Eliminates most single‑family zoning and allows small multifamily projects up to 70 units/acre, 35‑foot height and 60% lot‑coverage.

Santa Monica Emergency Ordinance (adopted in Aug. 2025):

Allows up to 20 units on vacant residential lots and permits three‑story structures in areas previously zoned exclusively for single‑family homes. The ordinance complements SB 1123’s ministerial small‑lot framework.
Conclusion
Together, new state legislation and proactive local initiatives are significantly expanding opportunities for small‑site housing development across California. Projects historically subject to lengthy, costly, and uncertain discretionary review may now qualify for streamlined, ministerial approvals under multiple overlapping statutes.

Illinois Receivership Act will be a valuable tool for creditors

On January 1, 2026, the Illinois Receivership Act (the Act) takes effect. The Act builds upon a patchwork of laws in Illinois to create a broad framework for creditors and other parties in interest for the appointment of a receiver over most types of real property, personal property and businesses. Here are six important things to know about the Act.
1. A receiver may be appointed as a primary remedy, pre-judgment and post-judgment, in cases involving: (a) lien enforcement where property is at risk of waste or impairment; (b) fraud; (c) a company with deadlocked management; and (d) a company that is insolvent or not paying its debts.
Notably, the Act does not modify a mortgagee’s rights under the Illinois Mortgage Foreclosure Act to seek the appointment of a receiver. Rather, the new Act expands the circumstances under which a receiver can be appointed and formalizes the processes and broadens the powers associated therewith.
2. The court may appoint a receiver without notice if circumstances warrant.
3. Once a receiver is appointed, the court has exclusive jurisdiction: (a) over all receivership property wherever it is located; and (b) over all controversies related to or arising from the receivership and its property.
4. The receiver has broad powers over receivership property, including to: (a) collect, manage and protect it; (b) operate a business by, among other things, incurring debt and paying expenses; (c) assert a claim or defense for the owner; (d) compel a party to produce records and/or be examined under oath; (e) engage professionals such as attorneys and accountants; and (f) transfer it by sale, lease or other disposition.
5. Upon notice from the receiver, creditors are required to timely file a claim against the receivership and if they fail to do so, the claim may be waived.
6. The court may order a receiver’s fees and expenses to be paid from: (a) the receivership property; (b) the person requesting appointment; or (c) a person whose conduct justified the appointment such as the owner.
In sum, Illinois receivers will soon have powers that could benefit secured and unsecured creditors in a variety of tricky situations.

NYS Executive and Attorney General Come Together to Expedite and Streamline Land Acquisition

