Beaumont Tashjian Law Blog

This year’s legislature has enacted several laws which are consistent with the State’s goals over the last several years; namely, to increase the availability of housing and address climate change.

The following is a summary of enacted and pending legislation, court decisions, news and current events from this past year, which impact common interest developments. Most noteworthy are the new laws, which will impact your community through 2023 and beyond.

ENACTED LEGISLATION

The bills below have been signed and approved by the Governor

and will take effect January 1, 2023, as “New Law.”

SB 897: Accessory Dwelling Units (“ADUs”)

What Does Current Law Say? Current laws limit how local governments can restrict ADU and junior ADU construction. For example, local agencies can impose certain height restrictions, setback limitations, and building construction standards.

What Changed? This Bill encourages more ADU and junior ADU construction, by further limiting local government’s ability to impose restrictions on same. For example, now ADUs can be 16-18 feet tall depending on certain circumstances. SB 897 also prohibits local agencies from enforcing certain parking standards, zoning and building code corrections, and occupancy requirements, as a condition to approving construction.

What Should Associations Do? Associations can still impose reasonable regulations on ADU and junior ADU construction, including requiring owners to go through the normal architectural approval process. We strongly recommend boards of single-family communities adopt an ADU policy, which clarifies the review and approval process, construction standards, and maintenance/insurance obligations for any and all proposed ADU or junior ADU construction.

AB 1410: Free Speech in Social Media & Rental Restrictions

What Does Current Law Say? Under current law, owners are guaranteed the right to peacefully assemble, communicate, use common area spaces, and distribute literature related to association living, elections, legislation, and other political and association matters. Current law also allows associations to prohibit transient or short-term rentals/leases lasting thirty (30) days or less. Additionally, current law allows associations to take reasonable enforcement action against owners for violations of the governing documents.

What Changed? This Bill amends Civil Code Section 4515, to state that the association’s governing documents cannot prohibit a member or resident from using social media to discuss association living, elections, legislation, and other political and association matters, even if the content is critical of the association (although, this was always the case, given the right to free speech under the U.S. Constitution). This change, however, does not condone or authorize harassment, defamation and other speech not protected by the First Amendment. AB 1410 also clarifies that an owner can rent a portion of their separate interest (i.e., a room rental while the owner occupies the rest of the home), but the association cannot impose a minimum lease term longer than 30 days. The bill also prohibits boards from charging members a fee to use common area space to exercise First Amendment rights, including requiring paying a deposit to reserve common area space for First Amendment purposes. Finally, Civil Code Section 5875 has been added, to prohibit associations from pursuing disciplinary action during a declared state or local emergency, if the nature of the emergency made it unsafe or impossible for the owner to prevent or fix the violation. This does not impact the association’s right to collect assessments.

What Should Associations Do? Associations should be prepared for the potential increase in the number of renters residing in communities and update the governing documents to ensure they are protected under the law. Boards and managers should also be cautious and seek guidance from legal counsel when it comes to enforcing the governing documents during a declared state or local emergency and ensure that doing so will not violate AB 1410.

AB 1445: Planning and Zoning

What Does Current Law Say? Under the current Planning and Zoning law, all counties and cities in California are required to adopt a long term, comprehensive general plan for physical development of the county or city. This plan requires cities and counties to calculate the existing and projected need for housing, and to include that in the general plan.

What Changed? This Bill changes the requirement and, commencing on January 1, 2025, requires counties and cities to consider emergency evacuation route capacity, wildfire risk, sea level rise, and other impacts caused by climate change when calculating housing needs and preparing the general plan.

What Should Associations do? Any determinations made by municipalities in response to this Bill could impact future laws and regulations on zoning and land use planning, density, building and development. Associations should work with legal counsel to evaluate best practices and strategies related to the State’s climate-change initiatives.

AB 1738: Electric Vehicle Charging Stations (“EVCS”)

What Does Current Law Say? Under current law, associations are not required to construct EVCS or otherwise upgrade their electric infrastructure to accommodate EVCS installations.

