California

California is a non-attorney closing state where the escrow officer at a title or escrow company is the central professional coordinating the closing. Buyers and sellers don't typically retain attorneys for residential transactions, though attorneys are common in higher-value or unusual deals. The escrow company is the neutral third party holding funds and documents from contract acceptance through recording.

The state-level transfer tax is small ($1.10 per $1,000 of sale price (about 0.11%), customarily split 50/50 between buyer and seller) but cities and counties layer additional documentary transfer taxes on top. The single most consequential local layer is Los Angeles city's Measure ULA (also called the LA mansion tax), which applies an additional 4% on transactions $5M–$10M and 5.5% above $10M. San Francisco, Berkeley, and several other charter cities have their own transfer-tax structures. The closing-costs estimator uses the state base; deals in cities with meaningful local taxes need separate local research.

How Proposition 13 shapes property tax

California's 1978 Proposition 13 caps annual property-tax assessment increases at 2% for as long as the same owner holds the property. When ownership transfers, the assessed value resets to the current market value (the new sale price), and Prop 13's 2% cap then applies going forward for the new owner.

The practical effect for buyers: the property tax bill in year one is roughly 1.0%–1.2% of the purchase price (varies by county and any local bonds), and grows at most 2% per year regardless of how fast the home appreciates. For long-held homes in fast-appreciating markets, this produces dramatic gaps between the prior owner's tax bill and the new owner's, a home a long-term owner pays $4,000/year on may carry a $14,000/year tax bill for a new buyer.

The new owner can apply for the homeowners' exemption (a modest $7,000 reduction in assessed value, saving about $70/year) by filing with the county assessor. Some counties also offer veterans' exemptions, senior exemptions, and other targeted relief. The application is short and free.

What buyers should know

The standard California Residential Purchase Agreement (the C.A.R. form most agents use) is comprehensive and well-tested. Contingency periods are explicit: 17 days for inspection, appraisal, and loan contingencies is the default, with options to shorten in competitive offers. The buyer-broker agreement (post-2024 NAR settlement) is required before showings.

Title insurance is not state-promulgated in California, premiums vary by insurer and are sometimes negotiable, especially on higher-value transactions. The owner's policy is customarily paid by the seller in southern California and by the buyer in northern California (a long-running regional difference that's worth confirming on any specific deal).

What sellers should know

Sellers face California's robust disclosure regime, which requires the Transfer Disclosure Statement (TDS) and a Natural Hazard Disclosure covering flood, earthquake, fire, and seismic hazards. Failure to disclose known material defects is the most common source of post-closing seller liability. A pre-listing inspection often pays for itself by surfacing issues for proper disclosure rather than letting them become buyer leverage.

The seller's share of transfer tax is small at the state level. In LA city above the ULA thresholds, the seller's local-tax bill becomes substantial, a $6M sale carries a $240,000 ULA charge customarily paid by the seller, which can dominate the seller's net proceeds calculation.

California has the highest top-bracket state cap-gains rate in the country at roughly 13.3%, taxed as ordinary income. Sellers with gains above the federal § 121 exclusion ($250,000 single / $500,000 MFJ) face the federal long-term cap-gains rate plus this state rate plus, for higher-income filers, the 3.8% Net Investment Income Tax, combined rates approaching 36% on the taxable portion.

How closing typically works

Closing in California is mostly an electronic and remote process coordinated by the escrow officer. The buyer signs loan documents at the escrow company or via mobile notary; the seller signs the deed and disclosures separately; funds are wired; the deed records at the county recorder, typically electronically. The full escrow period from contract to recording is typically 30–45 days for a financed purchase, with cash purchases sometimes closing in two weeks.

For specific contracts and disclosure questions, a real estate attorney admitted in California can review the language. For closing mechanics and the day-to-day work of moving the deal forward, the escrow officer at the title or escrow company is the primary point of contact.