2019 Legislative Highlights
| Publication year | 2020 |
| Author | Robert M. McCormick and Michael J. Maurer |
Robert M. McCormick and Michael J. Maurer
Robert M. McCormick is Of Counsel at Downey Brand LLP in Sacramento and a member of its Corporate, Real Estate, Securities and Tax Group. He is also currently an Advisor to 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 is a partner at Best Best Krieger's Los Angeles office and a member of its municipal law practice group. He serves as City Attorney to the cities of San Jacinto and La Habra Heights. His practice focuses on land use, infrastructure, and community economic development.*
In 2019, the California Legislature sent 1,042 bills to Governor Gavin Newsom and he signed 870 of them into law. Given the frequent headlines concerning the lack of affordable housing, the expanding homeless population, and the epidemic of catastrophic wildfires, many of the newly enacted laws reflect the Legislature's and Governor's increased attention to these issues. Their focus resulted in the Housing Crisis Act, a statewide rent control law, and numerous other tenant protective measures, plus a series of laws to enhance wildfire mitigation, preparedness, and response efforts, and to increase insurance protections. Despite the Legislature's heightened focus on these issues in 2019, further action on these issues will likely occur in 2020. This expectation is particularly applicable with respect to affordable housing.
This legislative review selectively focuses on laws enacted in 2019 that the authors believe are the most significant for real property law practitioners. It does not, therefore, cover every real-property-related law enacted in 2019. In particular, this review 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, rather than rely solely on the summaries in this article. The Legislature's website provides copies of these bills at http://leginfo.legislature.ca.gov under "Bill Information" for session year 2019-2020. Unless otherwise noted, all laws discussed became operative on January 1, 2020.
Amends Business and Professions Code section 7196.1. Adds Business and Professions Code section 7195.7.
AB 1018 clarifies the difference between the role of the appraiser and that of the home inspector. Specifically, AB 1018 prohibits a home inspector from giving an opinion of a property's value, and specifies that the law regulating home inspectors does not exempt a home inspector from laws regulating real estate appraisers. On the other hand, AB 1018 prohibits a licensed real estate appraiser performing an appraisal from acting as a home inspector performing a home inspection, except as required to comply with the laws or regulations governing appraisal practice standards.
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Amends Government Code sections 65852.2 and 65852.22. Adds and repeals Health and Safety Code section 17980.12.
Do single family zones still exist in California? One of the more controversial 2019 bills was Senate Bill 50 (Wiener). It would have permitted quadplexes in all residential zones, effectively eliminating single family zoning in most of the state. SB 50 remained in committee, becoming a two-year bill, and eventually failed to pass the Senate in 2020. (See brief discussion at the end of this article.) However, a series of three bills—AB 68, AB 881, and SB 13—significantly further a similar objective by expanding a right to develop "accessory dwelling units" on existing residential properties.
An accessory dwelling unit ("ADU") is a smaller residence on a property, such as a converted garage or back house. Under these bills, property owners may develop three separate residences on a single-family lot. Subject only to ministerial review, owners may construct either a detached or converted ADU on the property, plus a "Junior ADU" (or "JADU")—a 500-square-foot separate living quarter within the footprint of a single-family residence. And, in addition to single family lots, ADUs may now be constructed on lots with multi-family residences.
A local jurisdiction's ability to prohibit ADUs is very limited. Cities and counties:
- Cannot require that ADUs be owner-occupied;
- Cannot require that ADUs only be on lots with a minimum lot size;
- Cannot require that ADUs in side and rear yards have more than a 4-foot setback;
- Cannot require that parking be replaced when a garage is converted to an ADU;
- Cannot require parking for an ADU located within a half mile of public transit, including any bus stop;
- Cannot require correction of non-conforming structures converted into ADUs; and
- Cannot require impact fees and connection and capacity charges for certain ADUs.
The bills also provide a streamlined review process with a shortened time for local agency approval. Local agencies may still prohibit ADUs where, after consulting with utility providers, adequate water and sewer services do not exist to serve the increased density. Local agencies may also impose restrictions if ADUs will create public safety concerns or negatively impact traffic flow.
The goal of these bills, of course, is to expand the state's housing stock by increasing density in single family neighborhoods. The bill restricts local agency review to expedite the construction of new ADUs, likely to the chagrin of neighboring homeowners who do not want additional residences only four feet from their property lines.
B. Assembly Bill 670 (Friedman): Common Interest Developments; Accessory Dwelling UnitsAdds Civil Code section 4751.
California law previously restricted cities and counties from prohibiting ADUs, but before AB 670, it did not limit such restrictions in common interest developments. Thus, where a condition or covenant provided authority, the relevant homeowners' association could prevent owners from constructing ADUs. AB 670 closes this gap.
The bill voids any covenant, restriction, or condition contained in (1) a deed, contract, security instrument, or other instrument transferring or selling an interest in a planned development, or (2) a planned development's governing document, that prohibits or unreasonably restricts the construction or use of an ADU or JADU, provided the ADU or JADU satisfies Government Code sections 65852.2 and 65858.22, respectively. Essentially, the limited ability of homeowners' associations to regulate ADUs and JADUs mirrors that of local governments.
Given that the Legislature has prioritized ADUs to address the housing crisis, it seemed apparent that the Legislature would close this gap for homeowners' associations. More surprising, and the reason homeowners' associations opposed the bill, is that its provisions are retroactive. The bill voids terms governing existing common interest developments.
C. Assembly Bill 587 (Friedman): Accessory Dwelling Units; Sale or Separate ConveyanceAdds Government Code section 65852.26.
ADUs may be rented separately from a primary residence, but they generally cannot be separately sold or conveyed. AB 587 creates a limited exception to this rule. It permits the sale or transfer of an ADU if a "qualified non-profit corporation" developed the property—including the primary residence—and sold it to a "qualified buyer." This means that a charitable organization exempt from paying property taxes developed the property and sold it to a person or family of low or moderate income.
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The ADU may only be separately conveyed if subject to a tenancy-in-common agreement with certain restrictions, including that the ADU and the primary residence may only be offered for sale to low-income families. If a utility provider serving the main residence requests it, the ADU must have a separate water, sewer, or electrical connection.
The primary purpose of this bill is to enable affordable housing organizations, such as Habitat for Humanity, to create ownership units for low income families. Unlike the other ADU legislation, AB 587 maintains local control. A separate conveyance is only allowed if a local enabling ordinance authorizes it. Thus, it seems like a win-win. Without removing a local jurisdiction's authority, the bill provides a tool to expand low-income ownership opportunities for communities that benefit from partnerships with non-profit housing providers.
Amends Labor Code section 3351. Adds Labor Code section 2750.3. Amends Unemployment Insurance Code sections 606.5 and 621.
The Legislature enacted AB 5 in response to Dynamex Operations West, Inc. v. Superior Court of Los Angeles1 (Dynamex). Dynamex established a presumption that a worker performing services for a hirer is an employee for purposes of claims for wages and benefits arising under the Industrial Welfare Commission's wage orders. Dynamex imposed a three-part test, commonly known as the "ABC" test, to establish that a worker is, instead, an independent contractor for those purposes.
AB 5 reflects the Legislature's intent to codify Dynamex and clarify its application. Specifically, under the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission's wage orders, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor, unless the hiring entity demonstrates that (1) the person performs the...
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