On Nov. 10, 2025, the New York State Department of Environmental Conservation (DEC) and the New York State Office of the Attorney General (OAG) entered into a memorandum of agreement (MOA) to streamline the land acquisition process in New York. This blog post provides background information regarding the existing land acquisition process and discusses the MOA.
In New York, the Open Space Conservation Plan guides the investment of land protection funds from the Environmental Protection Fund (EPF) – a fund created during the State budget process. The State supports the national goal of conserving 30% of United States’ lands and waters by 2030, in collaboration with a group of partners and stakeholders.1 Land acquisition activities are undertaken using funding from multiple sources, such as the EPF, the Natural Resources Damage Fund, Clean Water/Clean Air Bond Act, Court of Claims cost recovery, Pittman-Robertson Act Funds and Federal Forest Legacy Funds. Most recently, New Yorkers voted on a ballot initiative that included that not less than $300 million from the Clean Water, Clean Air, and Green Jobs Environmental Bond Act of 2022 will be used for open space land conservation projects.
Given the money and resources the State has invested in its land acquisition goals, the Governor and AG have determined through the MOA that they must now enable a more expedited and efficient land conservation process.
The land acquisition process in New York is directed by statute and involves state agencies, the OAG, and often land trusts that are community-based, nonprofit organizations that work to conserve land by acquiring land or conservation easements from willing landowners. Pursuant to ECL § 3-0305(1) “no real property shall be so acquired by purchase unless the title thereto is approved by the attorney general.” The complicated nature of land acquisition has been a topic of interest for the State Executive agencies and Legislature over the last couple of years, with various bills being introduced and discussions with interested parties on solutions to make the process more efficient.
As part of her 2025 State of the State address, Gov. Hochul announced several initiatives to make open space accessible for all, including modernizing the use of title insurance to expedite and streamline land acquisitions, granting DEC the authority to independently acquire conservation easements, and reducing the financial hurdles non-profit organizations face in their land conservation effort. While some advocates anticipated an Article VII budget bill to address the issue of land acquisitions, the Executive did not include any proposals in the enacted 2025 budget to address the issue of using title insurance. The MOA is intended to fulfill this policy initiative.
The MOA does not change the statutory requirements for land acquisition, but instead outlines a process between DEC and OAG to move certain types of projects more quickly. For example, high-priority projects, transactions with minor title defects, and low-risk2 transactions will be subject to an expedited process. Specifically, for transactions with minor title defects that are low-risk, DEC is authorized under the MOA to provide the OAG with a title insurance policy provided by a New York State certified commercial insurer that provides satisfactory coverage for the title defect(s). Typically, the OAG has required marketable title for the transfer of real property in the State; however, this will permit the use of insurable title, which OAG has made a point to advise DEC of the potential risks. 
While nothing in state law prohibited the use of insurable title, the DEC and OAG did not typically use it. The MOA references third-party guidance and states that “[i]n any instances where title insurance is to be utilized, DEC shall require that the title insurance company conduct a review that meets all standards outlined in the ‘New York State Bar Association Real Property Law Section Committee on Title and Transfer Standards For Title Examination.’ Additionally, the title insurance company will refer to ‘General Guidance for Real Property Bureau’s Title Review Practice and Common Title Objections’ developed by the OAG to provide guidance for the title insurance company’s title review standards.” The MOA also provides the OAG the option to decline the use of title insurance, with a written explanation and an “appeals process.”
In sum, the MOA has the potential to expedite the achievement of the State’s land conservation goals and may increase process efficiencies.
1 ECL § 49-0113.
2 Acquisition of less than a fee interest, such as public fishing rights easements, donations, landlocked parcels, fee acquisitions of small projects, and acquisitions of open space are low-risk projects pursuant to the MOA.

Tennessee Condominiums- Horizontal Property Act Versus the Condominium Act

Tennessee developers continue to rely on the Horizontal Property Act (“HPA”) as a familiar framework for condominium ownership. The Tennessee Condominium Act of 2008 (“Condominium Act”) introduced a more modern alternative, offering expanded governance, financing, and consumer-protection tools. Both Acts remain in effect and may be used for new projects, but they reflect different approaches to regulation and project administration.
Applicability
The HPA remains fully operative. It was Tennessee’s original statutory authority for creating condominium ownership and continues to provide a valid framework for new developments. The Condominium Act did not repeal or replace the HPA. Instead, it established an updated and more detailed alternative structure. Developers may elect to organize a project under either statute depending on the project’s design, scale, and financing objectives.
In practice, most modern developments should favor the Condominium Act because it reflects current expectations for governance, disclosure, and consumer protection. Projects formed under the HPA typically involve simpler or smaller ownership structures—or follow historic documentation models already used within a particular jurisdiction.
Practical Differences
The Condominium Act provides a comprehensive roadmap for the creation, governance, and management of a condominium regime. It defines declarant rights, association powers, turnover obligations, lien priorities, and disclosure obligations. These features promote predictability and consistency across projects and are widely recognized by lenders and title companies.
The HPA is more limited. It lacks many of the governance and financial provisions that have become standard practice under the Condominium Act. Developers using the HPA may encounter more interpretive gaps and must often rely on custom drafting or local practice to achieve the same clarity available under the Condominium Act.
Use of Deposits For Construction
In 2025, the General Assembly amended the Condominium Act to permit limited use of purchaser deposits for construction. Under the revised statute, developers may access escrowed deposits to pay verified construction costs if buyers provide written acknowledgment and adequate security—such as a surety bond or letter of credit—is maintained. These amendments align Tennessee practice with modern condominium financing standards in several other states.
Although the amendment appears in the Condominium Act, the amendment is applicable to condominiums created under either statute when those developments meet the definition of a condominium. Thus, developers using the HPA cannot assume exemption from the deposit‑for‑construction or escrow‑handling requirements that now apply statewide. Careful compliance review is warranted to ensure that deposit practices meet the standards of the new rules for the use of deposits.
Choosing the Right Path
While both Acts remain available, the Condominium Act is the more complete and predictable structure for contemporary development, including mixed-use, high-rise, mid-rise, and townhome projects. It aligns more closely with lender expectations, clarifies and reinforces declarant and association rights, and provides well‑defined procedures for governance, reserves, and disclosure. The HPA may be suitable for smaller or single‑phase projects, but it provides less direction and offers fewer tools for management and financing. Developers should evaluate both options deliberately—recognizing that the Condominium Act generally offers clearer statutory guidance, stronger market acceptance, and more comprehensive protections for all parties involved.

