December 16, 2008
Common Interest Development Committee
Legislative Committee
This material is for discussion purposes only and has not been approved
by the Common Interest Development (CID) Committee, Legislative Committee,
Executive Committee or the Board of Directors
Issue:
Should C.A.R. sponsor legislation, in response to the Governor's veto in
2008 of the C.A.R.-sponsored AB 2259 (Mullin)*, that would provide that an
owner’s right to rent a separate interest in a CID can only be changed
pursuant to a written ballot approved by a super-majority vote of the CID's
home owners' association (HOA) membership?
* This bill proposed to provide that an individual owner's right to rent an
individual interest in a Common Interest Development (CID), that existed at
the time the separate interest in the CID was purchased, could not be
restricted during the term of his or her ownership absent written
permission of the owner.
Action:
Optional
Options:
1. Sponsor legislation in 2009 that addresses the concerns expressed by the
Governor in his veto message for AB 2259 by requiring a super-majority vote
of the HOA Membership to restrict the right to rent a separate interest in
a CID..
2. Create a support program for local REALTORS® fighting CID occupancy
restrictions.
3. Do nothing. Address CID rental occupancy restriction incidents on a
case-by-case basis (Status Quo).
4. Do nothing during this session of the Legislature and reassess this
issue for the 2011-2012 Session of the Legislature.
5. Other
Status/Summary
In 2007 the CID Committee Chair appointed a Working Group to examine the
issue of rental restrictions being imposed upon CID property owners and
bring a report to the CID Committee to consider for recommendation to the
Board of Directors. The Working Group reached consensus on the following
language:
That the California Association of REALTORS® sponsor legislation in
2008 providing that the rights of an owner in a common interest development
to own, occupy, lease or sell his or her ownership interest shall not be
changed throughout the duration of such ownership, and such rights of a
subsequent owner can only be affected by a 2/3 affirmative vote by the
members of the association pursuant to a written ballot.
History
This CID Committee recommendation was adopted by the C.A.R. Board of
Directors in October of 2007, modified to a more succinct goal of
protecting the basic property right of an owner of a separate interest in a
CID to preserve the ability to rent such an interest, if that right existed
at the time the CID unit was purchased. This Board of Directors' Action
Item became AB 2259 (Mullin) in the 2008 session of the Legislature. It was
passed unanimously by the Assembly Committees and on the Floor of the
Assembly. It also was passed unanimously by the Senate Committees and
received only one (1) "No" vote on the Floor of the Senate. Although AB
2259 was sent to the Governor with this overwhelming affirmative mandate by
the Legislature, he vetoed it for the following reasons:
This bill alters the basic tenets under which CIDs and HOAs are formed
and operated. While my support for property rights is unwavering, the CID
creates a unique community model that is unlike the standard single family
home in the traditional neighborhood. Property owners and residents that
purchase and live in a CID governed by an HOA have agreed to live under a
common set of rules and guidelines governed by a democratic process. It is
best, as current law allows, for the owner-members of the HOA to determine
what is best for their communities. (Emphasis added.)
It should be noted during discussion of options under this item that this
Governor has demonstrated a strong propensity for vetoing subsequent bills
sent to him on the same, or similar, topic to one he has previously vetoed,
notwithstanding the efforts of a bill sponsor to make the new bill
different from the earlier vetoed measure.
Discussion
The environment for legislation sent to the Governor following his
protracted "Budget Battle" with the Legislature was extremely hostile. He
was left little time to review more than 800 bills sent to him with less
than 10 days left for them to be considered. He acted on this limited
time-frame by vetoing more bills than any other Governor in California
history. On October 1 the Sacramento Bee summarized this "veto environment"
faced by Legislators who authored bills in 2008 and the interest groups who
sponsored them as follows:
"Bill terminator: Schwarzenegger sets veto record- Gov. Arnold
Schwarzenegger has set a modern-day record for vetoing legislation,
rejecting nearly 35 percent of bills that reached his desk in 2008. That
veto rate shattered the old record of just under 25 percent, set by former
Gov. Gray Davis. In all, Schwarzenegger signed 772 bills and vetoed 415
this year."
If Option #1 above is recommended, and C.A.R. sponsors legislation
in 2009, what form should it take?:
(1) That the California Association of REALTORS® (C.A.R.) sponsor
legislation in 2009 that establishes a super-majority vote requirement for
enactment by an HOA of any restrictions on renting a unit in a CID
administered by the HOA. Include a definition of "hardship" that must be
deemed to be an exception to any restriction on renting a separate interest
in a CID.
(2) That the California Association of REALTORS® (C.A.R.) sponsor
legislation in 2009 that requires an HOA in a CID that has rental
restrictions to have in its governance provisions specifically defined
"hardship exceptions" to any such restriction.
(3) Other
What is the Committee Recommendation?
