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New Bill Signed by Governor Proposes Ending HOA Restrictions on Rentals

At BAPS, we conduct both internal and external training for our employees and board members. We typically conduct 1 to 2 Educational events each year and we look forward to conducting these events in 2021. In the meantime, we will be sending newsworthy posts along with scheduling webinars. Please look for more information in the future.

On September 28th Governor Gavin Newsom signed into law Assembly Bill 3182 (“AB 3182”) which will make rental bans illegal, no matter how the owners vote to operate their community. The bill proposes to make several amendments the current Civil Code Section 4740 that was enacted in 2012 to “grandfather,” or exempt, current owners from constraints on leasing of HOA residences. These changes would ultimately remove the current grandfathering restrictions and make a series of other changes regarding rentals in HOA’s.

Rental bans and restrictions are typically placed by HOA’s and being voted on by homeowners within the association when they amend their convents, conditions, and restrictions (CC&R’s). The new bill would make such bans illegal, allowing up to 25% of HOA neighborhoods to be rental properties, regardless of how the members vote to conduct affairs in their community. Current homeowners in HOA’s will no longer be able to vote on having rental bans below the 25% mark. An exception on these new rental and voting restrictions would be short-term rentals of 30 days or less, such as Airbnb properties as stated in newly the added Section 4741.

AB 3182 was written as an effort to help fight the growing housing and homelessness crisis in California. Many residents are currently prohibited from renting houses due to current HOA rules, and supporters argue that home rentals could help alleviate the middle-class housing shortage, freeing up less expensive apartments to lower-income individuals in need of housing. AB 3182 may cause extensive changes to your community. Please consult with your community’s legal counsel for guidance regarding how AB 3182 may affect your community and what your community needs to do to comply. The new bill is set to become effective on January 1, 2021.

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