Unsuccessful Taxpayer Change in Domicile from New York to Florida Shows that Courts will Follow the Money

Snowbirds, take notice. In October 2025, the New York State Tax Appeals Tribunal issued a decision regarding a couple’s claimed change in domicile from New York to Florida for the 2018 and 2019 tax years. Matter of Hoff and Ocorr-Hoff, DTA No. 850209 (N.Y.S. Tax Appeals Trib. Oct. 9, 2025). The case illustrates the challenges involved even when taxpayers make diligent attempts to get their checklist of formal requirements right.
The Tribunal examined the standard factors for change of domicile, including (a) home, (b) time, (c) business ties, (d) social ties, (e) family ties, and (f) other evidence, with none being deemed dispositive. Citing well-established case law, the Tribunal noted that the taxpayer must prove a change in domicile by clear and convincing evidence, a high evidentiary standard, and further observed that the Division of Taxation’s determination that the taxpayers had not changed their domicile was presumed correct.
The taxpayers here had an uphill battle in establishing that they had moved from their long-time home in upstate New York to Florida in 2018 and 2019. The Hoffs had purchased a home in Florida in 2014 and maintained dual residences since that time. The Hoffs had owned their New York home since 2011, however, and it had been largely unchanged as their primary residence.
Regarding time spent in each location, the Tribunal used the taxpayers’ Verizon statements to establish the number of days spent in each location. Cell phone records reflected that the taxpayers spent 186 days in New York, 131 days in Florida and 48 days in other locations in 2018. In 2019, the Hoffs spent 164 days in New York, 153.5 days in Florida and 47.5 days in other locations.
Most importantly, the Tribunal reviewed the couple’s sources of income in 2018 and 2019, under the “business ties” factor. Mr. Hoff owned a New York business. Despite having a plan in place to separate himself from and eventually sell the business, Mr. Hoff earned a significant salary from the business in 2018 and 2019. He also maintained the business accounts and traveled on behalf of the business during the audit period. Mrs. Ocorr-Hoff testified that she started businesses in Florida, but no evidence was offered in support of this contention and, conversely, tax returns show that she continued her business in New York.
The Tribunal discussed at length the Hoffs’ efforts to make formal declarations regarding changes in domicile in 2018 and 2019. The Hoffs established strong social connections in Florida, were active in their homeowners’ association and a Florida country club, and changed their drivers’ licenses and voter registrations, among other steps taken to establish Florida domicile. The Tribunal noted, though, that many of the items about which the Hoffs testified were uncorroborated by contemporaneous evidence. The taxpayers either testified to the facts without supporting documentation or provided post-2019 documents in support.
As the Tribunal stated, “[s]o-called formal declarations of domicile, such as voter registration, have lost their importance in recent years as courts have recognized their self-serving nature, while informal declarations and acts of the person have been given greater recognition in resolving the question of domicile.” Ultimately, the Tribunal affirmed the determination of the Division of Taxation and the Administrative Law Judge who had previously reviewed the case, finding that the taxpayers may have intended to change their domicile to Florida “at some point” but that they had not accomplished the move in the tax years at issue. 
There are some important takeaways for those considering a change in tax domicile, particularly between New York and Florida:

