Legislative Update 2018

December, 2017

The legislative session for 2017 has come to a close, and many new laws were passed which will directly impact California landlords. Below are the new laws for 2018 along with other significant trends which will affect California landlords.

For your convenience, the new laws and trends are divided into seven sections: Landlord/Tenant, Fair Housing, Disability Access, Mobile Home, HOA (Homeowners’ Association), and Real Estate License Laws.

Landlord / Tenant Laws and Trends

AB 291 and AB 299 Tenant Immigration Status: The Immigrant Tenant Protection Act creates several protections intended to specifically prohibit housing discrimination or harassment based on immigration or citizenship status. Generally, the law prohibits inquiry, disclosure, or threats to disclose information regarding or related to immigration or citizenship status for the purposes of harassment, intimidation, retaliation, or to influence a tenant to vacate a unit.

An article, The Immigrant Tenant Protection Act: AB 291 and AB 299 (2018), is available here.

AB 551 Bed Bugs (2016): Passed in 2016, this law addresses issues of bed bugs in rental housing. Civil Code §1954.603 requires that a specific bed bug notice (with specific language and in at least 10 point font) be given to new tenants on and after July 1, 2017 and to existing tenants by January 1, 2018.

An article with information about AB 551 is available here.

AB 646 Rental Property Flood Disclosures: Beginning July 1, 2018, leases for residential properties must provide specific disclosures, in at least 8-point type, relating to flooding.

An article, Flood Disclosures for California Residential Landlords, is available here.

If you would like to purchase a Flood Disclosure Addendum, contact Jamie Sternberg at Jamie.Sternberg@kts-law.com or (619) 744-0863.

AB 1070 Solar Energy Contract Disclosures: Requires that property owners be provided with solar energy system disclosure documents before a solar energy system is sold, financed or leased.

AB 1108 Self-Service Storage Facility Act Amendments:  Through 2020 lien notices may be served by email if the rental agreement provides for email service. It also allows auctions to be either in-person or through an internet auction website.

AB 1137 Pets in Affordable Housing: Affordable housing properties financed on or after January 1, 2018, pursuant to the Zenovich-Moscone-Chacon Housing and Home Finance Act, must allow residents one or more common household pets within the resident’s unit, subject to applicable state laws and local government ordinances related to public health, animal control, and animal anticruelty.

AB 1139 Private Transfer Fees Disclosure: Some builders attempted to collect “private transfer fees” each time a property they built was sold. Effective January 1, 2009, Civil Code §1098.5 requires that documents assessing private transfer fees must be recorded. These private transfer fees can create financing challenges. This new law amends Civil Code §1098.5, and requires that private transfer fees created on or after February 8, 2011 (unless an exemption applies) must contain a specific notice in 14 point bold font.

SB 2 Increased Recording Fees: Effective September 29, 2017, adds additional recording fees of $75 to fund affordable housing development. There are two exemptions: the fee won’t be charged (1) in connection with a transfer of a home to an owner-occupant, or (2) when a documentary transfer tax is paid. Typically the additional recording fees will be charged for refinances or reconveyances.

SB 7 Water Meters; Multi Unit Structures (2016): SB 7 is a bill passed in September, 2016, regarding submetered water in multifamily residences. SB 7 is complex, imposes significant requirements on landlords beginning January 1, 2018, including obligations regarding meters, billings and lease provisions. An article with information about SB 7 is available here.

Kimball, Tirey & St. John LLP has created a Submetered Water Addendum, designed to help landlords comply with the new law.   SB 7 also modified Civil Code §1954 to allow landlord entry in connection with water conservation and submetered water.

Remember to update your Notice of Intent to Enter to specify entry “for purposes relating to water conservation and submetered water under Civil Code §1954.201 et seq.”

SB 745 Water Conserving Plumbing Fixture Replacement (2014): Originally passed in 2014, and codified in Civil Code §1101.5, it requires water conserving plumbing fixtures be installed in property constructed before January 1, 1994. To be compliant, plumbing fixtures may not use more than the following amounts of water:

  • Toilets – 1.6 gallons per flush
  • Urinals – 1 gallon per flush
  • Showerheads – 2.5 gallons per minute
  • Interior faucets -2.2 gallons per minute

By January 1, 2017, single family residential properties were required to be in full compliance, and provide buyers a written disclosure regarding compliance with this law. Beginning on January 1, 2014, noncompliant plumbing in multifamily and commercial property must be replaced in certain situations.

