New California Laws

The California legislature passed a series of new laws which real estate brokers and agents should be aware of as the industry moves into the new year.  While a majority of the laws go into effect on January 1, 2021, some laws became active as early as September 2020. These laws are briefly addressed here for purposes of providing an overview of some of the important laws for the coming year. As we head towards the new year, it is important to assess your practices to determine if you are in compliance with the new laws. 

New California Laws

The California legislature passed a series of new laws which real estate brokers and agents should be aware of as the industry moves into the new year.  While a majority of the laws go into effect on January 1, 2021, some laws became active as early as September 2020. These laws are briefly addressed here for purposes of providing an overview of some of the important laws for the coming year. As we head towards the new year, it is important to assess your practices to determine if you are in compliance with the new laws. 

Assembly Bill 2257

Effective September 4, 2020

The ABC test and the Dynamex case do not apply in the determination of whether appraisers are independent contractors or employees, and instead the more lenient multi factor test under Borello will be employed as long as six criteria have been met.

The California Supreme Court case, Dynamex Operations W. Inc. v. Superior Court, and Assembly Bill 5, passed last year, implement a strict 3-part test, commonly known as the “ABC” test, to decide if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Exempt relationships, on the other hand, are governed by the more lenient multifactor test previously adopted in S. G. Borello & Sons, Inc. v. Department of Industrial Relations.  

This law states that appraisers are exempted from the ABC test in determining their status as independent contractors or employees.

Assembly Bill 3182

Effective January 1, 2021.

Requires common interest developments (CIDs) to allow at least 25% of owners to rent or lease out their units starting January 1, 2021, regardless of whether the HOA has formally amended their governing documents.

Under the new law, any provision in a governing document “that prohibits, has the effect of prohibiting, or unreasonably restricts” the rental of any of the separate interests, accessory dwelling units (“ADU”), or junior accessory dwelling units (“JADU”) in a community association is rendered unenforceable.

There is uncertainty over the impact of this language on minimum rental terms, but the law allows associations to prohibit short term and transient rentals (defined as rentals of 30 days or less) and also allows associations to place a rental cap of  25% of the separate interests (or greater) in the association.

Assembly Bill 685

Effective January 1, 2021.

Requires employers to notify employees that they may have been exposed to COVID-19 if they were on the premises of the worksite within the infectious period of a person who had COVID-19. The notice must describe information regarding COVID-19 related benefits to which the employee may be entitled.

The law states employers, who have notice of a potential COVID-19 exposure, must give written notice to permanent and subcontractor employees who were at the worksite at the same time as a potentially infected person. Employers have to provide the notice, by the usual method that is used to communicate employment-related information in their business—within one business day of learning of a possible COVID-19 exposure.

The notice should protect the employee’s private data. It should also inform the recipient of COVID-19 sick pay, leave benefits and the employer’s implemented or planned disinfection plan.

Assembly Bill 3088

Effective January 1, 2021.

Requires mortgage servicers to follow applicable federal guidance regarding COVID-19 related forbearance. Failing to do so, entitles the borrower to injunctive relief, damages, restitution and attorney fees as a separate legal right under California law.

This law temporarily prevents evictions due to hardships related to COVID-19.  More specifically, it prevents eviction of tenants enduring financial hardship due to COVID-19 through January 2021 and delays rental recovery by landlords until March 2021.  AB 3088 only applies to residential tenants and landlords; however, no part of this bill forgives or cancels any payment obligations of a tenant.

Assembly Bill 2463

Effective January 1, 2021.

Prevents foreclosure on a judgment lien placed on an individual's principal place of residence if the underlying judgment, in turn, was based on a consumer debt.

This law prevents foreclosure of an individual’s principal place of residence if the underlying judgment lien on the residence is based on an unsecured consumer debt. Supporters of Assembly Bill 2463 think it will have a positive effect because the method of collection by foreclosing on a judgment lien is expensive and is disruptive to communities, particularly when the underlying debt is for a small amount.