New Real Estate Laws for 2018 – Part 2 of 3

Our legislators passed 41 bills affecting the real estate business last year. This is part 2 of our 3-part summary of those bills. For the full text of a law visit for California laws – or – for federal laws. A legislative bill may be referenced in more than one section.

suburbs-zoomHOUSING Creates a streamlined, ministerial approval process for infill projects with two or more residential units in localities that have failed to meet their regional housing needs assessment numbers. SB 35 codified as §§ 65400 and 65582.1 of the Government Code. Effective January 1, 2018.

HOUSING The law enhances the authority of the Department of Housing and Community Development (HCD) to determine if a locality is in compliance with its general plans for housing development. Assembly Bill 72 codified as Government Code § 65585. Effective January 1, 2018.

HOUSING Allows a city or county to create a housing sustainability district to complete upfront zoning and environmental review in order to receive incentive payments for development projects that are consistent with the district’s ordinance. Assembly Bill 73 codified as Government Code §§ 65582.1 and 66200 et. seq., and Public Resources Code § 21155.10 et. seq. Effective January 1, 2018.

HOUSING Changes the standard for a locality to disapprove development from “substantial evidence” which is a relatively low threshold to a “preponderance of the evidence.” Assembly Bill 678 and Senate Bill 167 codified as Government Code § 65589.5. Effective January 1, 2018.

HOUSING Requires a more detailed and broader housing element planning process with an eye toward removing obstacles that may hinder a locality from meeting its general housing plan. Assembly Bill 879 codified as Government Code §§ 6500, 65583 and 65700, and Health and Safety Code § 50456. Effective January 1, 2018.

HOUSING This law authorizes a local government to establish a Workforce Housing Opportunity Zone (WHOZ) which includes an upfront environmental review (EIR) pursuant to the California Environmental Quality Act (CEQA). The importance of this is that CEQA has reportedly been used as a barrier to housing projects even after those housing projects have been subject to lengthy public discussion and scrutiny, and have been approved by local governments. Senate Bill 540 codified as Government Code § 65620 et. seq. Effective January 1, 2018.

HOUSING RECORDING TAX A fee of $75 is imposed at the time of recording of every real estate instrument, paper or notice which is required or permitted to be recorded. The fee shall not exceed $225 per transaction. However, the fee does not burden purchase transactions or sales in general based on the two following exemptions. First, the fee is not imposed for any document recorded in connection with a transfer of real property that is a residential dwelling to an owner-occupant. Second, the fee is not imposed whenever a documentary transfer tax (DTT) must be paid which is whenever real property is sold for valuable consideration. The most common circumstances when the fee would be imposed are refinances or reconveyances. The funds generated by this fee are dedicated as follows: 20% of all funds are specifically dedicated to affordable owner-occupied workforce housing. Overall, the allocation is 70% of revenues will go to local governments for housing and 30% is distributed by the Department of Housing and Community Development and the California Housing Finance Agency. Senate Bill 2 codified as Government Code § 27388.1 and Health and Safety Code § 50470 et. seq. Effective January 1, 2018.

HOUSING The housing bills discussed above are part of a package of 15 housing bills that were signed into law. These laws are intended to streamline new housing developments, enforce the Housing Accountability Act, and provide a permanent source of funding for affordable housing projects. This package of laws also included the following:

  • SB 3 (Beall) authorizes $4 billion in general obligation bonds for affordable housing programs and a veteran’s homeownership program. SB 3 must be approved by voters next November.
  • SB 166 (Skinner) ensures that cities maintain an ongoing supply of housing construction sites for residents of various income levels.
  • AB 571 (E. Garcia) makes it easier to develop farmworker housing by easing qualifications for the Farmworker Housing Tax Credit.
  • AB 1397 (Low) makes changes to the definition of land suitable for residential development to increase the number of sites where new multifamily housing can be built.
  • AB 1505 (Bloom/Bradford/Chiu/Gloria) authorizes cities and counties to adopt an inclusionary ordinance for residential rental units in order to create affordable housing.
  • AB 1515 (Daly) allows housing projects to be afforded the protections of the Housing Accountability Act if the project is consistent with local planning rules despite local opposition.
  • AB 1521 (Bloom/Chiu) gives experienced housing organizations a first right of refusal to purchase affordable housing developments in order to keep the units affordable.

granny-flatHOUSING ACCESSORY DWELLING UNITS This is a follow-up law to the 2016 law, AB 2299, which among other things created a single standard for the Accessory Dwelling Unit (ADU) permit review process regardless of whether a local government has adopted an ordinance or not. This new law made clarifying changes to better reflect the intent of AB 2299 including: ADUs may be rented out; parking requirements cannot exceed one parking space per unit or per bedroom whichever is less and; and that “tandem parking” means when two or more cars are lined up behind one another. Assembly Bill 494 and Senate Bill 229 codified as Government Code § 65852.2. Effective January 1, 2018.

HOUSING Prohibits a city, county, or city and county from limiting the number of efficiency units in certain locations near public transit or university campuses. Assembly Bill 352 codified as Health and Safety Code § 17958.1. Effective January 1, 2018.

HOUSING Allows for a city or county to create an affordable housing authority which encompasses the entire city or county. Assembly Bill 1598 codified as Government Code § 62250 et seq. Effective January 1, 2018.

LandlordTenantLaw-1LANDLORD/TENANT DISCLOSURE OF FLOOD HAZARD Requires landlord or agent to disclose in writing in every residential lease or rental agreement information regarding flood hazards including the landlord’s “actual knowledge.” Assembly Bill 646 codified as Government Code § 8589.45. Effective July 1, 2018

LANDLORD/TENANT IMMIGRATION STATUS Expands protections against discrimination based upon immigration status and makes illegal the disclosure of information related to that status in the context of residential housing Expands the definition of immigration or citizenship status in the context of residential rental housing to include perception of such status or association with a person so perceived.

Prohibits any threat to disclose information relating to immigration status with the intent of harassing, intimidating or retaliating, or influencing a tenant to vacate, unless it is required to comply with federal law. If not, then a landlord can be liable for statutory damages of between 6 and 12 times the monthly rent in addition to other damages and penalties. -A new affirmative defense is created in a UD action if the landlord acted to recover possession because of immigration status. Nonetheless, the landlord is still entitled to request information or documentation necessary to determine or verify the financial qualifications of a prospective tenant, or to determine or verify the identity of a prospective tenant or prospective occupant. Practice pointer: Assuming it is the landlord’s standard practice to verify financial qualifications or identity of a prospective tenant, the landlord should never approve a tenant to take occupancy before verifying their financial qualifications or identity as this could give risk to an affirmative defense in an UD action. Additionally, the landlord may disclose information when complying with any legal obligation under federal law, including, but not limited to, any legal obligation under any federal government program that provides for rent limitations or rental assistance to a qualified tenant, or a subpoena, warrant, or other order issued by a court. Assembly Bills 291 and 299 codified as Civil Code §§ 1940.05, 1940.2, 1940.3, 1940.35, 1942.5, 3339.10; Code of Civil Procedure § 1161.4; and Business and Professions Code § 6103.7. Effective January 1, 2018.

PetsLANDLORD/TENANT PETS For new housing developments financed through certain Department of Housing and Community Development (HCD) programs, residents must be allowed to have one or more pets such as a dog or cat. Assembly Bill 1137 codified as Health and Safety Code § 50466. Effective January 1, 2018.

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