Rent Restrictions Voided
Adams Stirling PLC
  California's Leader in Community Association LawSeptember 9, 2020

Assembly Bill 3182 passed both the Senate and the Assembly last week and is on the Governor's desk. If signed into law, it will negatively impact associations and their ability to regulate rentals.

Problems with Renters. Although there are exceptions:
  • renters tend to violate rules more often than owners;
  • renters generate more calls to the police than owner;
  • renters & landlords are less inclined to invest in the upkeep of their properties;
  • short-term rentals create security issues due to their high turnover;
  • landlords are less likely to volunteer to assist the community;
  • landlords have a higher delinquency rate;
  • a high percentage of renters depresses property values; and
  • lenders recognize the problems associated with renters and are less inclined to loan or will lend at a higher interest rate in communities with a high percentage of renters.
Limit Renters. To ensure stability and preserve property values, many associations limit the number of rentals in their communities by imposing a cap at 10%, 15% or 20% of their units. In addition, many require leases to be at least six months or one year to avoid a high turnover of residents. They want renters to stay long-term and integrate into the community.

Restrictions Voided. Assemblyman Phil Ting (D-San Francisco) pushed through AB 3182, which makes unenforceable rental caps more restrictive than 25% and lease terms longer than 30 days. An association can adopt a 25% (or less restrictive) rental cap and require leases to be at least 30 days (but not more restrictive).

Requires Amendment of Documents.
Associations already have impaired budgets due to high unemployment created by the Governor's lockdown order. And we just went through a costly round of election rule amendments imposed by SB 323. If signed into law, AB 3182 requires another round of document amendments:
...a common interest development shall amend their governing documents to conform to the requirements of this section no later than December 31, 2021.
$1,000 Penalty. AB 3182 imposes a civil penalty of up to $1,000 on associations that fail to update their documents.
A common interest development that willfully violates this section a civil amount not to exceed one thousand dollars ($1,000).
Loss of All Rental Restrictions. Since AB 3182 voids existing non-compliant rent restrictions, associations that can't amend their documents will not have any rent restrictions. For those associations with lease term requirements longer than 30 days, they will cease to have any lease term requirements. That opens them to short-term vacation rentals and hotel-like operations.

Destabilizing Communities. According to Assemblyman Ting's website, "AB 3182 would...bolster the state‚Äôs housing supply." That is not true. Converting stable owner-occupied housing into rentals does not increase the housing supply, it merely converts owner-occupied housing into rentals. The obvious solution to increasing the state's rental housing is to build more apartments.

Please immediately ASK GOV. NEWSOM TO VETO AB 3182.

Boards can contact us for friendly,
professional advice.

Adrian J. Adams, Esq.
Founder & Managing Partner

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