BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 150|
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UNFINISHED BUSINESS
Bill No: SB 150
Author: Correa (D), et al.
Amended: 6/9/11
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 8-0, 5/3/11
AYES: DeSaulnier, Gaines, Harman, Huff, Kehoe, Lowenthal,
Rubio, Simitian
NO VOTE RECORDED: Pavley
SENATE JUDICIARY COMMITTEE : 5-0, 5/10/11
AYES: Evans, Harman, Blakeslee, Corbett, Leno
SENATE FLOOR : 39-0, 5/31/11
AYES: Alquist, Anderson, Blakeslee, Calderon, Cannella,
Corbett, Correa, De León, DeSaulnier, Dutton, Emmerson,
Evans, Fuller, Gaines, Hancock, Harman, Hernandez, Huff,
Kehoe, La Malfa, Leno, Lieu, Liu, Lowenthal, Negrete
McLeod, Padilla, Pavley, Price, Rubio, Runner, Simitian,
Steinberg, Strickland, Vargas, Walters, Wolk, Wright,
Wyland, Yee
NO VOTE RECORDED: Berryhill
ASSEMBLY FLOOR : 72-0, 6/23/11 - See last page for vote
SUBJECT : Common interest developments: rental units
SOURCE : California Association of Realtors
DIGEST : This bill exempts an owner of a unit in a common
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interest development from any prohibition on renting or
leasing the unit, except when the prohibition was effective
on or after January 1, 2012.
Assembly Amendments add double-jointing language with AB
771 (Butler).
ANALYSIS : A common-interest development (CID) is a form
of real estate in which each homeowner has an exclusive
interest in a unit or lot and a shared or undivided
interest in common area property. Condominiums, planned
unit developments, stock cooperatives, community
apartments, and many resident-owned mobilehome parks all
fall under the umbrella of common interest developments.
CIDs are governed by a homeowners' association with an
elected board of directors. The Davis-Stirling Common
Interest Development Act provides the legal framework under
which common interest developments are established and
operate. In addition to the requirements of the act, each
CID is governed according to the recorded declarations,
bylaws, and operating rules of the association. These
documents are referred to collectively as the governing
documents of the association.
Some CIDs have restrictions on renting out units. These
restrictions can take various forms, including limiting the
total number of rentals in the development to a set
percentage, requiring a minimum amount of time for leases,
prohibiting rental until a unit has been owner-occupied for
at least a year, and prohibiting renting outright.
This bill exempts an owner of a unit in a CID from any
prohibition on renting or leasing the unit unless the
prohibition was effective on or after January 1, 2012.
Specifically, this bill:
1. Provides that an owner of a separate interest in a CID,
except a CID that is limited to industrial or commercial
uses, is not subject to a provision in a governing
document that prohibits the rental or leasing of any of
the separate interests unless the prohibition was
effective prior to the date the owner acquired title.
2. Allows an owner to consent to be subject to a
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prohibition on renting or leasing that took effect after
the purchase of his/her separate interest.
3. Requires the owner, prior to exercising the exemption
allowed by this bill, to provide the association with
verification of the date of acquisition and the name and
contact information of the prospective tenant.
4. Requires the seller of a unit in a CID that prohibits
the rental or leasing of the unit to provide a
prospective purchaser with a statement describing the
restriction and its applicability.
5. Contains double-jointing language with AB 771 (Butler).
Prior legislation . The Senate has considered similar bills
in recent years. In 2008, the Senate approved AB 2259
(Mullin), which was nearly identical to this bill.
Governor Schwarzenegger vetoed AB 2259 stating, "Property
owners and residents that purchase and live in a CID
governed by an HOA have agreed to live under a common set
of rules and guidelines governed by a democratic process.
It is best, as current law allows, for the owner-members of
the HOA to determine what is best for their communities."
In 2010, the Senate approved a much narrower bill, AB 1927
(Knight), which would have required the membership of a CID
to vote on any new restrictions on the rental or lease of a
separate unit, as opposed to current law which, depending
on a CID's own by-laws, allows a CID board to impose such a
restriction without a vote of the general membership.
Governor Schwarzenegger vetoed AB 1927 stating, "There is
insufficient evidence to indicate that rental restrictions
are currently a growing or widespread problem to justify
such a wide-ranging rule change. Furthermore, current
provisions in law provide for an amendment process for
ÝCIDs] to make rule changes."
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/24/11)
California Association of Realtors (source)
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Center for California Homeowner Association Law
OPPOSITION : (Verified 6/24/11)
Community Associations Institute
ARGUMENTS IN SUPPORT : According to the bill's sponsor,
the California Association of Realtors, current law does
not protect the right of a CID unit owner to rent or lease
his/her unit when such a right existed at the time
ownership commenced. Over the last few years, an
increasing number of CIDs have imposed rental restrictions.
Many people need to rent out their units because of job
relocation or a personal situation. Others made a
significant investment based on the assumption of rental
income, only to have the rules change after the fact. The
ability to rent a unit has become even more important
because of the deteriorated housing market, which makes it
difficult to sell. The right to rent or lease real
property is a valuable property right that should be
protected during one's term of ownership. This bill is
intended to ensure that if an owner of a CID unit has the
right to rent that unit at the time he/she purchases it,
that expectation is preserved as long as he or she owns the
unit, irrespective of any subsequent revision of governance
documents effecting the right to rent.
ARGUMENTS IN OPPOSITION : The Community Associations
Institute (CAI) argues that CID rules and regulations,
including renter restrictions, need to be fluid and change
with conditions imposed by the mortgage market or personal
needs. In addition, CAI believes that rental rules should
be uniform for all owners, not differ based on when a unit
was purchased. CAI states, "Renter restrictions are a
property right that periodically should be uniformly
changed based on market and hardship conditions."
ASSEMBLY FLOOR : 72-0, 6/23/11
AYES: Achadjian, Allen, Ammiano, Atkins, Bill Berryhill,
Block, Blumenfield, Bonilla, Bradford, Brownley,
Buchanan, Butler, Charles Calderon, Campos, Carter,
Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
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Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Harkey, Hayashi, Hill, Huber, Hueso,
Huffman, Jeffries, Jones, Knight, Logue, Ma, Mendoza,
Miller, Mitchell, Monning, Morrell, Nestande, Nielsen,
Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino,
Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao,
Wagner, Wieckowski, Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Alejo, Beall, Gorell, Hall, Roger
Hernández, Lara, Bonnie Lowenthal, Mansoor
JJA:mw 6/24/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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