By January 1, 2019, multifamily and commercial properties must be in full compliance.

An article with information about water conserving plumbing fixtures required in California is available here.

E-Filing for Unlawful Detainers: Throughout the state, courts are moving towards e-filing civil actions (including unlawful detainers). As the name implies, e-filing allows parties to transmit documents directly to a court electronically. The system is being utilized by an increasing number of courts seeking to create a faster, paperless system.  E-filing is now available in some form in 12 counties throughout California. AB 976 authorizes all trial courts in the State of California to, by local rule, require the electronic filing and service of documents in civil actions. Currently, courts in 35 of California’s 58 counties have active electronic filing programs underway, with the majority of those expected to be implemented by the end of 2017.

Limitations on California Post-Disaster Price Increases: If a state of emergency is declared, and if the state of emergency results from an earthquake, flood, fire, riot, storm, or natural or manmade disaster, California Penal Code §396 generally prohibits price gouging (i.e. price increases of more than 10%) for rental housing, in addition to other goods and services identified by statute, for 30 days after the emergency is declared. The price gouging restrictions may be extended for additional 30 day periods by state or local officials, boards or other governing bodies authorized to extend the restrictions.

Following the state of emergency declared in the wake of the North Bay fires, on October 18, 2017, Governor Jerry Brown extended the North Bay fire price gouging protections to remain in effect until April 18, 2018. The City of Santa Rosa also passed a price-gouging ordinance following the fires.

An article with information about California Penal Code §396 is available here.

Marijuana: In 2016, voters passed Proposition 64 legalizing recreational marijuana in California.  Under this new state law, codified in California Health and Safety Code §11362 et seq., people 21 years of age and older can possess, process, transport, purchase obtain or give away (without compensation) up to 28.5 grams of non-concentrated cannabis and up to 8 grams of concentrated cannabis as well as possess, plant, cultivate, harvest, dry or process up to 6 living plants. Retail sales and taxation for adult use of recreational marijuana are anticipated to begin in Jan of 2018.

Under the law, cannabis (including the living plants), may be stored within a person’s private residence, or on the private grounds of a private residence, in a locked space which is not visible from a public place by normal unaided vision. Private residences include single family residences as well as multi-family properties. Additional limitations apply as specified within the law.

While the full impact this new law will have on landlords and residential properties remains to be seen, marijuana use in residential properties will increase, which will create challenges for landlords. In response, landlords may choose to prohibit marijuana smoking and cultivation.  However, landlords who choose to prohibit marijuana smoking and cultivation should expect to continue to encounter issues with residents claiming they need to smoke or cultivate marijuana for medical purposes, which raises issues relative to disability-related accommodations. Proposition 64 did not change California’s medical marijuana laws.

An article with information about Prop.64 and marijuana law for California residential landlords is available here.

If you would like a smoke free addendum that also addresses marijuana, contact Jamie Sternberg at Jamie.Sternberg@kts-law.com or (619)744-0863.

Smoking: Smoking (whether marijuana, tobacco, or e-cigarettes) will result in more conflict between neighbors and greater property damage. Cities, counties and housing authorities have continued to implement ordinances and policies to restrict or discourage smoking in multifamily housing. New smoke-free laws are being added rapidly. A current list of cities, and more information about local smoke free laws, is available at:

http://center4tobaccopolicy.org/tobacco-policy/smokefree-multi-unit-housing.

On November 30, 2016, HUD issued Final Rule 5597-F-03, which will ban smoking in all Public Housing Developments throughout the country. Under this new rule, Public Housing Agencies will have 18 months to implement no-smoking policies at their properties, which include prohibiting smoking of tobacco products in all units, indoor common areas, and outdoor common areas within 25 feet of housing and/or administrative offices.