Expect a full inquiry from the Division of Taxation for the tax year of a change in domicile. Do not assume that the change will fly under the radar.
Although not one of the textbook factors in the case law, the taxpayer’s source of income appears to have been the paramount element in this case. If the taxpayer is still actively engaged in a trade or business but claims to have a domicile elsewhere, the Tribunal will likely view that claim skeptically – even in the era of digital nomadism.
Anticipate that the Division of Taxation will request cell phone records, among other types of third-party documentation, to corroborate the number of days the taxpayers claim in each location.
Making formal declarations (drivers licenses, voter registration, etc.) and fulfilling checklists are important as well, but they likely will not be dispositive. Courts most often focus on these elements when taxpayers fail to get them right, as evidence of lack of a change in domicile, rather than relying on them to support the taxpayer’s affirmative case.

This article was authored by Laura Gavioli and Lylah Paine

No Bailout for Bureaucratic Inertia- NYDEC Ordered to Implement Albany’s Climate Commitments

In a ruling with sweeping implications for New York’s climate policy, an Albany trial court ordered the New York Department of Environmental Conservation (NYDEC or Department) to issue long-overdue regulations under the Climate Leadership and Community Protection Act, known as the Climate Act.[1] Enacted in 2019 and effective January 1, 2020, the statute requires a 40 percent reduction in statewide greenhouse gas emissions from 1990 levels by 2030, and an 85 percent reduction from 1990 levels by 2050.[2]
To meet those targets, the Legislature created the Climate Action Council—a body composed of the heads of major state agencies and appointees of the Governor and Legislature—and charged it with developing a “Scoping Plan” by January 1, 2023. The plan was to serve as a road map recommending the steps necessary to achieve the Climate Act’s goals. The Scoping Plan is not self-effectuating and does not impose binding requirements on any public or private entity. Rather, the statute directs the Department to adopt regulations establishing enforceable emissions limits, performance standards, and other controls on greenhouse gases across all sectors of the state’s economy by January 1, 2024.[3]
The Council completed the Scoping Plan in December 2022. The Department, however, missed the statutory deadline. It held public workshops in 2023 and 2024, and proposed a greenhouse gas reporting rule, but ultimately failed to issue the more comprehensive climate regulations the law contemplates. In March 2025, three environmental groups filed suit in the Supreme Court, Albany County, alleging that the Department’s delay was unconstitutional.[4] They sought an injunction compelling agency rulemaking and a declaration that the delay was unconstitutional.
The Court’s Decision
The court sided with the petitioners. It held that the Climate Act’s command that the Department “shall promulgate” regulations left no room for discretion.[5] The agency’s argument—that compliance would impose “extraordinary and damaging costs upon New Yorkers”—found no traction.[6] Questions of cost and feasibility, the court observed, belong to the Legislature, not the executive branch, and if the statutory targets prove unworkable, the remedy lies in Albany, not in an agency “unilaterally determining the course of New York’s climate policy by refraining from issuing legally-mandated regulations.”[7]
The court set a firm deadline of February 6, 2026, for the Department to issue the required regulations. Because that date falls during the legislative session beginning in January 2026, it effectively gives that Department a window to raise its feasibility concerns—including its view that “the 2030 goal itself is not practically feasible due to costs consumers simply cannot bear”—to law makers, who could consider amendments to the Climate Act that address those concerns, or simply leave the statute as-is and let the chips fall where they may.
Though the court declined to reach the petitioners’ constitutional claim, its ruling signifies that courts are willing to enforce legislative climate mandates according to their terms, even when doing so threatens serious economic consequences. The ruling is expected to be appealed, and Governor Kathy Hochul has indicated she intends to meet with lawmakers to consider potential adjustments to the Climate Act in light of the decision.
Implications for Real Estate and Building Operations
The court’s decision to enforce the Climate Act has immediate practical consequences on sectors responsible for substantial emissions, particularly building operations. According to the Scoping Plan, buildings account for 32 percent of New York’s total greenhouse gas emissions.[8] Most arise from fossil fuel combustion in homes and businesses, imported fuels, and hydrofluorocarbons released from building equipment and insulation.
The Scoping Plan establishes the blueprint for “decarbonizing” building operations. Its principal strategies include:

