California HOAs Can No Longer Restrict Rentals

California has passed a bill (SB 150) now disallows HOA's from changing the rules mid-game on a landlord by restricting rentals within the HOA. This bill took effect January 1st.

An association which previously has no restrictions on rentals, that attempts to amend the HOA to then restrict the amount or percentage of rentals is now prohibited from doing so. Such a change in bylaws will have no impact on existing owners unless the existing owners specifically provide their authorization. The existing owner by default will get grandfathered into the pre-restriction rules.

It however does not protect the next owner of a home in the same association. If a home is sold, the new HOA rules related to rentals will apply to the new owner and the previous owner must disclose the fact of the restrictions.

I have mixed feeling about this. My first impression (as a Landlord) makes me think this is great! If I bought a property in an association as an investment property, and later the association changed the rules which prevented me from renting my investment property that could be catestrophic to my cash flow. On the other hand, I prefer smaller government and less government interference in my affairs. An association is a mini-government in itself, and I generally trend towards wanting decisions to be at the smallest and most local form of government possible. In this particular topic, I think property rights might trump my preference for local government though.

Thoughts?

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Nathan is a member of Rentec Direct who provides property management software, tenant ach payment processing, and tenant screening for property managers and landlords nationwide.