Zoning & Land Use  ·  October 3, 2026

Suing to Stop an Affordable Housing Project in California: Bond Liability Cap Rises to $1 Million in 2027

If you are a neighbor or a community group thinking about suing to stop a housing project, the question you probably ask first is whether you can win. A second question deserves equal weight: what happens if the developer asks the court to make you post a bond while the case is pending? For certain projects, California has allowed that request for years under Code of Civil Procedure Section 529.2. Two bills Governor Newsom signed on September 29, 2026 raise the stakes. SB 1344 (Cabaldon), Chapter 811, Statutes of 2026, doubles the cap on a plaintiff's liability under that statute from $500,000 to $1,000,000, adds annual inflation adjustments, and extends the bond rule to "priority care developments" funded under specified behavioral health and residential care programs. For those developments it also creates a new special motion to strike, with fee-shifting and an immediate appeal. SB 916 (Ashby), Chapter 805, Statutes of 2026, extends the same bond rule to student housing owned by a public university.

Neither bill contains an urgency clause, so both take effect January 1, 2027. The inflation adjustment does not begin until January 1, 2028. ROMO Law Group represents both neighbors and property owners in these disputes, and this analysis is written for both.

Which housing projects trigger the bond rule?

The bond rule does not apply to every housing project. Under Section 529.2, subdivision (a), as amended by the two bills, it applies to civil actions, "including, but not limited to, actions brought pursuant to Section 21167 of the Public Resources Code" (the CEQA challenge statute), brought by any plaintiff to challenge a housing project that falls into one of three categories:

1. Affordable development projects. A "development project," as defined by Government Code Section 65928, that "meets or exceeds the requirements for low- or moderate-income housing as set forth in Section 65915 of the Government Code." Section 65915 is the state density bonus law. This category is not new; it has been in Section 529.2 for years.
2. Priority care developments. New with SB 1344. The term is defined in new Code of Civil Procedure Section 425.21, subdivision (c)(1), as "any projects funded, in whole or in part, pursuant to Sections 5892 or 5965.04, or subdivision (c) of Section 18999.97, of the Welfare and Institutions Code." Those sections cover, respectively, county spending from the Behavioral Health Services Fund, the Behavioral Health Infrastructure Bond Act of 2024 (which funds permanent supportive housing for veterans, and for people living with behavioral health challenges, who in either case are homeless or at risk of homelessness, and behavioral health treatment capacity), and grants under the Community Care Expansion Program for residential adult and senior care facilities. Under subdivision (c)(2), a "detention facility" as defined in Penal Code Section 9500, subdivision (a), is excluded.
3. Student housing projects. New with SB 916. Subdivision (f) defines a "student housing project" as "one or more housing facilities to be occupied by students of one or more campuses and owned by a public university, including dining, academic, and student support service spaces, and other necessary and usual attendant and related facilities and equipment." Note the ownership requirement: the text refers to housing "owned by a public university." The statute does not separately define "public university," and privately owned student housing near a campus does not appear to fit the definition as written.

Two qualifiers matter for anyone near a new project in Los Angeles. First, a market-rate project that does not meet the density bonus law's affordability requirements, is not a priority care development, and is not public-university student housing falls outside Section 529.2 entirely. A large project is not automatically covered. Second, "funded, in whole or in part" is broad. A priority care development does not need to be fully financed with behavioral health money to qualify; some funding under one of the listed sections is what the definition requires.

For background on how state law now limits local discretion over housing near transit, and what objections remain open to neighbors, see our article on SB 79 and transit upzoning.

How do SB 1344 and SB 916 fit together?

Both bills amend the same statute, Section 529.2, so the Legislature drafted them to "double-join." Each bill contains two versions of Section 529.2: one standing alone, and one that incorporates the other bill's changes. Section 4 of SB 1344 provides that its combined version (Section 2.5) becomes operative only if both bills are enacted and become effective on or before January 1, 2027, each amends Section 529.2, and SB 1344 "is enacted after SB 916, in which case Section 2 of this bill shall not become operative." SB 916 contains a mirror-image provision that would apply only if SB 916 were enacted last.

