The California commercial and residential real estate landscape changed significantly with the spread of COVID-19 and the resulting economic impacts. Below is a compilation of legal summaries on more than a dozen new state laws involving tenancy, housing, zoning and planning, CEQA, and taxes. (All laws are effective as of January 1, 2021, unless otherwise noted.)
Here are some of the main laws that may affect real estate this year:
Homeowner Association Rentals (AB 3182)
Homeowner association laws must now allow at least 25 percent of their properties to be rented. In the past, an HOA could prevent any rentals or limit them to, say, 10 percent. The new law is aimed at creating more availability of rentals in California.
Fire Notice for New Buyers (AB 38)
This law says buyers must be told if they live in a high-risk fire area. For buyers and real estate agents, it basically just means a one-page document needs to be signed at closing. The seller must list things that could be vulnerable to a wildfire, such as roof coverings, rain gutters, vents that are not fire-resistant and any combustible landscaping.
Foreclosure: Right of First Refusal (SB 1079)
This law is aimed at stopping a repeat of the Great Recession when investors snapped up a large amount of foreclosed properties. Early in the pandemic, many lawmakers were concerned the same thing would happen again. This legislation creates new ways an investor could lose a property even after winning it at auction.Under the new law, if a buyer purchases a home at auction, and does not plan to live in it, a renter in the property can try to get the property themselves. The tenant could submit to buy the property in the next 15 days after the auction.
Homestead Exemption (AB 1885)
Everyone who owns a home in California is eligible for a homestead exemption, which protects against losing your property if you file for bankruptcy or to other creditors. The amount of the exemption, though, has not changed in decades nor has it kept pace with the state’s rising housing prices. But, the law gets a big boost this year. Starting this year, $300,000 to $600,000 of a home’s equity can’t be touched by judgment creditors. This change is designed to make it more likely for a person to extinguish their debts and keep their homes.
This law allows Californians 55 years old and older to sell their existing house, buy another house and take their property tax with them. Typically, homes after purchase have values reassessed and tax rates go up. This change allows older Californians to have a much lower, blended tax rate if they move. Under Prop. 19, a person can move three times and still get tax benefits anywhere in California. The law also applies to people with severe disabilities or those who lost their homes in a natural disaster.
AB 831. Planning and zoning: housing: development application modifications.
AB 831 strengthens prior legislation (SB 35's Streamlined Ministerial Approval Process) which allowed certain qualified housing projects and housing-rich mixed-use projects to go through a streamlined, ministerial CEQA-exempt approval process. AB 831 aims to close loopholes that municipalities could use to avoid the streamlined approval process. As amended by AB 831, SB 35 projects can make minor modifications prior to the issuance of a final building permit so long as projects meet the standards in place during the original application submission. The bill also clarifies that mixed-use development is eligible for the streamlined approval process if it is at least 2/3 residential.
AB 831 went into effect as an urgency statute on September 28, 2020.