SB 1116 just became law, let’s talk about what it unlocks for infill housing
Concept massing · 30 ft roof ridges. Height, interior layouts, and eligibility require review. Existing-house retention is conditional on site verification.
California’s small-lot subdivision law just got a cleanup. Here’s how to use new development rules to build infill in California.
On September 29, 2026, Governor Newsom signed SB 1116 into law. The bill amends the Starter Home Revitalization Act, the state law that’s designed to make small-lot projects viable in California by creating clear rules on what’s buildable. That law allows a developer to divide a qualifying infill lot into as many as 10 small parcels and build homes for individual sale. SB 1116 is the cleanup bill designed to clarify and streamline the rules and prevent municipal issues from stopping projects.
At Cedar, we looked into how this act could open up a new class of small-lot housing. It builds on SB 684 in 2023 and SB 1123 in 2024. In practice, local standards have often reduced the number of homes a site can hold. The new subdivision and housing-development rules apply to applications received by local agencies on or after January 1, 2027.
How we got here
SB 684 opened the pathway in 2023 for up to 10 subdivided lots zoned multifamily. SB 1123 extended it to qualifying vacant single-family lots in 2024, which increased the number of eligible lots. A budget bill in 2025 added the remainder parcel, which is what lets an existing house stay while the rest of the lot gets subdivided.
The policy timeline
California’s path to small-lot housing
California Starter Home Revitalization Act
SB 684
Created ministerial approval for up to 10 for-sale homes on multifamily-zoned lots.
- New in this law: Up to 10 homes on multifamily lots
Operative
SB 1123
Opened the pathway to vacant single-family lots up to 1.5 acres, with a 1,200 sf minimum lot size.
- Carried forward: Up to 10 homes on multifamily lots
- New in this law: Also on single-family lots up to 1.5 acres
Operative
AB 130
Allowed a qualifying remainder parcel for an existing home, outside the 10-parcel cap, and map recordation before construction. Separate sale, lease and financing remain subject to completion rules and statutory exceptions.
- Carried forward: Up to 10 homes on multifamily lots
- Carried forward: Also on single-family lots up to 1.5 acres
- New in this law: Existing home allowed, not penalized
Effective
SB 1116
Next chapter · 2027Rewrites the density rules, limits the local standards cities have used to shrink projects, and makes more lots eligible.
- Carried forward: Up to 10 homes on multifamily lots
- Carried forward: Also on single-family lots up to 1.5 acres
- Carried forward: Existing home allowed, not penalized
- New in this law: New density rules
- New in this law: Local standards limited
- New in this law: More lots eligible
Signed Applies to applications from
What SB 1116 makes possible
The following ten changes signed into law through SB 1116 add clarity and keep local rules from limiting the housing a qualifying site can support.
Build fewer homes than zoning allows
The prior 66% minimum-density requirement is replaced with a base-zoning eligibility test. The project site generally must allow no more than 15 units, or 26,250 square feet of residential floor area where zoning specifies no unit maximum.
Protect your unit count
Local standards cannot physically preclude the unit count supported by the law’s parcel-size rules: generally 600 square feet in multifamily zones or 1,200 square feet in single-family zones, subject to the project cap and other eligibility requirements.
Raise the floor-area allowance
Local agencies cannot impose a floor area ratio (FAR) limit below 1.25 on qualifying projects. This raises the protected allowance from 1.0 for projects with three to seven homes; projects with eight to ten homes already had 1.25 protection. Height, building-code, and other applicable requirements still determine how much floor area a site can accommodate.
Make room for three stories
Height limits regulate physical building height, rather than the number of floors. A three-story design still needs to fit within the applicable height and building-code requirements.
Pull the building toward the street
Required front setbacks from the original lot line are capped at 10 feet, subject to building-code requirements. Side and rear setbacks remain subject to the state-law limits referenced by the statute.
Build attached homes
Local agencies cannot require internal setbacks between newly created parcels, except as required by the California Building Standards Code.
Mix product types on one site
Parcels can run as small as 480 square feet in a multifamily zone as long as they average at least 600 square feet. Single-family parcels can be as small as 960 square feet with an average of at least 1,200 square feet. When averaging is used, no new residential parcel may exceed half the original parcel’s area, subject to the remainder-parcel exception.
Work with a run-down lot
A lot with a permanent structure may qualify as vacant if that structure is abandoned or fails the specified habitability standards. Tenant-occupied and protected housing exclusions still apply.
Limits to blocking covenants
Deed restrictions that prohibit or physically preclude a qualifying project are void and unenforceable. This provision does not apply to property within a common interest development.
Sell more of the square footage
Homes must average no more than 1,750 square feet of net habitable area. Stairs and enclosed bicycle parking no longer count toward that cap.
Read the chaptered SB 1116 text for the full provisions and exceptions.
Screening your sites
The entitlement hurdle is getting easier, but we think the physical and infrastructure tests will still decide whether a project works. Water, sewer, fire flow, and trash staging can determine a site’s feasibility, and that is where we would start on any parcel you’re looking at.
