Ensuring HOA board members are educated and informed about state and local regulations is an important aspect of the value we provide to our clients. Understanding new and upcoming law changes helps homeowners association boards see the whole picture when making decisions and ensures they act within the association’s legal rights.
In addition to new board orientation sessions, treasurer training, and Community Associations Institute (CAI) summits, we also release informative webinars and other video content with guidance from our management experts and legal counsel to help associations ascertain the impact of new laws on HOA management.
The events of 2020 presented homeowners associations with unprecedented logistical and social challenges, some of which are reflected in new legislation. Here are some of the key laws affecting associations set to go into effect in the coming year:
Rental Restrictions (AB 3182)
The new law voids provisions in an association’s governing documents that prohibit or “unreasonably restrict” renting. However, there are two key exceptions: an HOA can disallow short-term rentals of 30 days or less and can limit the total number of rentals in their community to 25% (but not less). Associations have until December 31, 2021 to change their governing documents to reflect this law. Failure to abide or update governing documents can result in a fine of $1,000.
The Debt Collection Licensing Act (SB 908)
Debt collectors working on behalf of an association must now be licensed under the Debt Collection Licensing Act. All individuals representing the association’s interests during the process of delinquent assessment collections – the HOA management company, association’s legal counsel, or third-party collections vendors, etc. – must now be licensed by the state. It is important to ensure any party who participates in your association’s collection process is properly licensed. Fees for your collection partners may raise as they offset the cost of licensing their teams.
The COVID-19 Tenant Relief Act of 2020 (AB 3088)
This immediate, emergency relief measure temporarily prevents evictions due to COVID-19-related financial hardship through January 2021. The bill also postpones landlords’ ability to recover rents until March 2021. The bill does not forgive or cancel payment obligations; it simply prevents evictions and postpones rent recovery through the first quarter of 2021.
This law applies only to residential tenants who can prove, in writing, any of the following as directly related to COVID-19: loss of income, higher out-of-pocket expenses related to performing essential work or impacted health, responsibilities to care for children, elderly, disabled, or sick family member that resulted in income limitations, or other coronavirus-related issues that reduced income or increased expenses.
This issue may affect homeowners in an association who are unable to pay assessments if their tenants have temporarily paused rent payments.
Exterior Elevated Elements in Condominium Associations (SB 326)
Condo associations with three or more units are now required to have a licensed structural engineer inspect the building’s exterior elevated elements (balconies, elevated walkways, railings, stairways, etc.) every nine years. Associations must conduct their first inspection by January 1, 2025.
Work with your HOA management company to begin the engineer RFP process and restructure your association’s reserve allocation to address the additional expense of inspection and possible required upgrades.
Debtor Homestead Exemption (AB 1885)
The homestead exemption provision in AB 1885 protects owners’ equity in their homes by preventing creditors from collecting up to a certain dollar amount upon sale after foreclosure. In California, nonjudicial (lender) foreclosures may receive a homestead exemption of $75,000, $100,000, or $175,000, depending on certain owner circumstances. This exemption extends protections for delinquent homeowners whose properties are subject to foreclosure from their HOA.
Contact your legal counsel to ascertain the level of impact this new law will have on your community’s foreclosure/assessment collections process.
The time to begin is now
As 2021 dawns, we strongly recommend reviewing your association’s governing documents with your community association manager and HOA’s legal counsel. Discuss the pros and cons of these new laws and start taking action to ensure that when these legislative updates are in full effect, your association will be prepared to comply.