Common Interest Development - Renting Out A Condo

Many condo owners or townhouse owners are interested in renting out their unit. AB 3182 requires common interest developments to allow at least 25% of their units to be rented out. It also excludes junior accessory dwelling units (JADUs) from the cap. A JADU is typically an area within the home which has been allocated to house a separate individual or family and may contain a mini-kitchen which uses plug-in appliances. View Accessory Dwelling Units (ADUs & JADUs).

Assembly Bill 3182 is codified as Civil Code Sections 4740 and 4741, and Government Code Sections 65852.2 became effective Jan 1, 2021.

AB 3182 Sets Limits On Restrictions Common Interest Developments May Impose On Offering Units For Rent

1. A common interest development (CID) may limit the total number of rentals to 25% or higher.
2. ADUs and junior accessory dwelling units (JADUs) must not be counted toward this cap.
3. The cap must not end the right of an individual owner who was renting their unit out prior to Jan 1, 2021
4. A CID that violates the provisions of this law is liable for a civil penalty of up to $1,000.

Section 4740 of the Civil Code is amended to read:

• (a) An owner of a separate interest in a common interest development shall not be subject to a provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests in that common interest development to a renter, lessee, or tenant unless that governing document, or amendment thereto, was effective prior to the date the owner acquired title to their separate interest.
• (b) For purposes of this section, the right to rent or lease the separate interest of an owner shall not be deemed to have terminated if the transfer by the owner of all or part of the separate interest meets at least one of the following conditions:
  • (1) Pursuant to Section 62 or 480.3 of the Revenue and Taxation Code, the transfer is exempt, for purposes of reassessment by the county tax assessor.
  • (2) Pursuant to subdivision (b) of, solely with respect to probate transfers, or subdivision (e), (f), or (g) of, Section 1102.2, the transfer is exempt from the requirements to prepare and deliver a Real Estate Transfer Disclosure Statement, as set forth in Section 1102.6.
• (c) Prior to renting or leasing their separate interest as provided by this section, an owner shall provide the association verification of the date the owner acquired title to the separate interest and the name and contact information of the prospective tenant or lessee or the prospective tenant’s or lessee’s representative.
• (d) Nothing in this section shall be deemed to revise, alter, or otherwise affect the voting process by which a common interest development adopts or amends its governing documents.
  

Section 4741 of the Civil Code is amended to read:

• (a) An owner of a separate interest in a common interest development shall not be subject to a provision in a governing document or an amendment to a governing document that prohibits, has the effect of prohibiting, or unreasonably restricts the rental or leasing of any of the separate interests, accessory dwelling units, or junior accessory dwelling units in that common interest development to a renter, lessee, or tenant.
• (b) A common interest development shall not adopt or enforce a provision in a governing document or amendment to a governing document that restricts the rental or lease of separate interests within a common interest to less than 25 percent of the separate interests. Nothing in this subdivision prohibits a common interest development from adopting or enforcing a provision authorizing a higher percentage of separate interests to be rented or leased.
• (c) This section does not prohibit a common interest development from adopting and enforcing a provision in a governing document that prohibits transient or short-term rental of a separate property interest for a period of 30 days or less.
• (d) For purposes of this section, an accessory dwelling unit or junior accessory dwelling unit shall not be construed as a separate interest.
• (e) For purposes of this section, a separate interest shall not be counted as occupied by a renter if the separate interest, or the accessory dwelling unit or junior accessory dwelling unit of the separate interest, is occupied by the owner.
• (f) A common interest development shall comply with the prohibition on rental restrictions specified in this section on and after January 1, 2021, regardless of whether the common interest development has revised their governing documents to comply with this section. However, a common interest development shall amend their governing documents to conform to the requirements of this section no later than December 31, 2021.
• (g) A common interest development that willfully violates this section shall be liable to the applicant or other party for actual damages, and shall pay a civil penalty to the applicant or other party in an amount not to exceed one thousand dollars ($1,000).
• (h) In accordance with Section 4740, this section does not change the right of an owner of a separate interest who acquired title to their separate interest before the effective date of this section to rent or lease their property.

Section 65852.2 of the Government Code:

Section 6582.2 regulates accessory dwelling units (ADUs) and junior accessor dwelling units (JADUs). The code is lengthy. View a summary covering updates of Section 6582.2 for Accessory Dwelling Units (ADUs & JADUs).