What Changed? This Bill amends section 18941.11 of the Health and Safety Code to require the Department of Housing and Community Development to create a plan to install EVCS in existing multifamily dwellings, hotels, and motels.

What Should Associations Do? Boards should continue to monitor the State's push to meet its long-term goal of achieving 100 percent electric vehicles statewide. Eventually, associations may be subject to mandates to install EVCSs. In the short term, boards are obligated under existing laws not to prohibit EVCS installations in owners' exclusive use common area parking spaces. Boards should update their governing documents and adopt EVCS policies to streamline these requests and protect association property. Thinking ahead, boards should consider consulting with electricians to assess the electrical capacity of their community and whether EVCS installations can be accommodated on a larger scale now, or in the future.

AB 2075: Electric Vehicle Charging Infrastructure

What Does Current Law Say? Under the Health and Safety Code, the California Building Standards Commission, and Department of Housing and Community Development, work with "interested parties" to develop and propose new building standards for future electric vehicle ("EV") charging infrastructure. Interested parties include manufacturers, local building officials, utilities companies, apartment owners, and the building industry. Current law also requires the State Energy Commission to provide guidance to entities on how to "electrify" their buildings for future EV charging.

What Changed? This Bill provides that the Building Standards Commission and Department of Housing and Community Development must also work with the State Energy Commission to develop and propose new EV charging standards. Under the Bill, as of January 1, 2023, the Commission is required to begin assessing and developing plans to implement EV charging infrastructure statewide, the costs, impact on housing and potential alternatives.

What Should Associations Do? Boards and managers should continue to monitor the laws evolving around EV charging and prepare for a potential mandate in the coming yearsthat associations install EV charging stations in common areas. Boards should begin assessing their communities' EV needs and whether their current electrical infrastructure can accommodate EV charging.

AB 2174: Vehicle Towing and Electric Scooters

What Does Current Law Say? Currently, Vehicle Code Section 22658 allows associations to tow unauthorized vehicles if specified signage is posted in the community, notice is given, and under other circumstances specified by code. Tow truck operators must also obtain written authorization from the association before towing, and that authorization must specify the make, model, VIN and license plate number^.of the towed vehicle.

What Changed? This Bill addresses towing of those all-too-familiar electric scooters, bikes, and other "shared mobility devices" often laid out in the middle of the sidewalk or street, which do not typically have a model, VIN or license plate number. AB 2174 provides that the association's towing authorization can include the QR code or serial number for these vehicles.

What Should Associations Do? Parking and towing are always hot button issues. Boards and managers should work to amend their associations' towing and parking policies to authorize towing of shared mobility devices and prepare to implement them by working with licensed and insured towing companies.

AB 2221: Accessory Dwelling Units ("ADUs")

and Junior ADUs ("JADUs")

What Does Current Law Say? Under current law, associations must approve applications that comply with all building requirements and local regulations. Local regulations must also not be too stringent; for example, no local agency can set maximum square footage requirements (as specified), excessive setback requirements, etc.

What Changed? This Bill amends the Government Code to further limit local authorities' ability to restrict ADU or JADU construction. For example, AB 2221 renders certain height requirements unenforceable, while also prohibiting front setback requirements. It also prohibits local agencies from establishing certain parking standards as a condition to approving an ADU or JADU. If a local agency denies an owner's ADU or JADU application, it must also now provide the owner with a full set of comments listing any deficiencies and how an owner can fix them.

What Should Associations Do? This Bill facilitates the ADU or JADU construction process even more, by loosening restrictions that any local agency can impose. Naturally, more "granny flats" means higher density than the community was originally built to accommodate. Boards should work with legal counsel to update their governing documents including any ADU policies and rental restrictions, which may be impacted by this new law.

AB 2668: Streamlining Multifamily Housing Development

What Does Current Law Say? Current law allows applications for multifamily housing developments to utilize a streamlined review process, without any conditional use permits, if the development meets certain objective planning standards. Current law also allows local governments to impose/enforce design review standards on any new developments.

