2017 Legislative Highlights
| Publication year | 2018 |
| Author | Robert M. McCormick and Michael J. Maurer |
Robert M. McCormick and Michael J. Maurer
Robert M. McCormick
Robert M. McCormick is Of Counsel at Downey Brand LLP and a member of the Real Estate Practice Group. He is also currently one of the Co-Chairs of the Commercial Leasing Subsection of the Real Property Law Section of the California Lawyers Association. His practice is focused on commercial real estate transactions, including office and retail leasing, acquisitions, real estate secured financing, and the formation of common interest developments.
Michael J. Maurer
Michael J. Maurer is an Associate at Best Best & Krieger LP and a member of the Municipal Law, Special District, and Litigation practice groups. He is a member of the Real Property Law Section of the California Lawyers Association. His practice is focused on land use, public works, and community development.
The 2017 California legislative session was one of the most productive in recent history. In 2017, over 2,500 bills were introduced, with the Legislature sending Governor Edmund Gerald "Jerry" Brown, Jr., 1,059 pieces of legislation. He signed 898 bills into law, vetoed 159 bills, and let two become law without signing them. In 2017, the Democratic party regained a two-thirds supermajority control of both houses, and this added measure of control was reflected in the passage of a massive transportation funding package in the spring, an extension of the cap and trade carbon reduction program in the summer, approval of an affordable housing package, and approval of a park and water bond at the end of the session. Fostering the development of "affordable housing" was a particularly popular topic for legislation in 2017 with over 130 housing-related bills being introduced in this session. The efforts of affordable housing advocates culminated in Governor Brown's signing of a 15-bill package which is further discussed below. See infra Section VIII. One thing we can count on in 2018 is that the housing package, while helpful, will not end the need for housing advocates to further address the affordable housing crisis in the coming year.
This legislative review selectively focuses on these and other new laws enacted in 2017 which the authors believe are the most significant for real property law practitioners. It does not, therefore, cover every real property-related law enacted in 2017, and in particular, it does not cover new laws that affect only a specific locality or that are primarily revenue raising or funding measures. This article also provides only summary references to the text of the bills selected for comment. Practitioners should always review the actual chaptered versions including specific references to the statutory provisions that have been modified, deleted, or added instead of relying solely on the summaries in this article. The State Legislature's website provides copies of these bills at http://leginfo.legislature.ca.gov, under Bill Information for Session Year: 2017-2018. Unless otherwise noted in this article, all bills covered in this review became operative on January 1, 2018.
SB 229 and AB 494 both amend section 65852.2 of the Government Code, relating to land use.
In 2016, the Legislature adopted a number of bills regulating accessory dwelling units (ADUs) and other secondary housing units as a way to expand the availability of affordable housing. At that time, two companion bills, AB 2299 (Bloom) and SB 1069 (Wieckowski) in particular, redefined the state law relating to accessory dwelling units. An ADU is an independent living quarter that is on the same parcel as a single-family residence, whether attached or detached, and includes living, sleeping, eating, cooking, and sanitation facilities. The two 2016 bills restricted local agencies' ability to deny accessory dwelling units, essentially requiring ministerial approval of certain ADUs and prohibiting certain parking requirements. The 2017 bills are the authors' efforts to clarify some of the provisions originally enacted in AB 2299 and SB 1069.
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This year, SB 229 (Wieckowski) resolves a key issue from last year's legislation: it clarifies a restriction on capacity and connection charges for water and sewer service to new ADUs. The existing law prohibited a "local agency" from considering an accessory dwelling unit to be a new residential unit for purposes of imposing water and sewer capacity or connection charges and from requiring a new or separate connection. A capacity charge is a fee that water and sewer providers charge to new development to compensate for the new demands on the system and the needs to expand service facilities, which can be tens of thousands of dollars per equivalent dwelling unit. The problem: "local agency" was defined to only include cities, counties, and cities and counties. This meant that special districts and water corporations continued to require new capacity and connection charges and could require new separate connections. The new legislation resolves this distinction by expressly stating that special districts and water corporations are subject to the same restrictions as cities and counties.