Reducing energy demand in residential buildings through efficiency improvements, targeting one to two million homes reliant on electric systems by 2030, and deploying heat pumps for space heating and cooling in 10 to 20 percent of commercial space statewide.
Replacing gas-fired appliances (boilers, furnaces, and stoves) with electric alternatives such as induction stoves and electric heat pumps.[9]
Retrofitting or constructing more than 250,000 homes annually to achieve high efficiency standards and ensure “heat pump ready” systems for heating, cooling, and hot water.
Powering 85 percent of residential and commercial buildings by electricity rather than fossil fuels by 2050.

The Climate Act directs the Department to adopt regulations that “reflect, in substantial part,” the Scoping Plan developed by the Climate Action Council. The statute does not prescribe specific measures, leaving the Department broad discretion over the design and stringency of its rules.
That discretion carries significant implications. Aggressive standards could require building owners and developers to retrofit existing structures, phase out fossil-fuel equipment, and report emissions. A more incremental approach might initially target new construction, major renovations, or state-funded projects before expanding to the broader building stock. Either path will reshape the regulatory landscape.
Commercial property owners, developers, and asset managers would be wise to begin preparing now. Participation in public workshops, submission of written comments, and early review of building portfolios for exposure to forthcoming standards will be critical. Under the State Administrative Procedure Act, all proposed regulations must undergo a minimum 60-day comment period, and the Department must review and respond to potentially thousands of public comments before issuing final rules.
________________
[1] Climate Leadership and Community Protection Act, § 1(1), 2019 N.Y. Sess. Laws Ch. 106 (S. 6599).
[2] ECL § 75-0107(1)(a)-(b), 75-0109(4)(a)-(b), (f).
[3] The Climate Act directs the Department to promulgate regulations that “shall … [r]eflect, in substantial part,” the Scoping Plan developed by the Climate Action Council. ECL § 75-0109(1), (2)(c). The regulations must also “[i]nclude legally enforceable emissions limits, performance standards, or measures or other requirements to control emissions from greenhouse gas emission sources” across all sectors of the economy except emissions from livestock. Id. § 75-0109(2)(b). Additionally, the regulations must “[i]nclude measures to reduce emissions from greenhouse gas emission sources that have a cumulatively significant impact on statewide greenhouse gas emissions, such as internal combustion vehicles that burn gasoline or diesel fuel and boilers or furnaces that burn oil or natural gas.” Id. § 75-0109(2)(d).
[4] Article I, Section 19 of the New York Constitution includes a provision guaranteeing that “[e]ach person shall have a right to clean air and water, and a healthful environment.”
[5] Order at 5-6: newyorksupremecourt_clcpa_nyci__decision___order_oct2025.pdf
[6] Id. at 7.
[7] Id. at 7-8.
[8] New York State Climate Action Council Scoping Plan, New York State Climate Action Council, *175 (Dec. 2022), available at https://climate.ny.gov/-/media/Project/Climate/Files/NYS-Climate-Action-Council-Final-Scoping-Plan-2022.pdf . (“The buildings sector was the largest source of emissions in 2019, responsible for 32% of emissions statewide, which includes the combustion of fossil fuels in residential (34%) and commercial buildings (19%), emissions from imported fuels (33%), and hydrofluorocarbons released from building equipment and foam insulation (14%). The fuels used in buildings today include fossil natural gas, distillate fuel (e.g., heating fuel oil #2), wood, propane, kerosene, and residual fuel.”)
[9] Scoping Plan at 176-180