What Changed? This Bill further streamlines and facilitates the development approval process by clarifying that developments are not subject to a conditional use permit and requiring local governments to approve a development if it meets certain objective planning and design standards. AB 2668 also requires local governments to provide developers with written documentation of any of the design or planning standards they are in conflict with.

What Should Associations do? AB 2668 expands on the State's goal to increase housing and development, by streamlining local approval processes for developers. Associations may begin to see increased construction and faster approvals for developments in and around their communities, which could lead to higher density and traffic. Boards should be diligent and ensure that their governing documents are protective, in terms of their parking and rental restrictions, addressing off-site nuisances, and otherwise minimizing the impact of changing demographics and population sizes.

AB 2863: California Green Building Standards - Bicycle Parking

What Does Current Law Say? Currently, the Department of Housing and Community updates the California Green Building Standards Code every three (3) years.

What Changed? This Bill requires the Department of Housing and Community Development, in its next triennial update of the Green Building Standards Code, to develop and propose mandatory building standards for short-term and long-term bicycle parking within multifamily residential buildings, hotels, and motels. Once these standards are adopted, these buildings will need to develop a minimum amount of short-term and long-term bicycle parking independent of the number of vehicle parking spaces currently maintained.

What Should Associations do? Within the next few years, associations may be required to create short-term and long-term bicycle parking, or provide more than currently offered. Associations do not need to take any action now_,but this is a reminder for boards to consider long term budgeting needs so implementation of any new building standards or other legal requirements is less disruptive.

PENDING/INACTIVE LEGISLATION

The bills below are either "pending" bills or other impending changes in the law which could impact associations in the near future.

Debt Collection Licensing Act (amendments)

What Does Current Law Say? The Debt Collection Licensing Act (“DCLA”) was enacted in a previous legislative session and is undergoing amendments. The Act creates a program to ensure that those who engage in debt collection are properly licensed.

What May Change? Legislators and the California Department of Financial Protection and Innovation continue to amend the Act, including clarifying who is a “debt collector” required to be licensed. Currently, debt collectors whose annual profits from debt collection are less than five percent (5%), and who are not collecting consumer debt (i.e., “consumer credit transactions” as defined under the DCLA), do not need to be licensed under the DCLA. Debt related to homeowners’ association assessments and fines for violations of the governing documents are not considered consumer debt either. Additionally, there is debate on how long certain documents should be retained. The current amendments state phone records between a debtor and collector need to be kept for 7 years.

What Should Associations Do? Based on the current writing and interpretation of the DCLA, associations are not considered debt collectors. Additionally, the DCLA does not apply to collection of assessments. However, collections agencies and/or law firms that work for associations may be subject to the new licensure requirements if they meet the definitions of "debt collector". Associations should work with legal counsel for all their collections activities and ensure they are following these guidelines, which are regularly evolving.

AB 2430: “Tiny Homes” and Accessory Dwelling Units (“ADUs”)

What Does Current Law Say? Current law defines ADUs and junior ADUs (also known as “granny flats”) as fixed structures, either attached to or detached from the main residence on a lot, which meet certain square footage and other requirements. In recent years, laws have changed dramatically, to encourage and facilitate the ADU or Junior ADU building process for owners, in order to increase the availability of housing in the state.

What May Change? This Bill would redefine ADUs to include a “movable tiny home”, which is a habitable unit with independent living facilities (kitchen, sanitation, utilities, etc.), less than 400 square feet in size, which is distinct from a mobile home or RV. If passed, AB 2430 would pave the way for these separate “tiny homes” being constructed on owners’ lots, if they meet certain standards.

What Should Associations do? If this Bill passes, associations will not be permitted to deny architectural applications for mobile tiny homes, so long as they comply with local building requirements. However, certain reasonable restrictions can still be enforced. Boards should consult with legal counsel to implement ADU policies/standards, as well as review and update their parking, rental and other rules, which could be affected by increasing the density of the community.

CALIFORNIA CASE LAW

“Published” court decisions are law, and binding, while “unpublished’ court decisions are not law. Although not legal precedents, unpublished decisions are extremely valuable as they illustrate how courts address various issues commonly faced by common interest developments.

