Last month a Pacific Palisades lot seller spent weeks going back and forth with a buyer over price. Soon after the seller accepted, the buyer walked away because a cheaper lot had closed around the corner. The listing agent told The Real Deal that her advice to sellers now is to take a good deal quickly. Some agents estimate that up to 40 percent of Palisades lot deals are falling apart before closing.
That pressure to close fast runs into a ballot measure. On November 3, 2026, Los Angeles voters decide Proposition TE, which would exempt fire-damaged Palisades residential property from the Measure ULA "mansion tax." For most burned lots, though, the tax was never the issue. The exemption matters most for one group of sellers: original owners who rebuild and then sell the finished house.
The tax applies to the whole price, starting at the first dollar over the line
Measure ULA is a cliff, not a sliding scale. The Los Angeles Office of Finance lists the thresholds that took effect for transactions closing after June 30, 2026. A sale above $5.4 million pays 4 percent on the full price, and a sale at $10.9 million or more pays 5.5 percent. Both sit on top of the city's base transfer tax of 0.45 percent, for combined rates of 4.45 percent and 5.95 percent.
The Los Angeles Times worked an example: a burned lot sold for $6 million would owe $240,000 in ULA.
Because the rate applies to the entire price, a higher sale price can mean less money for the seller. Using the city's posted rates:
- A sale at exactly $5.4 million owes only the 0.45 percent base tax, about $24,300, and the seller keeps roughly $5.376 million.
- A sale at $5.5 million owes 4.45 percent, about $244,750, and the seller keeps roughly $5.255 million.
- A sale has to reach about $5.63 million before the seller keeps as much as at $5.4 million.
The same thing happens at the upper threshold. A sale just under $10.9 million pays the 4.45 percent combined rate. At $10.9 million it jumps to 5.95 percent, and the price has to climb past roughly $11.07 million to make up the difference. These are straight calculations from the posted rates. Any specific sale should be run with the escrow officer.
Most burned lots never come close to $5.4 million
If ULA mostly hit lots, Proposition TE would be relief for every fire-affected seller. Lot prices say otherwise. In September 2026, one Palisades agent put the cheapest lot in a "good area" at about $1.5 million and said outside buyers keep asking whether they can buy a $1 million lot in the Alphabet Streets. They can't.
As of April 2026, a broker cited by HousingWire said land values were still about 30 percent below pre-fire levels. His example was a 6,500-square-foot Alphabet Streets lot that sold for about $3 million before the fire and now trades around $2.1 million.
No public source has reported how many post-fire Palisades lot sales cleared $5.4 million. The reported prices point to most lots trading at a fraction of the threshold. Larger view parcels may cross it, but the typical burned lot pays the 0.45 percent base tax and nothing more.
The finished house is where prices reach the line
Building is what pushes value toward the threshold. The same agent who priced good-area lots at $1.5 million said buyers are then in for another $3.5 million to $4 million in construction, plus the time it takes to build. That puts a buyer's total cost at roughly $5 million to $5.5 million before any profit.
Finished-home prices are landing in the same range. In late September 2026, after mislabeled lot sales were removed from an MLS report, the median single-family sale in the Palisades over the previous three months was $4.7 million. That is $700,000 below the ULA threshold, and new construction generally sells above the overall median. One broker framed the open question for the next four years as whether enough buyers can afford $5 million to $10 million homes.
Who is doing the rebuilding matters here. In an April 2026 report, the same broker estimated that 60 to 70 percent of lot buyers were developers. He also said many original owners who had already bought homes in Brentwood, Santa Monica, Newport Beach and Orange County were hiring contractors to build on their old lots and sell, rather than give up the land equity.
The exemption goes with the owner, not the parcel
The City Clerk's impartial summary sets out who qualifies. The property must be residential, and the Department of Building and Safety must verify it was damaged or destroyed in the Palisades Fire. It must be sold between January 7, 2025 and January 6, 2030. The seller must be the owner of record on the day the fire began. The Los Angeles Times notes the exemption applies whether or not the owner lived in the home.
