Rental property laws in California are famous for being tenant-friendly, strictly enforced, and always changing. In 2021, it’s no different. There are a number of new laws that have been passed and implemented, and all of this legislative activity is against the backdrop of the COVID-19 pandemic, which has been with us for over a year now.
RentSimpli is a full-service San Diego property management company specializing in single family homes, townhouses, condos, mobile homes, small commercial buildings and small apartments. We work hard to stay up to date on all the laws and requirements that San Diego rental property owners must comply with.
These are the four most important and newest laws to know for 2021.
Eviction Moratoriums and SB 91
Both landlords and tenants have been suffering through the economic turmoil caused by the pandemic. Last year, the Tenant Relief Act (AB 3088) was enacted to help tenants who could not pay their rent due to job loss, reduced hours, and tougher economic conditions. The cornerstone of that bill was an eviction moratorium that prohibited California landlords from evicting their tenants for nonpayment of rent.
With the passage of SB 91, the statewide eviction moratorium is extended for tenants who have been financially impacted by the pandemic through to June 30, 2021. The law does not forgive any of the overdue rent that your tenants may not be paying. However, those months of unpaid rent cannot be used as a purpose for eviction. This will be a fact landlords need to grapple with even after the moratorium is lifted. You can try to collect those overdue amounts, but you cannot evict because of the unpaid rent.
California expects to receive $2.6 billion in federal rental assistance, which will fund the State Rental Assistance Program. This program helps California tenants, particularly low-income tenants, who are most at risk for housing instability because of overdue rent. Applications for assistance will open this month, and either tenants or property owners can apply and qualify for the funds.
This has the potential to ease the burden of landlords who have not been able to collect rent from tenants who are suffering. If you agree to waive 20 percent of the unpaid rent, you’ll be eligible to receive government assistance. When you qualify for this funding, you can be eligible for 80 percent of rent reimbursements from the government for any rent that was owed and unpaid between April 1, 2020 and March 31, 2021.
Tax Liability and Proposition 19
California passed Proposition 19 in November, and this law has two specific tax implications.
First, inherited homes that are not being used as primary residences must be reassessed at market value when ownership transfers. This covers any secondary homes, including rental property. Owners were previously protected from this reassessment under the Parent-Child Exclusion rule under Proposition 58 in 1986. However, the new requirements went into effect in February of this year.
Second, people 55 years of age or older with eligible disabilities can transfer their property tax assessment up to three times, instead of just once. Eligible homeowners can transfer those assessments to anywhere within the state. The benefit here is that beginning on April 1, 2021, eligible homeowners will include people who were victims of wildfires or other natural disasters.
New HOA Legislation – AB 3182
HOAs, legally referred to as common interest developments, are now required to permit at least 25 percent of their homeowners to rent out their properties within the association. This may require the HOA to update their governing documents, but the law went into effect on January 1, 2021, whether those documents were updated or not.
Short-term rentals of fewer than 30 days can still be banned by the community. However, any unreasonable restrictions on rental homes or accessory dwelling units (think guest house) are not permitted. No one has litigated what constitutes as “unreasonable” just yet, so we’ll be watching closely to see how this is enforced.
Financing Foreclosures – SB 1079
It’s been pretty easy for a large corporation to buy up foreclosed properties at low costs. The SB 1079 legislation hopes to help individual homebuyers compete. Owner-occupants, tenants, local governments, and nonprofit housing associations will have a 45-day window to purchase residential property through foreclosure if they can make a bid on the property that matches or exceeds the latest and highest bid that’s already been made on a single-family home at a foreclosure auction.
Additionally, this law prohibits buyers from bundling multiple homes and then selling all of them to a single buyer. When those homes are sold individually, people who expect to make that property a primary residence have a better chance of purchasing it.
These are the most important legislative issues that need your attention as the year moves forward. If you have any questions about how they apply to you specifically, we welcome you to contact us at RentSimpli.
RentSimpli is a full-service property management company serving landlords, investors and property owners in San Diego & Riverside Counties, including La Mesa, El Cajon, Chula Vista, Santee, Rancho Bernardo, Escondido, Fallbrook, Temecula, and Murrieta.