June, 2009

Common Interest Development Committee
Legislative Committee

(This material is for discussion purposes only and has not been approved by the Common Interest Development Committee, Legislative Committee, Executive Committee or the Board of Directors)

Issue:
Should C.A.R. sponsor legislation in 2010, 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 his or her unit in a CID can only be limited by a super-majority vote of the home owners' association (HOA) membership pursuant to a written ballot?

* Note: AB 2259 said that the unit owner's right to rent the unit, that existed at the time the unit 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

1) Sponsor legislation in 2010 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 2010 session of the Legislature and reassess this issue for the 2011-2012 Session of the Legislature when a new Administration is in place.

5) Other

Status/Summary
In January of 2009, the CID Committee Chair appointed a Working Group to examine the issue of rental restrictions being imposed upon CID property owners in light of the Governor's veto of AB 2259. The CID Committee requested the Working Group to consider for recommendation to the Board of Directors whether an effort to legislate around the Governor's veto was worthy of pursuing by C.A.R. The Working Group conducted two conference call meetings between the January and June meetings in 2009 and unanimously approved the following recommendation:

That the California Association of REALTORS® sponsor legislation in 2010 providing that a governing document shall not be adopted or amended to prohibit the rental or lease of a separate interest in a common interest development unless the provision that imposes the prohibition was enacted, pursuant to a written ballot, by a vote of the owners of separate interests in the common interest development (CID) and is approved by not less than 2/3 of such owners.

History
A 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
If Option #1 above is recommended to the Board of Directors by the CID Committee, and C.A.R. sponsors legislation in 2010, what form does the CID Committee recommend the legislation should take?

(1) That the California Association of REALTORS® (C.A.R.) sponsor legislation in 2010 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.

(2) That the California Association of REALTORS® (C.A.R.) sponsor legislation in 2010 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 in the legislation a "hardship exception" to any restriction on the right to rent.

(3) Other

What is the Committee Recommendation?