HOA Law Blog
On September 28, 2021, the state passed AB 1584 which amends laws regarding mobile home parks, mortgage protections, and access to limited civil case records among other things. Most importantly, as it applies to homeowners’ associations, AB 1584 contains provisions that affect restrictions on accessory dwelling units (“ADUs”), junior ADUs, and leasing requirements. These new laws will take effect on January 1, 2022.
ACCESSORY DWELLING UNIT RESTRICTIONS
Under existing law, any provision of a governing document or any covenant, restriction, or condition contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale of any interest in a planned development that effectively prohibits or unreasonably restricts the construction or use of an ADU or junior ADU is void and unenforceable.
In regards to the new changes in AB 1584, as they apply to ADUs and junior ADUS in a planned development (not condominium developments), Civil Code § 714.3 has been added. Civil Code § 714.3 confirms that associations have a right to maintain “reasonable restrictions” for constructing any ADUs. “Reasonable restrictions” means restrictions that do not unreasonably increase the cost to construct, effectively prohibit the construction of, or extinguish the ability to otherwise construct an ADU or junior ADU that is consistent with other Government Codes [§§ 65852.2 or 65852.22.]
If your association is considering adoption of any CC&Rs amendment or rule that would restrict ADUs in the development, please consult with your legal counsel first about whether such adoption is reasonable under the new law.
LEASING
In 2020, AB 3182 took effect. As a reminder, below is a summary of AB 3182 which revised Civil Code § 4741:
• Associations can only impose a leasing cap (the maximum number of homes that may be rented/leased in the development) of twenty-five percent (25%). In other words, an association could limit rentals to only 25% of homes or higher, e.g., 40% of homes.
An owner-occupied home that has a tenant would not count towards any leasing cap.
• Associations had to amend any of their governing documents that are non-compliant with AB 3182 by December 31, 2021 or else an association would be subject to damages and a civil penalty of one thousand dollars ($1,000).
• Any leasing amendment to comply with AB 3182 did not affect current owners of homes; these current owners were grandfathered from these changed leasing provisions.
When AB 3182 went into effect, it created some confusion and raised important questions. Does an association have to follow the secret ballot voting procedures to amend its governing documents to comply with AB 3182? If so, what happens if an association attempts to comply with the law by the end of the year but the membership does not vote to approve of the CC&Rs amendment? Would the association then be subject to liability and penalties?
AB 1584 resolves these questions. Below is a summary of AB 1584 as it applies to leasing which revises Civil Code § 4741:
• Notwithstanding any other law or provision of the governing documents, the board of directors of an association must amend the governing documents to comply with the AB 3182 leasing requirements and no membership vote or approval is required to bring restrictions up to code. However, such changes by a board of directors must be made only to the extent to comply with the leasing laws; so, a board cannot add any other discretionary changes related to leasing.
• The legislature created a procedure for accomplishing a board-voted amendment to the governing documents that is very similar to the process used to adopt a rule and regulation.
(1) A board must provide general notice, pursuant to Civil Code § 4045, of the amendment at least 28 days before approving the amendment.
(2) The notice must include the text of the amendment and a description of the purpose and effect of the amendment.
(3) The decision on the amendment shall be made at a board meeting, after consideration of any comments made by association members.
• The deadline to amend restrictions has been extended from December 31, 2021 to July 1, 2022 to provide more time to comply.
Due to the new changes in the law, we recommend associations check their leasing provisions in their governing documents for compliance. If your documents contain any language that is more restrictive than what is allowed by the new leasing laws, they must be amended by July 1, 2022. But even if your documents are already compliant with AB 3182 and AB 1584, an association may want to revise its leasing provisions anyway to include new provisions, such as a leasing cap or a requirement that leases be in writing, to better control and regulate future leasing within its development. It is important to note that case law has confirmed that owners are only subject to leasing restrictions effective on the date of their purchase. New restrictions cannot be enforced against existing owners. So when changes are desired, the best practice is to amend early so it can be enforceable against more owners.
adWe are here to help if you have any questions about AB 1584 and related law.