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Don’t Get Burned After the Southern California Fires
By Linda S. Koffman
This article provides an overview of some of the State and local government responses to this disaster, as well as describing property tax relief on fire-damaged properties.
The devastating wildfires sweeping through portions of Los Angeles County have left over 12,000 homes, schools, businesses, and other structures completely destroyed. Thousands of families and businesses have been displaced, which is exacerbating an already strained housing market. This article provides an overview of some of the State and local government responses to this disaster, as well as describing property tax relief on fire-damaged properties.
Government Responses
State Response: Some key State legislation and Executive Orders issued by the State include:
Mortgage Relief – California Assembly Bill 238, also referred to as the Mortgage Deferment Act, would provide essential financial relief to the victims of the Los Angeles County wildfires (including the Palisades and Eaton fires). It is intended to provide financial relief to those who have lost their homes or livelihood to wildfires by allowing borrowers to request mortgage payment forbearance for up to 360 days, specifically in two increments of 180 days each. To effectuate a request, as currently drafted, the borrower must submit a request for forbearance to the borrower’s mortgage loan servicer and affirm that the borrower is experiencing financial hardship due to the wildfire disaster. Upon receipt of this request, the lender must provide forbearance for up to 180 days, which may be extended for an additional period of up to 180 days at the request of the borrower. During the forbearance period, this act prohibits a lender from initiating foreclosure, moving for a foreclosure judgment or order of sale, or executing a foreclosure-related eviction or foreclosure sale.
Price Gouging/Cap on Residential Rent Increases – California Assembly Bill 246 would prohibit landlords in Los Angeles County from increasing rental rates above what was charged on January 7, 2025, for properties impacted by the Los Angeles County wildfires. This restriction applies to all residential properties and would remain in place for 12 months after the emergency is declared over. In addition, it addresses price gouging by prohibiting price increases to ten percent (10%) above pre-emergency prices for essential goods and services during a state of emergency.
Coastal Commission and CEQA Suspension – Through Governor Newsom’s Executive Order No-20-25, Governor Newsom expanded on previous executive orders to (a) waive permitting requirements under the Coastal Act and CEQA by clarifying the scope of the waivers; (b) accelerate the rebuilding of recently constructed homes by allowing them to be rebuilt to previously approved specifications; (c) extend deadlines for construction permits to 3 years for properties or facilities substantially damaged or destroyed in the fires; (d) accelerate access to original plans held by local planning and building departments by waiving the requirement that the local building department seek the consent of the specific professional who signed the original plans; and (e) extend deadlines for local jurisdictions to update their zoning ordinances to implement housing elements such as minimum density and development standards, which allows local government staff to focus fully on issuing permits for rebuilding efforts. This Executive Order is already in effect.
Eviction Moratorium – Through Executive Order N-11-25, landlords may not evict a tenant for sharing housing space with a wildfire victim who has lost his/her home. This Executive Order is already in effect.
Local Response: Some key measures issued by Los Angeles County Board of Supervisors (the “Board”) include:
Adjustments to Short Term Rentals – The Board removed the 90-night cap on un-hosted stays and removed restrictions on vacation rentals and accessory dwelling units.
Eviction Protection – Landlords may not evict tenants who offer housing to individuals or pets displaced by the fires.
Property Tax Relief
Property Tax Reduction - Individuals and companies experiencing property damage or destruction due to the recent fires may be eligible for property tax relief in the form of a reduction in the property’s assessed value. This reduction is anticipated to continue while the property remains in fire-damaged condition. Property tax relief is available for taxable property (including real property, business equipment, fixtures and manufactured homes) that is subject to local property taxation by the Los Angeles County Tax Assessor (“Tax Assessor”). Eligibility requirements for tax relief require the fire damage or destruction to the qualified property to be at least $10,000 of the current fair market value. A qualifying claim must be filed with the Tax Assessor within twelve months of damage or destruction. If the Tax Assessor grants relief, the property will be reassessed downward to reflect its condition, and that reduced value will apply retroactively from the month in which the damage occurred until the property is fully repaired or rebuilt. If the property is partially repaired or rebuilt as of any January 1st date, the taxable value will be adjusted upward to reflect the repairs completed as of that date. If the property is rebuilt entirely, the property’s prior assessed value will be restored if it is rebuilt in a similar manner.
