The July 1, 2022 deadline to amend governing document rental restrictions that conflict with Civil Code §4741 is approaching fast.
Civil Code §4741 took effect at the beginning of last year—in January of 2021—as a result of Assembly Bill (AB) 3182. As discussed in prior bulletins, Civil Code §4741 prohibits associations from adopting or enforcing governing document provisions that effectively prohibit or unreasonably restrict rentals. Among other things, the statute invalidates any provision requiring a minimum rental period of greater than 30 days or restricting rentals to less than 25% of the properties. To the extent that an association's governing documents include any provisions that conflict with Civil Code §4741, the statute mandates that associations “amend their governing documents to conform to the requirements” of the statute.
When Civil Code §4741 originally took effect on January 1, 2021, it required associations to amend nonconforming governing document provisions by no later than December 31, 2021. By way of AB 1584, which amended Civil Code §4741 on January 1, 2022, the deadline to amend governing documents to conform to the statute was extended to July 1, 2022.
In addition, AB 1584 further amended Civil Code §4741 to simplify the governing document amendment process for the limited purpose of amending nonconforming rental restrictions. Rental restrictions are often found in an association's CC&Rs, and 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 difficult to obtain the votes necessary to approve an amendment to an association's CC&Rs. As amended by AB 1584, 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. 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. Pursuant to Civil Code §4741(g), associations that willfully violate Civil Code §4741 could 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. Please contact our firm if you have any questions or if you would like assistance in reviewing your association's governing documents for any nonconforming rental restrictions that will need to be amended.