SB 916 was chaptered as Chapter 805 and SB 1344 as Chapter 811, both on September 29, 2026. SB 1344 received the higher chapter number, which is generally treated as showing it was enacted after SB 916, so the condition in its Section 4 is satisfied and its combined version controls. Government Code Section 9605, subdivision (b)(2), points the same way: absent an express provision to the contrary, the statute with the higher chapter number is presumed to be intended to prevail. The operative Section 529.2 starting January 1, 2027 therefore contains all of the changes described in this article: affordable development projects, priority care developments, and public-university student housing, with a $1,000,000 cap and inflation adjustments from 2028. Anyone reading only one bill, or an earlier draft of either, will get an incomplete picture.

What does a court have to find before ordering a neighbor to post a bond?

Section 529.2 does not require a bond simply because someone sued. It is a motion the defendant must bring, and the defendant must establish specific grounds.

The trigger. Under subdivision (b), a defendant (which, under subdivision (e), includes a respondent and a "real party in interest," the term usually used for the developer in a CEQA or land use petition) may bring a noticed motion only "if the bringing of the action or the seeking by the plaintiff of particular relief including, but not limited to, injunctions, has the effect of preventing or delaying the project from being carried out." A lawsuit that does not prevent or delay the project does not support the motion.

The grounds. The motion "shall be made on the grounds that the action is without merit and that the action was brought in bad faith, vexatiously, for the purpose of delay, or to thwart" the student housing or low- or moderate-income nature of the project, "or the suitability of the priority care development to serve the intended population." Read the conjunction carefully: the defendant must show both that the action is without merit and at least one of the listed improper purposes. A weak case brought in good faith does not satisfy that standard on its face, and neither does a strong case that happens to cause delay.

What the bond secures. The undertaking is "security for costs and any damages or economic hardships that may be incurred by the defendant by the conclusion of the action or proceeding as the result of a delay in carrying out the development project." SB 1344 added the words "or economic hardships." How courts will read that addition, and whether it covers losses that were not recoverable as "damages" before, has not been decided.

Mandatory once established, but limited by hardship. Under subdivision (c)(1), "If the court, after hearing, determines that the grounds for the motion have been established, the court shall order that the plaintiff file the undertaking." That word "shall" makes the order mandatory once the grounds are proven. The amount, however, is the court's to set, "taking into consideration any admitted evidence of plaintiff's economic hardship and avoiding causing the plaintiff to suffer undue economic hardship." The plaintiff may present "admissible evidence" that posting the bond will cause it, and where the plaintiff is an unincorporated association, its members, undue economic hardship. And if the court concludes "that a bond in any amount would cause the plaintiff undue economic hardship, the court is authorized in its discretion to decline to impose a bond."

The cap. "The liability of the plaintiff pursuant to this section for the costs and damages of the defendant shall not exceed one million dollars ($1,000,000)." Note what the sentence caps: the plaintiff's liability under Section 529.2, not merely the face amount of the bond. The cap sentence refers to "costs and damages" and does not repeat the new words "or economic hardships"; how the two fit together has not been decided. Under subdivision (c)(2), that figure adjusts annually for inflation beginning January 1, 2028, based on the California Consumer Price Index for All Urban Consumers published by the Department of Industrial Relations, rounded to the nearest $25.

A protection for plaintiffs. Subdivision (d) runs the other way. If, after the plaintiff has posted an undertaking, the developer changes the plan in bad faith so that it no longer meets the low- or moderate-income requirements, the priority care definition, or the student housing definition, "the developer shall be liable to the plaintiff for the cost of obtaining the undertaking."

The statute sets no deadline for bringing the motion. As a practical matter, a defendant looking to secure delay damages has an incentive to move early in the case, and a plaintiff should expect that possibility from the outset.

What changes for challenges to behavioral health, supportive housing, and residential care projects?

For priority care developments only, SB 1344 adds a second tool: a special motion to strike under new Code of Civil Procedure Section 425.21.

Who can file it, and against what. Under subdivision (b)(1)(A), "In all civil actions brought by any petitioner to challenge the approval or permitting of a priority care development project, including actions brought pursuant to Section 21167 of the Public Resources Code, a respondent may bring a special motion to strike the whole or any part of a pleading." Subdivision (b)(5) defines "petition" to include a complaint and cross-complaint, "petitioner" to include a plaintiff, and "respondent" to include a defendant and a "real party in interest."

