Could Rental Restrictions Be in Your Association’s Future?

A new law that significantly limits rental restrictions in California community associations took effect Jan. 1, 2021. Among other things, California Civil Code Section 4741 imposes a deadline on associations in the state to amend their governing documents to comply with its provisions.

While the law applies only to California associations, the state often is a bellwether for changes in the industry. So it makes sense to bone up on the new provisions and what they could mean for your clients, now or in the future.

“On a high level,” says Jeffrey Beaumont, a partner with Beaumont Tashjian in Woodland Hills, Calif., “the law prohibits associations from enacting rules, regulations, or restrictions that prohibit or have the effect of prohibiting rentals.”

The latter category of now-unlawful restrictions — those having the effect of prohibiting — refers to rules that don’t prohibit rentals on their face but that end up blocking rentals when applied, according to Beaumont. That might include, for example, a rule allowing rentals but only for terms of at least five years. “Who’s going to sign a five-year lease for a condo?” he says.

Kelly Richardson, a partner in the law firm Richardson Ober De Nichilo in Pasadena, Calif., says the new law includes several other critical provisions, including a ban on “unreasonable” restrictions on rental of units, accessory dwelling units (ADUs) and junior ADUs (JADUs).

“But it also specifically authorizes bans on short-term rentals of 30 days or less,” he says. “And it says that associations can cap rentals at 25% of units or higher.” Under the law, a unit doesn’t count toward a cap if the unit or its ADU or JADU is occupied by an owner in addition to a tenant.

Learn more about the new law, and what it could mean down the line for your association:

California Limits HOA Rental Restrictions

Best regards,
Matt Humphrey
President