On September 28,2020, Governor Newsom signed AB 3182, which went into effect January 1,2021 amending Civil Code § 4740 and adding new Civil Code § 4741. It means that nearly three million of the state's eleven million homeowner association housing units are now available for investors to buy and convert to rentals. It also guarantees that rules 'enforcement problems, deferred maintenance, and lower property values will undoubtedly follow. The new law does the following:

• Makes unenforceable rental caps more restrictive than 25%;
• Allows 30-day minimum lease terms;
• Mandates that all associations amend their governing documents; and
• Imposes a penalty of $1 ,000 for each violation on associations that do not strictly comply.

The legislation also includes a requirement that all building departments push through ADU approvals since the governor and state legislature wants everyone to convert their garages into rentals as quickly as possible. Most importantly, the law specifically deleted ADUs from the 25% cap which means HOA rentals can climb well above the 25% ceiling.

Associations with non-compliant restrictions should talk to legal counsel about amending their governing documents.