This article offers an overview of the new laws impacting real estate that were passed and signed into law in 2021.
New laws taking effect in 2022
California’s senate and assembly members have a wide range of legislative agendas that impact firsttuesday readers. In 2021, these included the state’s housing shortage, homelessness crisis, the backlog of rental debt accrued during the pandemic and inequality in real estate. Dozens of new laws were passed in response to these issues and the biggest are examined here.
Editor’s note — Are you interested in becoming more involved in the legislative process as it impacts your career in real estate? Follow our Legislative Gossip page throughout the year to stay informed on real estate related bills. Reach out to your local legislators with concerns and attend local city council meetings for the most impact.
New real estate and appraiser education requirements
Senate Bill (SB) 263 requires real estate licensees and license applicants to complete implicit bias training during their licensing courses and 45-hour renewal courses. These new requirements go into effect beginning in January 2023 and will require real estate licensees and licensee applicants to learn:
- the impact of implicit, explicit and systemic biases on consumers;
- the historical and social impacts of those biases; and
- actionable steps licensees can take to recognize and address their own biases.
Editor’s note — firsttuesday will begin offering the required implicit bias training course later in 2022. Want to get a head start on fair housing and implicit bias topics? Download firsttuesday’s Fair Housing continuing education e-book, which covers many of the topics outlined in SB 263.
For real estate appraisers, Assembly Bill (AB) 948 requires cultural competency and anti-bias training. This new law also makes it unlawful for appraisers to discriminate in their appraisals or in making available their services to members of protected groups.
Further, the Bureau of Real Estate Appraisers (BREA) will be required to include a check box within their existing complaint form, asking the complainant whether they believe the appraisal is below market value. Complainants will have the option to include their demographic information on the form. The BREA will need to study this demographic information and provide a report of their findings to the state legislature before July 1, 2024.
Addressing inequalities in housing
Along with the new anti-bias requirements for real estate licensees and appraisers, legislatures are cracking down on inequalities in real estate in other ways.
AB 491 requires a mixed-income residential building constructed beginning January 1, 2022 to maintain common areas and entrances accessible by all types of units, incorporating all units rather than separating or isolating low-income units to a single floor or wing of the building.
Further, AB 1466 requires a title insurance company involved in a transfer of real property to identify whether any of the documents contain unlawfully restrictive covenants beginning July 1, 2022. When unlawful covenants are identified, the title insurance company will need to record a modification document with the county recorder. Before July 1, 2022, only the property owner may record a modification.
Loosened zoning eases the housing shortage
California’s housing shortage is infamous for causing extremely low inventory, escalating bidding wars and pushing home prices and rents beyond the capabilities of most household incomes. As a result, low- and even moderate-income households have been forced to delay homeownership, move in with roommates or lose their housing altogether. This dynamic has made many look to other states for a more reasonable cost of living, helping cause California’s first ever population decline in 2019.
To add to our state’s limited housing inventory, California’s legislature passed several new laws in 2021, to take effect in 2022. These include:
- SB 10, which authorizes local governments to zone any parcel for up to 10 units of residential density when the parcel is located in a transit-rich area, a jobs-rich area or an urban infill site;
- AB 345, which requires each local agency to allow an accessory dwelling unit (ADU)to be sold or conveyed separately from the primary residence to a qualified buyer;
- AB 571, which prohibits a local government from imposing affordable housing impact fees from being imposed on a housing development’s affordable units;
- SB 591, which permits the covenants, conditions and restrictions (CC&Rs) of a senior citizen housing development to establish intergenerational housing that includes seniors aged 55+ along with caregivers who do not meet the age minimum and transitional age youths, as long as at least 80% of the occupied dwelling units in the development are occupied by seniors;
- AB 1584, which makes any CC&R that affects the transfer or sale of an interest in real estate that effectively prohibits or unreasonably restricts the construction or use of an ADU on a lot zoned for SFR use void and unenforceable. It also requires a common interest development (CID) to amend any governing document that includes a covenant restricting ADUs in this manner by July 1, 2022;
- SB 9, which sets forth what a local agency can and cannot require in approving the construction of two residential units on a single lot, or a single family residence and an ADU. This new law also requires a proposed housing development containing two residential units within a single-family residential zone to be considered without discretionary review or hearing when the proposed housing development meets certain requirements, including that the proposed housing development does not require demolition or alteration of low- or moderate-income housing; and
- SB 60, which raises the maximum fines for violating an ordinance relating to a residential short-term rental which poses a threat to health or safety from $100 to $1,500 for a first violation, from $200 to $3,000 for a second violation of the same ordinance within one year, and from $500 to $5,000 for each additional violation of the same ordinance within one year of the first violation.
Still, loosening zoning restrictions and allowing greater housing density remains contentious. According to a recent firsttuesday poll, 51% of readers believe there ought to be more permissive zoning which allows for higher density construction. However, the remaining 49% advocated for more restrictive zoning which limits the number of units and height allowed for new residential construction.
This razor thin outcome in the polling results parallels the highly contentious nature of zoning more broadly. Yet, without shifting how local governments approve new housing, California’s housing crisis will only worsen.
Addressing COVID-19 rental debt
SB 91 used federal funds to cover 80% of the back-rent accumulated by low-income tenants from April 1, 2020 through March 31, 2021. In return, the landlord is required to forgive the remaining 20% of rent owed.
AB 832 enacted the Rental Housing Recovery Act, which built on previous legislation to keep tenants housed during the recovery from the 2020 recession and COVID-19 pandemic. This Act extended a temporary moratorium on the eviction of residential tenants for the nonpayment of rent that became delinquent between March 2020 and September 30, 2021 due to the tenant’s COVID-19 related financial distress.
Further, landlords may sue their tenants for unpaid rent which became due between March 1, 2020, and September 30, 2021 in small claims court starting March 1, 2022.
Prior to March 1, 2022, courts will only hear an eviction case due to nonpayment of rent when the landlord has attempted to obtain rental assistance, and:
- the application is denied; or
- after 20 days have passed, there is no sign the tenant will cooperate. [Calif. Code of Civil Procedure §1179.11(a)]
Read more about how to access rent relief and what eviction forms to use here: How and when residential evictions will resume in California.
Moratorium Watch 2021
Plans to fight the homelessness crisis
California’s homelessness crisis continued to reach new levels in 2021. However, the California Comeback Plan was launched in May 2021 to provide:
- immediate housing to 65,000 people;
- long-term housing stability to 300,000 people;
- 46,000 new housing units; and
- money to clean up public spaces that typically serve as homeless encampments.
While these plans are crucial to address the immediate homelessness crisis, a longer-term fix will be found in providing enough housing to accommodate low- and moderate-income renters and homebuyers. Recently, some of these new laws have included AB 978 and AB 1482, which:
- cap annual rent increases at 5% plus the rate of inflation for much of California multi-unit residential properties and mobilehomes; and
- require “just cause” to evict tenants in place for 12 months or more.
2020’s Tenant Protection Act Part II: Rent caps