New Law Against Rental Restrictions in HOA communities

If you live in a homeowner’s association you are probably familiar with rental restrictions, or at least the feeling that renters are a bad thing for neighborhoods.  For the last decade there has been an increase in amendments to the governing documents to include a restriction for renting the property.  Normally the restrictions prohibit an owner from renting the property for terms of less than thirty days.  The catalyst behind the rental restriction movement is rooted in the idea that owners take better care of the property.

Covenants, conditions and restrictions (CC&Rs) strive to reach a delicate balance between making homeowners maintain their property while at the same time allowing owners to retain some of their “frontier” land rights.  Due to the increased nature of rental restrictions and based on successful lobbying efforts, early this year Governor Brown signed SB 150 into law which prohibits a rental restriction provision in a homeowner’s association governing documents.  Effective January 1, 2012, Civil Code section 1360.2 will prohibit a rental restriction provision if the following conditions are met:

(1)   The provision must be located in a governing document or an amendment to a governing document;

(2)   The governing document or amendment must take effect on or after January 1, 2012; and

(3)   The owner of the property must have acquired title to the interest in the property before the governing document or amendment became effective.

This represents a substantial change to the Davis-Stirling Act, which is the section of the California Civil Code which governs most common interest developments, or as they are known, homeowner’s associations.  While this law represents a victory for landlords and tenants, it may have less impact than anticipated.  If an association properly records a rental restriction amendment prior to the effective date of January 1, 2012, the law will only protect future amendments and preserve any restrictions in place.  Naturally, if you live in an association who has wrestled with passing a rental restriction amendment, you can expect that there will be a rush to pass amendments before January 1, 2012.

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