Olson v. Doe, 12 Cal. 5th 669 (2022) (CA Supreme Court)— Published

1) Facts: An owner filed for a restraining order against the board president in a condominium complex for alleged "peeping, harassment," and other threatening behavior. The court ordered the parties to go to mediation where they agreed in writing to stay away from each other and not disparage one another. The owner who filed the restraining order, then brought a separate lawsuit against the board president, seeking damages for their harassing conduct. The board president argued that the owner's lawsuit violated the non-disparagement clause of their mediation agreement.

2) Court Decision: The California Supreme Court held that the non-disparagement clause in the parties' mediation agreement could not be used to prevent either party from filing a subsequent lawsuit. The right to petition or file lawsuits with the court is constitutionally protected activity and cannot be waived by a non-disparagement agreement, given the circumstances.

3) Takeaways: The facts of this case highlight how critical it is to maintain good relations between the board and members of the community. Claims of harassment, which escalate to temporary restraining orders, discrimination lawsuits, or otherwise, create significant liability concerns for boards, unbudgeted legal fees, insurance problems, and reputational damage for the community. This case also shows that, while pre-litigation alternative dispute resolution, such as internal dispute resolution ("IDR") or mediation, are effective tools to resolve disputes efficiently, both parties need to leave those meetings with a carefully drafted written agreement, which clearly outlines each side's intentions.

Geiser v. Kuhns, 2022 13 Cal. 5th 1238 (2022) (CA Supreme Court) - Published

1) Facts: Plaintiff purchased a home in a foreclosure sale, which happened to be previously owned by activists and members of a non-profit organization that advocated against foreclosures. Following foreclosure, the former owners, along with their advocacy group, began protesting outside the plaintiff’s home. The plaintiff then filed restraining orders against the demonstrators, in part, because he felt that their protesting and behavior threatened his safety and were intended to coerce the owners into selling back the property.

2) Court Decision: Whether the protestors' conduct was constitutionally protected and did not amount to harassment, depends on the circumstances. In this case, the Court determined that the demonstrators were protesting an issue of public interest, and therefore, were allowed to protest. The Court noted that the protesters were picketing against the plaintiff's (a real estate developer) "unfair and deceptive practices". Therefore, their conduct was constitutionally protected.

3) Takeaways: In today's politically charged environment, boards and managers are in the difficult position of weighing whether a resident is exercising free speech during board meetings, in the community, etc., or whether they have "crossed the line" into nuisance or harassment territory. Whether it be neighbor-to-neighbor disputes, board meeting disruptions, social media posts, or excessive emails, boards should work with legal counsel to determine where that "line" is given the circumstances. Policies, such as neighbor-to-neighbor dispute policies, board meeting codes of conduct, and updated fine schedule, can also help reduce conflict.

Artus v. Gramercy Towers Condominium Assn., 76 Cal. App. 5th 1043 (2022) (Court of Appeal) - Published

1) Facts: The Association embarked on a project to amend their bylaws to remove cumulative voting. In their voting materials and mailers, they included several explanatory letters which were more supportive of direct, rather than cumulative, voting. One letter even stated to "Vote 'Yes^-to amend the bylaws. The amendment was approved by the owners, but one owner sued on the basis of election violations, including the improper use of association funds for "campaign purposes" and denying equal access to association media.

2) Court Decision: The Court ruled against the owner, because while trial was going on, the Association held a second election to vote on eliminating cumulative voting. The second time, the Association abided strictly by all election procedures under the Civil Code. The Court also denied the owner's claim that they were denied equal access toassociation media, because the owner was not able to prove that they ever asked to access association media for purposes of the election.

3) Takeaways: California's election laws for common interest developments are complex and extremely cumbersome. The board, with the help of legal counsel, management, and the inspector of elections is responsible for complying with a 100+ day election timeline and making sure various notices go out to the members and candidates during that period. Additionally, the Civil Code prohibits associations from advocating for particular candidate in an election or for any ballot measure using association funds and denying any owner equal access to association media (newsletters, websites, etc.). Boards should take caution to ensure they are complying with all of these procedures and restrictions.

