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AB 3182: Forced Amendments

Sep 23, 2020 | Legislative Updates

By Nathan R. McGuire, Esq.
CAI-CLAC Chair
ADAMS|STIRLING PLC

You’ve been hearing a lot from us about Assembly Bill 3182 (Ting). That’s because it is a bad bill and will be harmful to community associations and their members throughout California if passed, for numerous reasons. One of the consequences of drastically changing a bill’s language at the last possible minute, is there’s simply no time for those impacted to provide input and express the need for changes. That’s exactly what happened here.

Some of the reasons the bill is bad include that it incentivizes rentals at the expense of homeownership, will actually drive prices up by encouraging investors to come into the picture in larger numbers, and places unreasonable one-size restraints on communities. However, this article will focus on a different reason the bill is bad you may not have heard much about yet – the requirement that associations “amend their governing documents to conform to the requirements of this section no later than December 31, 2021.”

Forced Amendments

Those of us who live in and work with community associations understand how monumental this task would be. Consider the following:

  • A massive number of community associations currently have prohibitions contained in their governing documents which do not currently conform to the requirements of the bill, namely that they have a rental cap lower than 25% or minimum rental period of more than 30 days.
  • The vast majority of nonconforming requirements are contained in association CC&Rs, as opposed to bylaws or operating rules.
  • Amending CC&Rs requires a member vote, typically a majority or more of all members.
  • Amending CC&Rs is expensive, can take a long time, and is often near-impossible as a result of member apathy.
  • The law is not clear on whether an amendment to a different governing document (i.e., operating rules) would suffice.
  • The legislature has a long history of enacting legislation as part of the Davis-Stirling Act which renders provisions of governing documents void or unenforceable, but has never once required community associations to seek member approval to amend governing documents to comply with the law.

AB 3182 is unprecedented in its disregard for the practical realities of community association governance. A history lesson of instances where the legislature has enacted provisions which would conflict with a community association’s governing documents, but has not required community associations to obtain a member vote to change the governing documents, is illuminating. It drives home how unusual AB 3182 is.

A History Lesson – Housing Discrimination

First, recall SB 222 from last session, which adds “veteran or military status” to the list of those specified characteristics under which a person is protected from housing discrimination. As stated in the bill’s digest:

“Existing law requires a county recorder who provides a copy of a declaration, governing document, or deed to any person to place a cover page or stamp on the first page of the previously recorded document stating that if the document contains any restriction based on certain characteristics, that the restriction violates state and federal fair housing laws and is void, and may be removed.

This bill would require the specified language in the cover page or stamp to include the characteristic of veteran or military status. By requiring the county recorder to change the cover page or stamp, this bill would impose a state-mandated local program.”

Pursuant to Government Code Section 12956.1(b)(1), “A county recorder, title insurance company, escrow company, real estate broker, real estate agent, or association that provides a copy of a declaration, governing document, or deed to any person shall place a cover page or stamp on the first page of the previously recorded document or documents stating, in at least 14-point boldface type, the following:

‘If this document contains any restriction based on race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, disability, veteran or military status, genetic information, national origin, source of income as defined in subdivision (p) of Section 12955, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to Section 12956.2 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status.’” (Emphasis Added).

Pursuant to Civil Code Section 4225, an association is required to amend CC&Rs which violate Section 12955 (prohibiting housing discrimination), but the board may do so “without approval of the members” –

“(b) Notwithstanding any other provision of law or provision of the governing documents, the board, without approval of the members, shall amend any declaration or other governing document that includes a restrictive covenant prohibited by this section to delete the restrictive covenant, and shall restate the declaration or other governing document without the restrictive covenant but with no other change to the declaration or governing document.”

In spite of the critical public policy here, the legislature understood that requiring an association to amend CC&Rs is not feasible unless it could be done without a member vote. Civil Code Section 4225 (previously located at Civil Code Section 1352.5), took effect January 1, 2000, via SB 1148.

A History Lesson – The Davis-Stirling Act

Over the course of a number of years, the legislature has determined to override a community association’s CC&Rs a number of times. In each case, with the exception of housing discrimination, they have NEVER required an association to amend CC&Rs. Examples include:

  • Civil Code 4705 – right to display the US Flag – nothing specific about the CC&Rs. It simply permits a member to display the flag under certain conditions.
  • Civil Code 4706 – display of religious items on entry doors – “no governing document shall limit or prohibit.” No amendments to conform were mandated for existing documents.
  • Civil Code 4710 – display of noncommercial signs – “The governing documents may not prohibit posting or displaying.” No amendments to conform were mandated for existing documents.
  • Civil Code 4715 – limitations on pet restrictions – “No governing documents shall prohibit…” Applies only to governing documents amended or created after the law passed.
  • Civil Code 4720 – requirements for fire-retardant roofing materials – “No association may require…”
  • Civil Code 4725 – TV antennas and satellite dishes – “Any covenant, condition, or restriction contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale of, or any interest in, a common interest development that effectively prohibits or restricts the installation or use… is void and unenforceable as to its application.”
  • Civil Code 4730 – real estate marketing – “Any provision of a governing document that arbitrarily or unreasonably restricts an owner’s ability to market the owner’s interest in a common interest development is void.”
  • Civil Code 4735 – low water-use plants and turf – “Notwithstanding any other law, a provision of the governing documents or architectural or landscaping guidelines or policies shall be void and unenforceable if…”
  • Civil Code 4736 – pressure washing – “A provision of the governing documents shall be void and unenforceable if it requires…”
  • Civil Code 4740 – rental restrictions – “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…”
  • Civil Code 4745 – EV charging stations – “Any covenant, restriction, or condition contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale of any interest in a common interest development, and any provision of a governing document, as defined in Section 4150, that either effectively prohibits or unreasonably restricts the installation or use…”
  • Civil Code 4746 – solar panels on common area roofs – requires an association to handle applications in a specific way.
  • Civil Code 4750 – personal agriculture – “Any provision of a governing document, as defined in Section 4150, shall be void and unenforceable if it effectively prohibits or unreasonably restricts…”
  • Civil Code 4750 – accessory dwelling units – “Any covenant, restriction, or condition contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale of any interest in a planned development, and any provision of a governing document, that either effectively prohibits or unreasonably restricts … is void and unenforceable.”
  • Civil Code 4753 – clotheslines – “Any provision of a governing document, as defined in Section 4150, shall be void and unenforceable if it effectively prohibits or unreasonably restricts an owner’s ability to…”

In spite of some very important public policies represented above, the legislature has NOT ONCE required an association to obtain a member vote to amend existing CC&Rs to conform to the law. Why? Because this is a herculean task, impossible as a practical matter in many cases. And of course, expensive. The Davis-Stirling Act is often amended several times every year. If the legislature required association to amend their governing documents every time the law changed, the entire community association housing scheme would be at risk.

Last year’s SB 323 regarding elections was very different from AB 3182, because it merely required amendments to election rules, which the board can do without a member vote.

Conclusion

The forced amendment requirement of AB 3182 is only ONE of many reasons the bill will be bad for community associations throughout California. Please stand with us in opposition to AB 3182. There is still time to express your concern to Governor Newsom and urge him to veto the bill.

 

Nathan R. McGuire is a partner with Adams Stirling, PLC, in charge of the firm’s Northern California offices. He is ending a 2 year stint as Chair of CAI-CLAC and has served in various capacities on CAI-CLAC for the last 10 years. You can reach Nate at nmcguire@adamsstirling.com or (800) 464-2817.