California Senate Bill 2 (SB2) – The Building Homes and Job Act of 2017 (May Affect Your Real Estate Transaction!)

California Senate Bill-2(SB2)

(SB2) California Senate Bill 2  has the potential of affecting Sellers, Buyers and refinance Borrowers, by adding additional costs to their closings beginning January 1, 2018 .

Here is a very simple summarization of SB2:

Every document relating to real estate that is recorded will require an additional recording fee surcharge of $75.00, per document, per parcel of land. There are exemptions that you, as a consumer, can claim:

(1) If you are recording a Deed transferring ownership and you are paying a transfer tax on this deed then it is exempt, as well as any document in the same transaction that has to be recorded.

(2) If you have a Deed in which you ARE NOT paying a transfer tax on but you are transferring ownership to someone who is going to be occupying it as a principal residence, then this Deed and any documents in that same transaction will also be exempt.

However, if you have a transaction in which there is no such document that can qualify for this exemption, then the surcharge of $75 is charged for every document that has to be recorded, to a maximum of $225.00.

Go to this link for a full copy of the bill SB2 and refer to Section 27388.1(a)(1) and (2).

Simple and easy? Not really.

There are many nuances to the actual bill and California’s 58 independent County Recorder offices are interpreting this Bill with variations, creating questions and confusion.

So how will you know if you will get charged and how much extra you have to pay?

Education is the first step to being proactive. Read this article, read other articles, and if you have questions.


During this time of uncertainty, contact your Escrow Officer/ Settlement Agent and run the scenario or the transaction by him/her for a more definitive answer. If they don’t know, they will have the resources to find out for you, especially if they are a member of the California Escrow Association.

Here are a couple of conversations we had with clients in the 12 days of January:

First Call – January 5, 2018

Bright and early in the morning, the phone rings and the irate client comes on the line:

Client: “Hello! I just got your closing statement on this Reverse Mortgage refinance that you handled for me. What is this “Affordable Housing Act” recording charge line item of $500? How did recording fees double from my previous refinance? This is outrageous! What is this? Who is this being paid to? What’s going on?”

Me: “Good morning Mr. Johansen! Thank you for calling! I knew you were going to have questions regarding this particular fee. Let me explain.

First, you already know that on a Reverse Mortgage the Lender needs to record two Deeds of Trust for one loan. The recording fee for those 2 documents is normally $225.00.
Now, after January 1, we have this new law that states real estate documents that are recorded get charged an extra surcharge of $75.00 per document. So that is an additional $150.00 – $75.00 each for the two deeds of trust.

Secondly, we also recorded that Affidavit of Death because your wife passed away. So that document recording fee is $25.00 and the surcharge is another $75.00.
Thirdly, in your file we also had to record that Release of Lien on the debt that you paid off, so another $25 recording fee was added on. The good news is that because you paid a total of $225 already on the surcharges for the other 3 documents, the surcharge on that 4th document is now waived!”

Client: “This is outrageous!”

Me: “Well, Mr. Johansen, our legislators voted this Senate Bill 2, or SB2 as our industry calls it, and it became effective on Jan 1, 2018. There are certain exemptions, but none applied to your transaction. So I am so sorry, perhaps you can complain to your State congressman?”

Client: “This is outrageous! And where is this money going to? Is the State trying to balance the budget on my dime?”
Me: “The actual name of the Bill is called the “Building Housing and Jobs Act” and the State is trying to raise money to build affordable housing in low income areas. So that’s what some of us are calling it in the line item description – “The Affordable Housing Act” charge.”

Client:” This is outrageous! Am I going to see any of that money applied to my benefit?”

Me: “I don’t know sir, all we can do is follow the law. Happy New Year!”

Second Call – January 5, 2018

Another call came in, this time on a personal transfer of a few pieces of vacant land in Kern County from a brother to a sister:

Client: “You are telling me that in order to record this Grant deed from me to my sister it is going to cost me $253?? Why so much?”

Me: “Mr. Chuang, you are not actually selling the properties to your sister, right? You are transferring 5 pieces of vacant land to your sister as a “gift” because she is family.
California’s new SB2 law says that (1) if you are not paying transfer tax on the grant deed, and (2) this property will not be your sister’s principal residence, then this surcharge applies. Because it is 5 separate parcels, you may have to pay the surcharge on each different parcel. It is , as they say, three strikes and you are out.

So in addition to your regular original recording fee of $24.00 you pay $75.00 per parcel for 3 of the 5 parcels. You get a discount because the maximum surcharge to a single transaction is $225. They won’t charge you the $75.00 for the other 2 parcels. You just saved $150.00! Your total charge to record this one Deed will be $253.

But look, Mr. Chuang, every Recorder is an independent government organization and each is trying interpret the Bill their own way. Kern’s County Recorder may look at it that since you have all 5 different parcels written on one Deed document, it can be considered as “one parcel” as mentioned in the Bill. In that case, they may refund you the extra $150.00. But we just don’t know yet what each Recorder is doing. It’s only been two weeks since the start of the Bill!

By, the way, Mr. Chuang, since this is a “gift” to your sister, I hope you and your sister talked to your CPA and got good financial counsel? Remember, Congress passed that new Tax Law as a Christmas gift to you and her right before Christmas.

So, Happy New Year!”

See also: The most common topics of interest to our clients at

Juliana Tu
Escrow Manager

juliana tu

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