On September 28, 2020, Governor Gavin Newsom signed Assembly Bill 3182 into law. The new law amends Civil Code § 4740 and adds Civil Code § 4741 putting new rental restrictions on homeowners associations.
Under the new law, rental bans will become illegal starting January 1, 2021. The change to the law also removes homeowners’ rights to vote on banning rentals. In addition, at least 25% of HOA neighborhoods can be used as rental properties.
The law also removes the provision which limits the application to governing documents that became effective on or after January 1, 2012, and deletes the provision authorizing an owner to expressly consent to be subject to a prohibition on renting or leasing of the owner’s separate interest.
The purpose of the law is to add rental properties, but instead it is taking power away from homeowners associations and its members. It is important to understand what associations must do to comply with the new changes in the law.
If an association’s governing documents are silent on voting to ban rentals or the percentage of units that can be used as rental properties, then nothing needs to be done. The changes in the law will control. However, there is ambiguity in the new law as to what associations should do if their governing documents do have conflicting provisions.
If an association has a minimum rental period of 30 days or less, the association will not need to take any further steps. Civil Code § 4741(c) states, “This section does not prohibit a common interest development from adopting and enforcing a provision in a governing document that prohibits transient or short-term rental of a separate property interest for a period of 30 days or less.” The section, however, does not provide any guidance on minimum rental periods of more than 30 days.
Similarly, if an association’s governing documents have a rental cap of more than 25%, nothing needs to be done. However, if the rental cap is below the required 25%, the association may want to amend its governing documents to comply with the new laws.
It is important to note that the new laws are controlling and will override any conflicting provisions in the governing documents, and any conflicting provisions will be unenforceable.
The big question is whether associations should amend their governing documents if they do not comply with the new laws. The problem is that laws change every year and amendments can get expensive. But, members also cannot follow the rules if they do not know the rules.
Instead of having an amendment done every time the law changes, associations should consider attaching changes in the law as an appendix to the CC&Rs so members and new purchasers have notice. This saves the association expense and avoids a lengthy voting process.
Our office regularly reviews CC&Rs and prepares appendixes to CC&Rs. If you have questions about the new laws and would like to discuss attaching an appendix to your CC&Rs, we invite you to contact our office or call to speak with us personally at (949) 729-8002 and our experienced attorneys will be happy to assist you.