Beaumont Tashjian Law Blog

Friday, July 24, 2020

Assembly Bill 3182: The Undoing of Rental Restrictions in Common Interest Developments

Rental restrictions have long been a hot button issue and source of debate, from the state/legislative level, down to the rules in your unique community’s governing documents. California law currently allows homeowners’ associations to adopt reasonable rental restrictions, such as minimum lease terms, occupancy requirements prior to leasing and caps on the total number of homes in the community that can be rented at a given time. Generally speaking, as long as the restrictions and limitations the board chooses to adopt are reasonable and consistent across the governing documents, a court would uphold them.

 

Rental restrictions, and the broad discretion the board is given to adopt and enforce them, are intended to preserve the residential character of the community by promoting stability, minimizing increases in insurance premiums, maintaining property values and avoiding transient tenancy. Assembly Bill 3182 (“AB 3182”), if chaptered in its current form, would limit this discretion and prohibit certain types of rental restrictions.

 

AB 3182 effectively prohibits (with only a couple of exceptions) rental bans, to allow owners to rent out their homes or attached/detached accessory and junior accessory dwelling units. Associations can still prohibit short-term rentals and require a minimum thirty (30) day lease term. Associations can also impose a rental cap that would limit the total number of rentals to no less than twenty-five percent (25%) of the total separate interests in the community, even if less rentals are necessary to secure financing or obtain insurance at industry-recognized rates.  

 

The intention of AB 3182 as presented by Assembly Member Ting is to address California’s shortage of housing and potentially provide relief to the state’s homelessness crisis. Unfortunately, removing an association’s ability to restrict rentals so substantially may have negative consequences, such as, decreasing the sense of community, impacting affordability and availability of insurance, and increasing costs of maintenance due to tenants’ neglect and turnover of residents. As a whole, AB 3182 could certainly impact property values adversely as well.

 

While the State Legislature’s intentions may be well placed, it has the potential for missing its mark and in the process, deteriorating the spirit of community association living. Though not yet chaptered and enrolled, boards and managers should continue to work with legal counsel to monitor any developments with AB 3182 and implement strategies such as new rules, which would mitigate its potential impact.

 

Community Associations Institute has prepared a sample email that you can simply copy and paste to send to the Senate Housing Committee with the email addresses provided. 


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