AB 3182 Changes Rental Restrictions in HOAs

AB 3182 Changes Rental Restrictions in HOAs

By: Laura E. Ferret, Esq.

February 16, 2021

As part of our continuing series on legislation that is new to 2021, today we will discuss AB 3182. AB 3182 applies to homeowners in common interest developments (CIDs) and prohibits HOAs from imposing unreasonable rental restrictions within their communities. The Covid-19 pandemic had much of the legislature’s attention focused on housing last year, and AB 3182 is no exception. As with many new laws, there are still open questions about how AB 3182 will be applied and how effective it will be at solving the problems it is meant to address. However, AB 3182 will certainly be of interest to homeowners or investors looking to utilize their properties for additional rental income.

AB 3182 was signed into law on September 28, 2020 and became effective on January 1, 2021. The new law prohibits CC&R provisions that restrict rentals to less than 25% of the separate interests in the community. AB3182 also bars CC&R provisions that prohibit or unreasonably restrict rentals of Accessory Dwelling Units (ADUs) or Junior Accessory Dwelling Units (JADUs) and contains language to specify that these units will not count as separate interests for purposes of rental restrictions. Lastly, the law clarifies and, in some ways, fast tracks municipal permitting requirements for the installation and use of ADUs and JADUs.

Before AB 3182, many HOAs within California had adopted restrictions, subject to then existing laws, to curb rentals within their community. The restrictions arose out of a perception that higher renter populations hurt property values within the community. Many believe that renters are more likely to violate CC&R’s by failing to maintain the property or otherwise. Additionally, it can be more difficult to enforce the rules against renters who are typically not subject to the same enforcement penalties as homeowners are under the governing documents.

However, the pandemic and national stay-at-home orders put California’s affordable housing shortage into sharp focus, and the legislature identified loosening rental restrictions within HOA’s as a potential solution to the problem. Under the new law, HOAs are still allowed to prohibit short term rentals of less than thirty days, but any other existing rental caps more restrictive than 25% of the total separate interests (not counting ADUs or JDUs) in the community are unenforceable. Those rental caps were void as of January 1, 2021, but Associations will have until December 31, 2021 to amend their CC&Rs so that they follow the new law. Associations that attempt to enforce rental restrictions in violation of the law will be subject to monetary penalties up to $1,000.

Thus, many homeowners within HOAs who were previously restricted from renting their properties may now be free to do so. However, the new law does contain ambiguities which have left many to question whether member approval will be necessary for Boards to amend their CC&Rs so that they comply with the new law. Additionally, it is still unclear whether any new CC&R provisions that restrict rentals in compliance with the new law can be applied retroactively to homeowners who were subject to previously existing restrictions.

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The information presented in this article is not to be taken as legal advice. Every situation is different. If you are facing a legal issue of any kind, get competent legal advice in your state immediately so that you can determine your best options.

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