Property Tax Deferral – In addition, if the property owner has filed a claim for reassessment, the property owner may also request deference of the next installment of property taxes occurring immediately after the property was damaged. This allows the County Tax Assessor to reassess the property because of the damage and then issue a corrected property tax bill. To be eligible for deferral, the damage must be at least $10,000 or 10% of its fair market value, whichever is greater. Tax deferral is not available where property taxes are paid through an impound account. This specific claim form is due to the County Assessor by April 10, 2025.
Limited Suspension on Penalties, Costs or Interest – Through Executive Order N-10-25, Governor Newsom suspended the imposition of penalties, costs, or interest for failure to pay property taxes for properties located in certain zip codes. The suspension extends until April 10, 2026. This suspension does not apply to taxes that were delinquent as of January 7, 2025 (the date of the first fire) and does not apply to any property for which taxes are paid through an impound account.
Transfer Base Year Value to Replacement Property – Certain damaged property may also qualify for a transfer of the damaged property’s base year value to another property within Los Angeles County, or even another county in California. The following are three different types of base year value transfers, each with different eligibility requirements:
1. Same County Base Year Value Transfers for Any Property Type. Under California Revenue and Taxation Code Section 69, owners of certain taxable real property damaged or destroyed in the wildfires may transfer their base year value to a comparable replacement property in the same county. To qualify, the physical damage must be more than 50% of the property’s fair market value immediately prior to the governor-proclaimed disaster and the replacement property must be acquired or newly constructed in the same county within five (5) years of the damage. Importantly, this transfer path is available for any type of real property, not just a primary residence. The replacement property must be the same property type and be comparable in size, utility, and function. Once the base year value is transferred to the replacement property, the damaged property will be reassessed at the lower of its fair market value or the existing factored base year value. If reconstruction on the damaged property subsequently occurs, the new construction will be assessed at fair market value.
2. Intercounty Base Year Transfers on Principal Residences to Certain California Counties. California Revenue and Taxation Code Section 69.3 permits a resident whose principal residence was substantially damaged or destroyed by the wildfires to transfer that property’s base year value to a comparable replacement principal residence acquired or newly constructed in a different county within California if that alternative county has adopted an ordinance accepting such base year value transfers. As of the date of this article, fourteen (14) counties in California accept base year value transfers from other California counties. To qualify for transfer, the property must be damaged to more than 50% of its fair market value immediately before the disaster and the replacement property must be acquired or newly constructed within three years of the date of the casualty. The fair market value of the replacement principal residence must be equal or lesser value to the property which is being replaced (105% if within the first year after the casualty, 110% if within the second year and 115% if within the third year). Once the base year value is transferred to the replacement property, the damaged property is reassessed at the lower of fair market value or the existing factored base year value. If reconstruction of the damaged property subsequently occurs, the new construction will then be assessed at fair market value.
3. Intercounty Base Year Transfers on Principal Residences to Any California County. California Revenue and Taxation Code Section 69.6 allows a resident whose principal residence was substantially damaged or destroyed to transfer the factored base year value to a replacement principal residence in any other California County. To qualify, the principal residence must be damaged or destroyed due to wildfires or a governor proclaimed natural disaster, and the physical damage must amount to more than 50% of the property’s fair market value immediately prior to the casualty. The damaged primary residence must be sold in its damaged state and the replacement primary residence must be purchased or newly constructed within two years of the date of sale of the damaged property. It is important to note that the replacement primary residence can be of any value. However, if the replacement property is more than a certain percentage of the fair market value of the original property, then the transferred factored base year value will be adjusted according to a specified formula.
Given the extensive and complex legislation that is developing in response to the recent devastation, it is critical to contact a qualified real estate and tax attorney to make sure you don’t get “burned” after the Southern California wildfires.
Endnotes
1. Linda S. Koffman is a Partner with Smith, Gambrell & Russell, LLP in Los Angeles, California. More about Linda can be found here:
