New Blanket Rental Restriction Ban in CA Senate Under Consideration

Stop electing these douche canoe politicians.

I think the OP is absolutely correct about the implications of this bill, particularly the loss of financing support and the loss of affordable home ownership. ** adjusts tinfoil hat to a jaunty angle ** I smell big money interests behind this. Many condo properties were snapped up by investors during the Great Recession, and I expect the fallout from the pandemic to be worse.

Some years ago we had a PM who had returned to Ohio from the west coast. Based on things she told us, i got the impression that the courts have been favoring the investor class at the expense of individual home owners for some time. This is one more data point supporting that conclusion.

If I were in California, I'd be looking to organize a lobbying effort, although this may be the worst time possible to get anybody's attention. It would help if you could show how this change could lead to a bad economic outcome for the state.

* Would the loss of affordable housing make it more difficult to attract a young, educated workforce, thus make the state less attractive to businesses?

* I would think that such a change would lead to a more mobile society vs. one that puts down roots for a while - does this have any negative impacts, both economic and societal?

* What do the lenders think about the potential loss of revenue from mortgage lending? Or do they believe that the increase in lending to investors would make up for it? Would this change in the nature of their loan portolios increase the risk for the banks? (With the current ban on evictions due to COVID, I predict that many small investors will go bankrupt --> more loss of tax revenue as well as foreclosures on rental properties.)

I'll give this some more thought...

I am pretty sure this translates to lenders, who have an application for a loan from a HOA board or condo board, not liking to see a lot of renters. Some studies show a link between declining property values and the percentage of rentals. (Other studies say the data is inconclusive.)

Provide a citation for this, for condominiums in particular, and it might be believable.

Readers here can judge your credibility for themselves. I for one am not persuaded that 95% of California condominiums have zero rental restrictions. Furthermore, the absence of explicit wording about "rentals," "renting," "rent" and the like in the CC&Rs does not preclude a board from enacting lawful rules restricting renting.

My credentials and experience speak for themselves. You might make a good research assistant, but for your lack of experience that's the best I can come up with.

California has a set of rules for both condos and planned unit developments. Within these groups they are called homeowner, community and maintenance associations. We use the Davis-Stirling Act within Civil Code and Corporation Codes for all types of associations.

I have twice asked if you have ever lived in an association, been a board member or even managed a property or two. Without that, what credibility is one supposed to derive from a non response except that you would make a damn good research assistant.

Currently FHA certification requires a condo community to be at least 50% owner-occupied. During the Great Recession, this requirement was bumped to 75% (I think). That meant that a number of condo communities that had previously been FHA approved no longer were, which reduced the pool of possible buyers at a time when the real estate market had already slowed painfully.

FHA typically has other requirements that can limit the types of rentals that would be allowed in eligible communities. It also limits the number of units that may be owned by a single entity, although we all know the games that can be played to get around this.

Other lenders also have requirements about the maximum number of rental properties in a community for which they will approve a mortgage loan. In addition, many lenders do not continue to service their loans - they sell them to Fannie Mae, for example, which may also have its own requirements for loans they will purchase.

I have my doubts about the possibility of amending bylaws to require owner-occupants to serve on the boards. I question the legality of something that imposes a requirement on a subset of owners, never mind the fundamental unfairness of it. And many condo communities already have problems filling their director positions - this could only make it worse, and it could increase the numbers of communities that go into receivership as a result. (I wonder how the investors will like them cookies when the cost of receivership means they're no longer cash flow positive.)

I also wonder if California will see condo owners bail if this law passes. Owners would be left with the worst of both worlds: the obligations and legal liabilities of home ownership along with the disadvantages of living in a rental community. (I'd be outta there toot sweet.) And I wonder how condo developers will feel if their market starts to dry up as potential non-investors say "nope".

The unintended consequences of this bill bear further investigating.

Thanks, Augustin for the good summary. I hope to read it soon but not this weekend. I'm happy we in CA still will be able to prevent short term rentals.

The eff. 1/20 SB 323 makes any owner absentee or not eligible to serve on the Board. So I guesss this proper all wants to overturn that?

Our condo building's CC&Rs do restrict renting out a portion of our units, for transient purposes, and requires landlord to submit complete leases to the HOA. The firm of Community Association lawyers that wrote our CC&Rs wrote them for at least a dozen more in my urban center. So, at least i nurban condos, there are CC&R limitations on rentals.

A rent Clai post also asked about renting to a housemate and his CC&r's section the topic was like ours.

It's not big money interests, per se. It's the grassroots California YIMBY org (Yes In My Back Yard). We have a housing crisis here and the YIMBY position is to force development of housing by any means and at any cost. This was a bill written by them, submitted to an agreeable state assemblyman who submitted this in a package of housing reform bills. With COVID, all of those housing reform bills were put on hold, except for this one.

IMO, we need more housing. I'm not a NIMBY (Not in My Back Yard) by any means. But my contention is that this is the wrong approach to get to more housing. The effects are nuanced but substantial and likely cannot be fully realized until 2, 3, maybe 4 years down the road.

What's concerning is that legislators that are in both state houses and on the housing committees are not just pro-housing, they're pro-renters and anti-homeowners.

I'd like to get a lobbying or grassroots effort going, but there's only (approx.) 14 days until the next hearing.

The most worrying and confusing part is that the only org opposed to the bill (https://caiclac.com/) made suggestions on how to amend this bill for the worse, not better. They suggested making this bill completely retroactive, whereas the original bill only called for it to be retroactive to Jan. 1, 2012. The Assemblymember made those changes with the understanding that CAI-CALC would drop their opposition to the bill.

I would appreciate any additional thoughts you have on this!

Sorry folks, new to the board. Didn't realize my replies don't nest under other replies.

07/11/2020 10:11 PM was for CathyA3
07/11/2020 10:18 PM was for AugustinD

Let,

Where do you come up with these blanket statements?

Recommendation: Facebook page, Twitter feed, etc. stat. Do all the stuff you need to do to advertise your page and get the word out.

Get the word out about the negative consequences of this bill. It may actually be a good time to reach people on line, since many will be stuck at home avoiding covid.

Also a good time to let your elected officials know what's on your mind. Flood their offices with calls and letters.

Write op-eds for your local papers (does anyone read these any more?).

Call the local radio and TV stations to see if they'd like to do a story about this, and find a thoughtful, well-spoken individual to be your official media contact.

Your message: this bill will do the opposite of what the sponsors claim it will.

And don't give up. Even if the bill passes, it's still possible to amend or even repeal it before too much damage is done.

Good news, yes? It sounds like people who understand how all of this stuff works are keeping tabs on the bill and legislators are listening.

Did anyone actually read this, top to bottom. The groups you're praising, won't go for some of these changes.