Step by step
The definitive checklist for building with SB 1116
Five checks for applications from January 1, 2027.
Mark items as you review them.
0 of 20 items reviewed. Requirements depend on the site’s eligibility path.
The site must allow multifamily residential use, including qualifying mixed-use zoning, or be a vacant lot zoned for single-family housing. A qualifying remainder parcel may retain an existing home.
The base-zoning path allows no more than 15 units, or 26,250 sf of residential floor area where zoning has no unit maximum. Evaluate the project site without the remainder parcel, bonuses, overlays or ADU allowances. The Housing Element path below is an alternative where applicable.
If using the path for a site identified for low- or very-low-income housing in a compliant Housing Element, provide the proportional share projected for the project site, with recorded affordability restrictions of at least 45 years.
Use a legal parcel in a city containing part of a Census urbanized area, or in an urbanized area or urban cluster in a county with more than 600,000 people. The law uses the 2012 Census area designations. ZIP codes 91001 and 91003 have a temporary application restriction through 2029, with grandfathering and affordable nonprofit exceptions under SB 1090.
Meet one alternative in PRC §21080.66(a)(3): prior urban development; 75% of the perimeter adjoining urban uses; 75% urban uses within a quarter mile; or, for a four-sided site, three developed sides and at least two-thirds of the perimeter adjoining urban uses. Only this infill test is imported from the CEQA exemption.
Vacant single-family sites may be no larger than 1.5 acres. The former five-acre cap on multifamily-zoned lots is removed for applications received from January 1, 2027.
The lot cannot already have been created under this small-lot law or an SB 9 urban lot split. The exclusion also covers a remainder parcel designated in an earlier small-lot subdivision.
Vacant can mean no permanent structure, or a structure that is abandoned or fails the specified habitability standards in Civil Code §1941.1. Protected affordable housing, rent- or price-controlled homes and housing occupied by tenants in the past five years do not qualify as vacant.
The project cannot require demolition or alteration of protected affordable or rent-/price-controlled housing, or housing occupied by tenants in the preceding five years. Also screen for an Ellis Act withdrawal from rental use within the preceding 15 years.
This pathway cannot make existing dwelling units separately saleable from each other. A qualifying remainder parcel retains existing uses or structures, adds no new homes and cannot be exclusively dedicated to serving the new project.
Covenants that prohibit or physically preclude a qualifying project can be void. The exception is a legally defined common interest development, not simply any HOA. Consistent, objective and uniformly applied rules that do not preclude the project can remain enforceable.
Exclude the mapped very-high fire zones under Government Code §51178 and high/very-high zones under PRC §4202. Fault zones, 100-year flood areas and regulatory floodways have specific code, FEMA or no-rise exceptions; evaluate those conditions before ruling a site out.
Screen prime/statewide-important farmland, locally protected agricultural land, wetlands, protected habitat and conservation land. Listed hazardous-waste sites need the specified closure or residential-suitability determination. Coastal Act requirements still apply.
Both connections are required. Verify capacity and the practical layout early, including fire flow, utility easements, access and trash staging; entitlement alone does not establish infrastructure feasibility.
The pathway allows up to 10 residential units and 10 parcels. A qualifying remainder parcel is outside the parcel cap. Cities need not permit ADUs or JADUs on these lots, but any they do permit are excluded from the 10-unit count.
Minimums are 600 sf in multifamily zones and 1,200 sf in single-family zones. Averaging allows individual lots down to 480/960 sf while retaining those averages; then no new residential parcel can exceed half the original lot, subject to the remainder exception. Local ordinances may allow smaller minimums.
The limit is average net habitable floor area, not gross building area. The statutory calculation excludes stairs, enclosed bicycle parking, garages, carports and other specified nonhabitable spaces.
Check unit-count protections, a permitted FAR of at least 1.25, the 10-foot front-setback limit and internal-setback protections, subject to building-code exceptions. The floor-count protection applies to qualifying vacant single-family sites. Parking requirements are limited and cannot require covered or enclosed spaces.
The project must comply with applicable local inclusionary housing ordinances. Confirm the obligation alongside any separate Housing Element affordability requirement.
Eligible forms include fee-simple lots, common interest developments, cooperatives, qualifying community land trusts and interests in common. Map recordation can precede construction; separate sale, lease and financing have completion requirements and statutory exceptions.
Next steps on SB 1116
Re-screen the sites you passed on
Parcels that failed because of the density minimum, a two-story cap, a deep front setback, or a title covenant may work under the new rules.
Check your city’s ordinance
Compare the local ordinance and application requirements with the state rules that will apply to your project. Confirm how the jurisdiction plans to implement the January 2027 changes.
Watch the filing date
The amended subdivision and housing-development rules apply to applications received on or after January 1, 2027. An application received in December 2026 does not qualify for those changes simply because it is reviewed in 2027.
If you have a site you want us to look at before January, we’d like to hear about it.
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