Properties that do not currently have no-smoking provisions in place may want to consider implementing them to their properties.  For information about going smoke free, contact Jamie Sternberg at Jamie.Sternberg@kts-law.com or (619) 744-0863.

Recycling: The last 5 years have seen increased legislative attention in the area of recycling. Since 2012, state law requires multifamily dwellings of five or more units arrange for recycling services. As of 2016, businesses must arrange for recycling services for organic waste (multi-family properties are only required to arrange recycling services for non-food organic waste, often referred to as “green waste”). This year, AB 1158 will require that a manufacturer of carpets used in commercial or residential buildings, develop and submit a plan to achieve a 24-percent recycling for post-consumer carpet by 2020.

In July 2017, the City of Los Angeles released a new franchise waste hauling system, known as RecycLA, meant to expand recycling opportunities to businesses while simultaneously reducing the number of trucks on the streets. Under this system, businesses (including multifamily properties) are only allowed to contract for waste services with one of the limited companies identified by the City of Los Angeles as an approved vendor. This has led to a substantial increase in trash related service charges, with many businesses reporting that the amount which they pay for trash removal charges has doubled or tripled under the new system.

 Rising Rents & Rent Control Initiatives: As renters continue to flood the California housing markets, many local governments continue to battle over the implementation of rent control ordinances in their cities. KTS anticipates that rent control will remain a major issue for landlords in the coming years.

Additionally, there is political movement towards repealing Costa-Hawkins. The Costa Hawkins Rental Act exempts certain types of properties from local rent control ordinances, namely single-family homes and newly constructed units. Costa Hawkins also provides for vacancy decontrol.

Proposition 65: Proposition 65 requires businesses with 10 or more employees to provide warnings when they cause significant exposure to specific chemicals.  Proposition 65 requires disclosures by employers who have 10 or more employees and who may expose their employees or the public to specific listed chemicals. There are more than 850 chemicals listed. Some of the environmental hazards are contained in items common in residential housing, such as building materials, cleaning materials, pool chemicals, car exhaust, barbecues, and tobacco smoke.

For some time, landlords have been uncertain about how to comply with their Proposition 65 obligations. “Clear and reasonable” warnings must be given.  Generally, in an effort to comply with Proposition 65, landlords have posted signage on their properties.  Some also have also included Proposition 65 warnings in their leases.

Effective August 30, 2018, a new regulation changes the safe harbor warnings. Use of the new warnings is not required, but using the safe harbor warnings is an effective way for businesses to protect themselves from Proposition 65 claims. Businesses that use the safe harbor warnings will be deemed to have provided “clear and reasonable” warnings.

The new warnings say the product “can expose you to” a Proposition 65 chemical rather than saying the product “contains” the chemical. They also include:

  • The name of at least one listed chemical that prompted the warning,
  • The Internet address for OEHHA’s new Proposition 65 warnings website, https://www.p65warnings.ca.gov, which includes additional information on the health effects of listed chemicals and ways to reduce or eliminate exposure to them,
  • A triangular yellow warning symbol on most warnings.
  • New “tailored” warnings that provide more specific information for certain kinds of exposures, products, and places. The specifically tailored warnings most likely to affect property owners are the “enclosed parking facilities” warning (available at

https://www.p65warnings.ca.gov/places/enclosed-parking-facilities) and “designated smoking areas” warning (available at https://www.p65warnings.ca.gov/places/designated-smoking-areas).

For more information about the new Proposition 65 warnings, see https://www.p65warnings.ca.gov/new-proposition-65-warnings.

Fair Housing Laws and Trends

SB 179   Gender Recognition Act – Third Nonbinary Gender: This bill creates a third nonbinary gender for California state identification documents. The law, parts of which will go into effect on September 1, 2018 and on January 1, 2019, provides for the following:
 

  • Ensures that intersex, transgender, and nonbinary people have state-issued identification documents (drivers’ licenses, birth certificates, identity cards, and gender change court orders) that provide full legal recognition of their accurate gender identity.
  • Requires the state to provide three equally recognized gender options on state-issued identification documents: female, male, and nonbinary. The State must also provide an efficient and fair process for individuals to amend their gender designation on state-issued identification documents and the identification documents must legally recognize a person’s gender identification.
  • Streamlines the legal process for one to change their gender marker. The law deletes the requirement that a person has undergone treatment to seek a court judgment to recognize their change in gender and would permit the individual to attest, under penalty of perjury, that their request is to conform their legal gender to their gender identity. The law also provides for modified procedures to obtain a court order for a change of name to conform to the person’s gender identity and a court judgment to recognize a change in the person’s gender. Lastly, a separate procedure is provided for those under 18 years of age to petition for a court judgment to recognize a change of gender to male, female, or nonbinary.