AB 494 (Bloom) makes subtler clarifications. It clarifies that an ADU may be rented separately from the primary residence, but may not be sold separately. It also provides that no setback is required if an existing garage is converted to a portion of an ADU; the prior version of the law implied that the setback exception only applied if the existing garage were converted fully to an ADU. Finally, where a garage or carport is converted to an ADU, the prior law allowed replacement parking in any configuration on the law, including in tandem parking. AB 494 defines tandem parking to mean two or more automobiles lined up behind each other.
B. AB 352 (Santiago)—State Housing Law: efficiency units.Amends section 17958.1 of the Health and Safety Code, relating to building standards.
Cities and counties may permit "efficiency units," which are units with a minimum floor area of 150 square feet and that may include a partial kitchen or bathroom. Of course, because local agencies can permit these units, they can also regulate them. AB 352 limits that regulatory authority, albeit in fairly limited circumstances. The bill prohibits local jurisdictions that allow efficiency units from limiting the number of efficiency units in two scenarios. First, they cannot limit the number within one-half mile of public transit or where there is a car-share vehicle within one block, and second, they cannot limit the number in a residential area within one mile of a University of California or California State University campus. AB 352 does not, however, restrict local jurisdictions' ability to establish and apply regulations related to density, setbacks, lot coverage, or height restrictions.
For fans of micro-units, the legislative history for AB 352 indicates that California is winning the race to allow the smallest living spaces in the nation. Originally, AB 352 had required 220 square feet of living space, which was reduced to 150 square feet in the final bill. This gives California a sizable lead over New York (300 square feet) and Dallas (400 square feet) and even goes beyond the minimum that had been allowed in San Francisco (200 square feet). The Senate's analysis of the bill also notes that efficiency units tend to lease at 20% to 30% less than conventional units, which could result in more affordable living options in areas where parking and traffic are less likely to be impacted.
SB 547 (Hill)—Professions and vocations: weights and measures.
Amends, among other provisions, sections 11302, 11320.5, 11321, 11323, 11324, 11345, 11345.2, 11345.6, and 11422 of the Business and Professions Code.
SB 547 is an omnibus bill that makes technical and substantive changes to boards and bureaus under the jurisdiction of the Department of Consumer Affairs. In particular, SB 547 defines multiple terms for the Bureau of Real Estate Appraisers and makes various substantive and technical changes to conform applicable existing California law to federal regulations for real estate appraisers.
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Amends section 7197 of the Business and Professions Code and amends section 1102.4 of the Civil Code, relating to home inspectors.
AB 1357 primarily addresses confusion regarding whether the existing unfair business practice restrictions for home inspectors apply to licensed roofing contractors. In connection with refining the limitations of those restrictions with respect to C-39 roofing contractors, AB 1357 also clarifies that a report or opinion, prepared by a C-39 roofing contractor who conducts a home inspection, can be utilized by a listing or selling agent to provide specified information that is required to be disclosed upon the transfer of residential real property by such agent. Provided ordinary care was exercised in obtaining and transmitting the report, the agent will be exempt from liability for any error, inaccuracy, or omission in the report's information.
B. SB 764 (Moorlach)—Real estate trust fund accounts: fidelity insurance.An act to amend section 10145 of the Business and Professions Code, relating to real estate brokers.
SB 764 expands prior legislation enacted in 2015, AB 607, which provided real estate brokers with greater flexibility in organizing their businesses. AB 607 allowed brokers to permit unlicensed employees to withdraw money from brokers' trust funds accounts if an employing broker has fidelity bond coverage equal to or greater than the maximum amount of trust funds to which the unlicensed employee has access at any one time.
SB 764 expands this flexibility by authorizing an unlicensed employee of the broker to withdraw funds if the...
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