Here is how that plays out for the three common paths a burned parcel takes:
| Path | Price range the sale likely lands in | Does Proposition TE apply? |
|---|---|---|
| Original owner sells the lot | Mostly well under $5.4 million | Only if the lot sells above the threshold. Below it, there is no ULA to exempt |
| Developer buys the lot, rebuilds, sells | Finished-home pricing at or above the threshold | The lot sale qualifies only if it clears the threshold. The developer's later sale does not, because the developer wasn't the owner on January 7, 2025 |
| Original owner rebuilds and sells | Finished-home pricing at or above the threshold | Yes. This is where the exemption is worth six figures |
The table shows the measure's real effect. When an owner sells the land to a developer, the exemption covers a sale that probably owed no ULA. The later sale of the finished house, where ULA would apply, falls outside the measure. When an owner rebuilds and sells, the exemption covers the sale where the 4 percent bill actually shows up. On a $6 million rebuilt home, that is the $240,000 the Times calculated.
The record-owner test also matters for property that has changed hands since the fire. That includes property inherited or moved into a new entity. The measure's text ties eligibility to the owner of record on January 7, 2025, so executors and family members should get a written answer from the city on how their title history applies before counting on the exemption.
The measure also looks back. The Director of Finance would be authorized to refund ULA paid by eligible sellers before the measure takes effect, so an owner who already paid on a qualifying sale would have a claim. The City Administrative Officer estimated the revenue reduction at $35 million to $66 million through January 2030, based in part on rebuilt homes listed for sale as of July 2026 and on post-fire vacant parcel sales.
Comps showed the wrong number for more than a year
Pricing a rebuilt home near the cliff depends on reliable comparable sales, and in the Palisades those were wrong for a long time. In September 2026, MLS/CLAW confirmed it would reclassify off-market Palisades lot sales that had come in from Los Angeles County data labeled as single-family homes. Before the fix, those lots made up about 27 percent of single-family sales recorded since the fire. Brokers said they had flagged the problem more than a year earlier.
Removing the mislabeled lots raised the three-month single-family median by $1.3 million, to $4.7 million. Appraisers, lenders and automated estimates all draw on this data. One broker described a homeowner whose AI-generated estimate came back at $2.5 million, which he said was 25 percent below the home's actual value. The MLS says the data will be manually checked for at least the next couple of years.
For a seller deciding whether to list a rebuilt home at $5.35 million or $5.6 million, comps that were understated by more than a million dollars can put the asking price on the wrong side of the threshold. Agents also say there is no consistent pricing pattern among lot sellers. Some have insurance complications and need to sell quickly, while others can afford to hold their lots for five years or more.
What the November 3 vote decides
Proposition TE is the only change to Measure ULA that will be on any ballot this fall. The Howard Jarvis Taxpayers Association withdrew its statewide initiative on June 25, 2026. On July 1, the City Council shelved, 14-0, a proposed exemption for new multifamily buildings.
Thirteen of 15 council members voted to place TE on the ballot. Councilmember Traci Park, who represents the Palisades and led the effort, said in July:
"They're not selling to profit. They're not selling because they want to. They're selling because they've already lost everything and there's nothing left."
Councilmember Eunisses Hernandez was the only member to vote against placing the measure on the ballot. She argued it should not extend to LLCs, investors or owners with multiple properties. According to LAist's voter guide, no official argument against TE was filed with the City Clerk. The Los Angeles Housing Department estimates the exemption could reduce ULA revenue by about $32 million a year, roughly 6 percent.
The measure needs a simple majority. If it passes, the exemption runs through January 6, 2030, and covers qualifying sales in either direction from the vote, through the refund provision. If it fails, the cliff stays where it is, and the next adjustment comes with the annual inflation update to the thresholds.
If you own a burned Palisades lot and the deals around you keep falling apart in escrow, Coko Acquisitions can give you a cash offer on the lot as-is within 24 hours. There's no financing to fall through, and you set the closing date. Our team can also show you what your sale price means for your transfer tax, whichever way the November 3 vote goes. Get My Cash Offer Now.