The new law also defines the terms “intersex”, “binary” and “transgender” and recognizes the frequent discrimination, harassment, and violence faced by these individuals in housing, education, employment, health care and law enforcement.

SB 384 Megan’s Law Disclosures: Effective July 1, 2021, SB 384 creates tiers of Megan’s Law registration (10 years, 20 years and life for adult offenders, and 5 years and 10 years for juvenile offenders), with procedures for termination at the end of the mandated minimum registration period.

DFEH Online Filing System: DFEH has launched a new online case filing system called the Cal Civil Rights System (CCRS). The CCRS allows complainants, respondents, and representatives who create accounts in the system to view the status of cases they are involved in, send notes to DFEH staff, and upload documents directly into the case file. Complainants will still be able to send complaints and inquiries to DFEH by mail, email, in person, or by phone.

Online Verifications for Assistive Animals: Many landlords have noted an increase in the use of online services providing service dog certificates, cards, vests and even verification documentation for persons with emotional support animals. Additionally, there has been a rise in online services that provide verification of a person’s disability or disability-related need. By filling out a form and paying a nominal fee, these online companies will verify a tenant’s disability need for an assistive animal. While some companies conduct a telephonic interview, these verifications are often provided without ever seeing the requestor in person. The accessibility and convenience of these types of websites may result in an increase in abuses of the disability accommodation laws relative to assistive animals. If you receive an online verification or other verification and are unsure as to how to proceed, contact our Fair Housing Practice Group at FairHousing@kts-law.com for assistance.

Disability Access

AB 1148 CASp Inspections and Disclosures for Commercial Property: Existing law requires commercial leases signed on or after January 1, 2017 to specify whether the premises have been inspected by a Certified Access Specialist (CASp).   AB 1148 amends Civil Code 1938 effective July 21, 2017, to define “commercial property” as “property that is offered for rent or lease to persons operating, or intending to operate, a place of public accommodation as defined in Title 24 of the California Code of Regulations, Part 2, Chapter 2, Section 202, or a facility to which the general public is invited”.  A place of public accommodation includes a place of lodging such as an inn, hotel or motel or other short term rentals with amenities similar to a hotel, motel or inn; a restaurant or bar; a movie theater, concert hall or the like; a bakery, grocery store, shopping center, or other sales or rental establishments; most varieties of service establishments such as laundromat, bank or professional office; a museum, library, or the like; most types of schools including a nursery; a day-care center or other social service center establishments; a gym or other place of exercise or recreation; a religious facility; an office building; and a public curb or sidewalk.

Mobile Home

SB 147 Mobilehome Park Additional Occupant: Under existing law, a homeowner who lives alone is permitted to share his or her mobilehome space with one guest at a time without being required to register the guest with management and without imposition of a fee. This bill amends Civil Code §798.34 to authorize the homeowner to designate only one person as his or her companion per calendar year.

This bill also allows a homeowner to share his or her mobilehome with a live-in caregiver. Management may not charge a fee for this additional person but may require written verification of the need for a live-in caregiver, if not readily apparent.

The law clarifies that the additional person(s) do not have tenancy rights and that a violation of the mobilehome park rules and regulations by the additional occupant is a violation by the homeowner.

AB 294 Mobilehome Parks Disclosure: This bill amends Civil Code §798.28 to require management of a mobilehome park to disclose, in writing, the name, business address, and business telephone number of the mobilehome park owner within 10 business days of a homeowner’s written request.

