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Material Breach

AB 1492 (Laird, Chapter 694)

Effective January 1, 2004, AB 1492 adds Section 51250 to the Government Code. Section 51250 provides an additional and alternate remedy from the contract cancellation petition (§51281-et. seq.) for a material breach of contract. See below for frequently asked questions about the statute and material breach issues in general.

Does AB 1492 Repeal the Williamson Act?

No, AB 1492 provides enhanced penalties for a material breach of contract and extends the date of the lot line adjustment provisions. AB 1492 contains no new restrictions on uses allowed under the Williamson Act, existing contracts or local uniform rules or ordinances.

What is a “Material Breach of Contract”?

Government Code §51250(b) defines a material breach on land subject to a Williamson Act contract as a commercial, industrial or residential building(s), exceeding 2,500 square feet that is not permissible under the Williamson Act, contract, local uniform rules or ordinances. AB 1492 only applies to structure(s) that have been permitted and constructed after January 1, 2004.

Does AB 1492 Prohibit Homesite Construction on Williamson Act Contracted Lands?

No, as long as the residence is part of the agricultural use of the land for commercial agricultural production. In order to approve new homesite construction, local governments are advised to verify that there is an ongoing agricultural operation on the land and that the contract and local uniform rules and ordinances allow for the homesite. Landowners should be aware that homesites do not receive the Williamson Act preferential tax assessment provided to Williamson Act agricultural lands under the Revenue and Tax Code.

Does AB 1492 Mean That I Can Now Develop my Williamson Act Property as Long as None of the Buildings Exceed 2500 Square Feet?

No. Any development on property subject to a Williamson Act contract must be related to the primary use of the land for agricultural purposes and in compliance with local uniform rules or ordinances.

What Does “Related to the Agricultural Use of the Land” Really Mean?

A use is related when it is required for or is part of the agricultural use on the parcel. Compatible uses on Williamson Act lands are defined in Gov. Code §51201(e). Additionally, each participating local government is required to adopt rules consistent with the principles of compatibility found in Gov. Code §§ 51231, 51238 and 51238.1. Local governments are encouraged to define 'commercial agricultural use' in their jurisdictions to allow clearer determinations of what uses are related.

Does AB 1492 Prohibit me From Building a House Larger Than 2500 Square Feet?

Not necessarily. Homesites are allowed on contracted land but are limited in purpose and number and must be related to the agricultural use of the land. In addition, any homesite on land subject to a Williamson Act contract must be in compliance with local uniform rules or ordinances.

What Effect Does AB 1492 Have on Subdividing Williamson Act Land?

AB 1492 may affect structures on subdivided lands if those structures are not related to the agricultural use of the land.

How Can I Ensure That Construction of an Improvement Does Not Result in a Material Breach of my Williamson Act Contract?

Early consultation with your local planner and the Department of Conservation is important.

What Happens if the Rules in Place When my Project is Permitted Are Later Changed?

AB 1492 does not apply to a building permitted or constructed prior to January 1, 2004. Nor does AB 1492 apply to a building that was not a material breach at the time of construction but becomes a material breach because of a change in law or ordinance.

What Happens if my Local Government Approves a Building on my Williamson Act Property and Then the State Claims it's a Breach of Contract?

A landowner may still be subject to increased penalties. However, the local government may take into consideration the landowner’s culpability in the breach and thereby reduce the penalty imposed to no less than 12.5 percent of the unrestricted fair market value of the land and improvements. Also, to ensure that he or she will not be subject to increased penalties, the landowner may execute an affidavit acknowledging that the breach provisions may apply if a local government’s action to terminate a contract is rescinded, a court permanently voids the termination or for any other reason, the land continues to be subject to the contract. As a result, a penalty of no more than 12.5 percent will be imposed.

Did AB 1492 Increase the Williamson Act Contract Cancellation Fee From 12.5 Percent to 25 Percent?

The cancellation fee is still 12.5 percent of the unrestricted current fair market value of land. AB 1492 allows a local government to levy a monetary penalty for a material breach of contract up to 25 percent of the unrestricted fair market value of land rendered incompatible by the breach, plus 25 percent of the value of any incompatible building and related improvements on the contracted land.