Last year, Assembly Bill (AB) 3182 was signed into law, which added new Section 4741 to the California Civil Code as of January 1, 2021. Civil Code §4741 prohibits associations from adopting or enforcing governing document provisions that effectively prohibit or unreasonably restrict rentals. Among other things, the new law prohibited any provision restricting rentals to less than 25% of the properties or requiring a minimum rental period of greater than 30 days. In addition, the new law mandated that associations “amend their governing documents to conform to the requirements” of the new law by no later than December 31, 2021.
The mandate to amend their governing documents to conform to the new law posed a challenge for associations with nonconforming rental restrictions in their CC&Rs. Amending an association's CC&Rs ordinarily requires a vote of the owners conducted in accordance with a statutory secret ballot voting procedure. Not only can that be a costly process, but it can also be very difficult to obtain the votes necessary to approve an amendment to an association's CC&Rs. Some associations may have been able to amend their CC&Rs for the limited purpose of conforming to the new law without a vote of the owners under authority found in their existing CC&Rs. However, to the extent that an association's CC&Rs did not include such authority, the legislature had not provided any exception to the requirement that amendments to an association's CC&Rs must be approved by a vote of the owners conducted in accordance with the statutory secret ballot voting procedure. Until now….
The Governor recently signed AB 1584 into law, which amends Civil Code §4741 effective January 1, 2022. As amended, Civil Code §4741 now sets forth a process by which an amendment to conform with Civil Code §4741 can be approved by board action alone, and it extends the deadline for such an amendment to July 1, 2022 (instead of December 31, 2021). The new process for approving an amendment to conform to the requirements of Civil Code §4741 is very similar to the statutory process for approving a rule change. The board needs to provide general notice of the amendment at least 28 days before approving the amendment at an open board meeting after consideration of any owner comments, and the notice needs to include the text of the amendment and a description of the purpose and effect of the amendment.
Associations that have not already had their governing documents reviewed for potentially nonconforming rental restrictions should do so as soon as possible. If your association's governing documents include nonconforming rental restrictions that have not yet been amended to conform to Civil Code §4741, the governing documents need to be amended by July 1, 2022. Associations that willfully violate Civil Code §4741 (presumably including the requirement that they amend their governing documents to conform to the new law) will be liable for damages and a civil penalty to any owner who might sue the association based on the association's failure to comply with the new law. Thankfully, the law now makes the amendment process much simpler.