HOA

SB 407 Noncommercial Solicitation: HOAs cannot prohibit members or residents from meeting to discuss matters related to the common interest development, including HOA elections, legislation, election to public office, or the initiative, referendum, or recall process, and to use the HOAs common areas for these activities.

AB 634 HOA Restrictions on Solar Systems: Prohibits HOAs from establishing general policies prohibiting rooftop solar systems on a building, garage or carport assigned to the homeowner for the homeowner’s exclusive use.

AB 690 HOA Disclosures: When a property subject to a HOA is sold, certain HOA documents must be provided to the buyer.  AB 690 specifies that the billing form must advise the seller of the right (but not the obligation) to purchase the documents from the HOA. The annual budget report must individually identify the cost of each separate disclosure document.  HOA managers must disclose to the HOA (1) any business or company in which the HOA manager has any ownership interests, profit-sharing arrangements, or other monetary incentives provided to the management company, (2) whether they receive a referral fee or other benefit from a third party who provides disclosure documents. HOA managers must also provide a written acknowledgment that the disclosure documents are the property of the association and not the property of the manager.  The manager must facilitate delivery of the disclosure documents, if that responsibility is specified in the management contract.

Real Estate License Laws

SB 173 The BRE is now the DRE (Again): In 2012, the Department of Real Estate (DRE) became the Bureau of Real Estate (BRE). On January 1, 2018, the BRE will again become the DRE.

SB 764 Fidelity Insurance for Real Estate Trust Fund Accounts: In the past, real estate brokers who allowed unlicensed employees signing authority on their trust accounts were required to have a fidelity bond. SB 764 amends Business and Professions Code §10145 to now allow brokers to purchase fidelity insurance (or a fidelity bond), beginning January 1, 2018.

AB 1650 Real Estate Licensee Advertisements: Under existing law, “first point of contact” solicitation materials from real estate licensee must include the name and license number of the licensee and identify the responsible broker. Before January 1, 2018, there was an exception for advertisements in print or electronic media, or for newspapers and magazines. This exception has been eliminated. An exception remains for open house, “for sale”, “for rent or for lease” and directional signs, as long as no identifying licensee information is included (or only the broker’s name appears). Real estate licensees should include their name and license number, and the responsible broker, on all solicitation materials, including business cards, stationary, advertising flyers, advertisements on television, in print, or electronic media, signage, and other materials designed to “solicit the creation of a professional relationship between the licensee and a consumer.” An article with more information about real estate license number disclosure requirements is available here.

AB 1807 Real Estate License Publication of Disciplinary Action: Existing law allows the Bureau of Real Estate to include records of suspension and revocation of licensees on its license verification internet web page. This new law, passed in 2016, establishes a procedure that may be utilized as of January 1, 2018, in which, after 10 years from posting, a licensee may petition the Commissioner to remove notice of disciplinary action from the website when the petitioner can display that he or she has been rehabilitated and that the notice of discipline is no longer required in order to prevent a credible risk to members of the public. Petitions will be granted on a case-by-case basis.

AB 2330 Associate Real Estate Licensees: Beginning January 1, 2018, the Bureau of Real Estate (BRE) website will identify whether a licensee is an associate licensee and, if the associate licensee is a broker, will identify each responsible broker with whom the licensee is contractually associated. A real estate broker must immediately notify the commissioner in writing whenever a real estate broker acting as a salesperson enters the employ of or is terminated by the responsible real estate broker. This bill incorporates additional changes in Business and Professions Code §10083.2, proposed by AB 1807 (see AB 1807 above).

Kimball, Tirey & St. John LLP is a full service real estate law firm representing residential and commercial property owners and managers. This article is for general information purposes only. While KTS provides clients with information on legislative changes, our courtesy notifications are not meant to be exhaustive and do not take the place of legislative services or membership in trade associations. Our legal alerts are provided on selected topics and should not be relied upon as a complete report of all new changes of local, state, and federal laws affecting property owners and managers. Laws may have changed since this article was published. Before acting, be sure to receive legal advice from our office. For contact information, please visit our website: www.kts-law.com. For past Legal Alerts, Questions & Answers and Legal Articles, please consult the resource section of our website.

 

© 2019 Kimball, Tirey and St. John LLP