On September 28, 2020, Gov. Gavin Newsome signed Assembly Bill (AB) 3182 into law. The new law imposes additional limitations on California Homeowner’s Associations (HOAs) regarding rental restrictions. Here is what you need to know about the upcoming changes to California HOA rental restrictions:
Assembly Bill (AB) 3182
Effective January 1, 2021, California Civil Code 4740 will be amended to add section 4741. The amendment reflects the passage of Assembly Bill (AB) 3182.
AB 3182 amends the Davis-Stirling Common Interest Development Act to make HOA governing provisions that unreasonably restrict an owner from leasing or renting to a tenant unenforceable and void.
Under the new law, HOA provisions that “unreasonably restrict” rentals will not be enforceable except for those that:
1) prohibit rentals for 30 days or less, or
2) limit the total number of rental homes in the community to 25%.
Additionally, HOAs must amend their governing documents by December 31, 2020, to comply with the new law. If an HOA enforces a prohibited rental restriction or fails to comply with the requirement to amend its governing documents, the association could incur a $1000.00 fine.
Notably, under AB 3182, owner-occupied tenants are not considered “renters” who are leasing space on a property for purposes of calculating the 25% community rental property cap.
Why did Lawmakers Pass AB 3182?
According to its author, the motivation for filing the bill was to make properties available to address the state’s housing and homelessness crisis. The belief is that there are millions of California homes that have the potential to be rented out to citizens in need but can’t because of antiquated HOA restrictions and requirements.
Issues with AB 3182
Before the change in the law, California HOAs, like HOAs in other states, had the discretion to adopt and enforce CC&Rs (Covenants, Codes, and Restrictions) that residents believed were necessary to protect and preserve the residential character of their communities. Critics of the bill believe that its passage will lead to more investor purchases and a decrease in affordable housing supply. A more looming issue is that the bill failed to define the term “unreasonably restricting.” By leaving the definition open to interpretation, disputes between HOAs and homeowners seem highly likely. Another problem with the law is that it excludes some types of rentals from the maximum. Owner-occupied properties or, Accessory Dwelling Units (ADUs) are not considered part of the “separate interest” and, therefore, do not have to be counted towards the maximum.
What actions Should my HOA Take?
As of January 1, 2021, AB 3182 will go into effect, and HOAs are mandated to do their utmost to comply with its requirements. By December 31, 2020, governing documents need to be reviewed and revised as necessary to comply with the new law. It would be best to have an experienced California real estate attorney review your HOA documents to ensure that the correct amendments are made to reflect these changes and that your association is in compliance.
Contact the Law Office of Raffy Boulgourjian
Attorney Raffy Boulgourjian is a California real estate attorney with over twenty years of experience representing clients. He has the knowledge and expertise to protect your interests. Contact Mr. Boulgourjian today to schedule a free legal consultation to discuss your California legal needs.