The standard. "The court shall deny the motion to strike if it determines that the petitioner has established that there is a probability that the petitioner will prevail on the claim." The burden is on the challenger. Unlike the general anti-SLAPP statute, Code of Civil Procedure Section 425.16, which first requires the moving party to show the claim arises from protected speech or petitioning activity, Section 425.21 as written goes straight to the probability-of-prevailing question. The court decides "based on the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based." If the petitioner meets the standard, neither the determination nor the fact of it is admissible at any later stage of the case or in any subsequent action.

Timing. Under subdivision (b)(3), the motion "may be filed within 60 days of the service of the petition or, in the court's discretion, at any later time upon terms it deems proper." The statute does not specify court days, so the safe course is to count 60 calendar days from service of the petition. Because land use cases are often decided on an administrative record that is prepared after the case is filed, subdivision (b)(1)(C)(ii) adds a second window: if the court determines that the administrative record is required for its decision, the moving party may file the motion "within 60 days of the service of the administrative record or, in the court's discretion, at any later time it deems proper," notwithstanding the first deadline.

Discovery stops. Under subdivision (b)(4), "All discovery proceedings in the action shall be stayed upon the filing of a notice of motion," unless the court, on noticed motion and for good cause, orders specified discovery.

Fees. Under subdivision (b)(2), "a prevailing respondent on a special motion to strike shall be entitled to recover that respondent's attorney's fees and costs." That is mandatory. In the other direction, if the court finds the motion "is frivolous or is solely intended to cause unnecessary delay," it "shall award costs and reasonable attorney's fees to a petitioner prevailing on the motion, pursuant to Section 128.5." The fee risk is asymmetric: a challenger who loses the motion pays fees; a respondent who loses pays only if the motion was frivolous or solely for delay. The Section 529.2 cap applies by its terms to liability "pursuant to this section"; it does not on its face limit fees awarded under Section 425.21.

Immediate appeal. Under subdivision (b)(6) and amended Code of Civil Procedure Section 904.1, subdivision (a)(13), an order granting or denying the motion is appealable. That means a denial can be appealed before trial, which can itself add time to the case.

What should neighbors and project owners do now?

If you are considering a challenge, start by identifying which category, if any, the project falls into. Pull the density bonus application, any funding award, and the ownership of the site. If the project is covered, budget for the possibility of a bond motion, and gather the evidence of your group's finances that the hardship provision contemplates before you need it. Your strongest protection against a bond is a claim with real merit, brought for a reason you can explain. Our article on the first SB 79 lawsuits shows how qualification disputes tend to turn on specific statutory facts.

If you own or are developing a covered project, document the delay costs and economic hardships the litigation causes, because the bond secures those items and the court will want evidence. Consider whether the case presents the combination of no merit and improper purpose the statute requires; a motion that cannot meet both halves may cost more than it gains. For a priority care development, calendar the 60-day window from service of the petition, and the alternative window keyed to service of the administrative record. Avoid plan changes that could expose you to liability for the plaintiff's bond costs under subdivision (d).

What do these bills not do?

• They do not bar lawsuits. No one is prohibited from filing a CEQA petition or other challenge. The bills change the financial risk and procedure of some challenges, not the right to bring them.
• They do not reach most market-rate projects. The bond rule is limited to the three categories above. The special motion to strike is limited to priority care developments; it does not apply to an ordinary affordable or density bonus project.
• They do not make a bond automatic. The defendant must move, the lawsuit must prevent or delay the project, and the court must find the action both without merit and brought for an improper purpose. Hardship evidence can reduce the amount or eliminate the bond.
• They do not change filing deadlines. The short limitation periods for CEQA and other land use challenges come from other statutes and are unaffected. Those deadlines remain the first thing to calendar.
• They do not answer whether the new rules apply to cases already pending on January 1, 2027. The bills do not say, and there is no case law on these amendments yet. Expect that question to be argued.

These are new provisions with no appellate guidance yet, and several questions, including the meaning of "economic hardships," how courts will weigh members' finances, and how often the special motion is granted, remain unsettled. If you are on either side of a dispute over a housing project, our zoning and land use practice handles these cases for neighbors and owners alike, and you can contact us to discuss your situation.

Common questions

This article is general information about California law as of October 3, 2026 and is not legal advice. It does not create an attorney-client relationship. Anyone facing a specific dispute should consult a lawyer about their own circumstances.

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