Legal Question in Real Estate Law in California

There are a number of exceptions to the percentage rule. The two most common are remodeling/additions, and recovery of previous devaluations.

The rules for remodeling/additions are complicated because they are supposed to capture the increased value created, but only the new value. There can be a lot of debate over how much above the cost of construction a new bathroom ads to value.

The other is much more simple. Due to the market value crash of the last recession, Prop. 13 required DEvaluation of properties that were worth less than the tax value to market value. However that same provision allowed for (but does not require immediate) adjusting back MORE than 2% and to previous tax value when prices rebound. The reassessment can’t be to more than the last highest Prop 13 value plus 2%/year thereafter. But Nothing says they need to impose that immediately. So if they forgo the allowed increase for the market rebound, and then suddenly realize they have been owed a lot of upped value, the sudden adjustment can be huge.