On September 28, 2020, Governor Newsom signed AB 3182, which went into effect January 1, 2021. It means almost 3 million of the state's 11 million HOA housing units are now fair game for investors to buy and convert to rentals. It also means that rules enforcement problems, deferred maintenance, and lower property values will inevitably follow. The bill does the following:
- makes unenforceable rental caps more restrictive than 25%;
- allows 30-day lease restrictions but appears to void anything greater than 30 days (law firms are split on this point);
- mandates all associations amend their governing documents;
- voids restrictions on January 1 but allows associations until December 31, 2021 to amend their governing documents; and
- imposes a penalty of $1,000 on associations that do not comply.
Consequences. Even though associations have until December 31, 2021 to amend documents, in reality it needs to be done by January 1, which is when non-compliant restrictions are rendered unenforceable. That means those associations will have no rent restrictions, beginning on January 1. This opens the door to investors buying up units and converting them into Airbnb rentals.
ADU Problem. The legislation also includes a requirement that building departments push through ADU approvals. The Governor wants everyone to convert their garages into rentals as quickly as possible. In addition, the bill specifically carved out ADUs from the 25% cap, which means HOA rentals could climb well above the 25% ceiling.
Recommendation: Boards with non-compliant restrictions should talk to legal counsel about amending their governing documents.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.