A broad slate of new California construction laws took effect at the start of 2026, reshaping environmental review, housing approvals, building standards and private construction contracting across the state.
The changes stem from multiple bills adopted in 2025 and are expected to significantly affect developers, contractors, subcontractors and public agencies by accelerating project approvals while tightening compliance requirements in building codes and construction contracts.
Effective Jan. 1, 2026, California Environmental Quality Act procedures have been substantially streamlined through AB 130 and SB 131. The legislation expands CEQA exemptions for qualifying infill housing projects, health centers, child care facilities, farmworker housing, advanced manufacturing, broadband infrastructure, parks, trails and certain clean water projects.
Additional reforms include exemptions for rezoning actions that implement certified housing elements, caps on public hearings, shortened agency review timelines and clearer project completion standards. The legislation also limits the scope of administrative records in CEQA litigation, reducing exposure to prolonged legal challenges.
AB 130 further introduces a statewide Vehicle Miles Traveled mitigation bank to simplify transportation impact compliance, while SB 131 establishes a “near miss” environmental review process that limits analysis to the specific factor preventing a full exemption.
Together, the measures are designed to reduce discretionary delays and litigation risk for qualifying projects while maintaining exclusions for environmentally sensitive areas.
Another major change arrives July 1, 2026, when SB 79 — the Abundant and Affordable Homes Near Transit Act — takes effect. The law overrides local zoning height and density limits for mid- and high-density housing near major transit stops in eight counties, including Los Angeles, San Francisco, San Diego and Sacramento.
Under the law’s two-tier system, projects near heavy rail stations may reach heights of 65 to 75 feet, while developments near qualifying light transit stops may reach 55 to 65 feet. SB 79 also allows qualifying projects to receive streamlined, ministerial approvals if environmental, labor and affordability criteria are met and authorizes transit agencies to develop housing on land they own.
The law significantly curtails local zoning barriers that have historically constrained housing development near transit corridors.
The 2025 California Building Standards Code (Title 24) became effective Jan. 1, 2026, applying to all permit applications submitted on or after that date. This update is the last comprehensive residential code revision until at least 2031 due to AB 130’s freeze on residential building standards.
Among the most notable changes is the creation of a standalone California Wildland-Urban Interface Code, now codified as Title 24, Part 7. Previously scattered wildfire-resistance requirements have been consolidated into a single enforceable code governing ignition-resistant construction elements such as roofing, vents, decks and exterior walls.
The Energy Code (Part 6) continues pushing higher performance and lower-carbon buildings, increasing coordination demands among framing, mechanical and electrical trades and placing greater emphasis on field verification and commissioning.
Electrification policies embedded throughout Title 24 also expand electrical scope requirements, including increased service sizing and EV-ready infrastructure.
Amendments to the California Existing Building Code now align more closely with Chapter 11B accessibility standards, increasing the likelihood that tenant improvements or renovations trigger accessibility upgrades.
Fire and life safety requirements have also been clarified across multiple codes, particularly for larger reconstruction projects. Meanwhile, the Green Building Standards Code raises baseline expectations for waste management, water efficiency and indoor air quality documentation.
Several laws enacted for 2026 significantly alter private construction contracting practices.
SB 61 establishes a mandatory 5 percent cap on retention for most private construction contracts entered into on or after Jan. 1, 2026. The cap applies to both progress payments and total retention and must flow down through all subcontracting tiers. The retention limit cannot be waived by contract and includes an attorneys’ fee provision for enforcement.
SB 440, the Private Works Change Order Fair Payment Act, creates standardized procedures and timelines for resolving claims and change-order disputes on large private projects. The law emphasizes timely notice and documentation and is scheduled to sunset in 2030 unless extended.
SB 517 requires disclosure of subcontractor use in home improvement contracts. If a subcontractor performs more than 50% of the estimated project cost, the contractor must disclose identifying information. The law also mandates a disclaimer stating:
“[o]ne or more subcontractors will be used on this project, and the contractor is aware that a list of subcontractors is required to be provided, upon request, along with the names, contact information, license number, and classification of those subcontractors.”
AB 1327 modernizes home improvement contract cancellation rules by allowing homeowners to cancel within three days via email and requiring contractors to provide an email address and phone number for cancellation assistance.
Taken together, the 2026 changes represent one of the most significant overhauls of California construction regulation in years. While CEQA and zoning reforms aim to accelerate housing and infrastructure delivery, new code requirements and contracting rules increase compliance obligations and documentation risks.
Developers, contractors and subcontractors are encouraged to update internal procedures, contract templates and compliance workflows to align with the new statutory landscape.
Originally reported by JD Supra.