Loeffler v. Trabuco Highlands Cmty. Ass'n.2022 Cal. App. Unpub. LEXIS 3511 - Unpublished

1) Facts: An owner stopped paying assessments claiming that the amounts were improper and excessive, based on the CC&Rs, which required assessments to be "assessed equally and uniformly." The owner sued the Association, which then countersued her for the unpaid assessments, interest and late charges.

2) Court Decision: Interestingly, the Court held that "equal and uniform" assessments does not necessarily mean that every owner pays the same dollar amount. Instead, this Court held that, "equal and uniform" means that the Association's rate for computing assessments must be imposed equally and uniformly on all of the owners, even if that formula yields different results.

3) Takeaways: Boards should ensure that their current assessment allocation is consistent with the CC&Rs and the annual budget, to avoid disputes such as this. Note, this is an unpublished case, so the classic definition of "equal and uniform" (each owner pays the same dollar amount) would certainly still apply. But this case does show how a judge might interpret the CC&Rs if a collections dispute goes to trial. Assessments are the lifeblood of the association, so be sure to update the CC&Rs and collections policies to clarify any vague or uncertain terms.

OTHER

Below are local ordinances, federal legislation, and other administrative

or declaratory rulings by government entities, which may not

directly impact your communities, but can be a

sign of trends and things to look out for in the future.

Malibu Short Term Rental Regulation Ordinance (Adopted in 2020, Repealed August 12, 2022).

This Malibu ordinance mandated that hosts of short-term rentals in Malibu be present and on-site during guest stays. On August 12, 2022, the California Coastal Commission repealed this ordinance, citing evidence that hosted short-term rentals are less desirable. According to the Commission, this means that short-term renters would then move to multi-family housing outside of Malibu and in the cities, further tightening the supply of available housing in those cities. The Coastal Commission's decision is consistent with the State's ongoing goal of increasing the availability of housing, including limiting restrictions on rentals.

HR7532 Securing Access to Finance Exterior Repairs (SAFER) in Condos Act of 2022

This Bill was introduced in Congress in 2022 with no action being taken since. This Bill expands the section 203(k) rehabilitation and Title I property improvement loan programs of the Department of Housing and Urban Development to authorize such loans to be made to low-income families residing in condominium units to cover the costs of special assessments imposed for repair or replacement of common areas, systems, and features, and for other purposes. The loans cover up to a maximum of 90% of the total repair cost, which can provide major assistance to low-income families and associations who might otherwise be unable to collect special assessments from owners to fund common area repairs.

FCC Report and Order and Declaratory Ruling from Feb. 15, 2022, re Sale and Leaseback Arrangements

This declaratory order by the Federal Communications Commission (FCC) bans exclusive revenue sharing agreements and graduated revenue sharing agreements between multifamily residential buildings and broadband companies. This order also requires broadband providers to disclose to residents any exclusive marketing agreements they have with landlords of multifamily residential buildings. This order also makes clear multifamily residential buildings cannot buyback wiring from cable companies and then lease it out on an exclusive basis. All of these actions by the FCC were taken to increase broadband choice and quality for residents of multifamily residential buildings. Associations need to be advised of this order and ensure they are complying. If there are permissive exclusive deals associations may have with a cable provider, this must be disclosed to every homeowner. The FCC’s policy goal is to allow residents choice in selecting their cable providers, so while this may include added costs to an association, it can ultimately increase homeowner satisfaction with an association if homeowners know they can get the best quality internet for the best price.

2021 Southern California Edison Settlement and Tax Liabilities

Southern California Edison paid $350,000 in penalties for violating the Regulation for Reducing Sulfur Hexafluoride Emissions from Gas Insulated Switchgear (SF6 GIS Regulation) as codified in California Code of Regulations (CCR), title 17, § 95350 et seq. (17 CCR § 95350-95359). The approximate amount paid out per affected unit was $350. If an association or a homeowner was paid this $350 settlement, each are required to report this settlement amount received as taxable income. Settlements received in California are considered taxable income under the state tax code. Please consult with a tax attorney or CPA for further questions on tax liabilities.