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AB-721 Covenants and restrictions: affordable housing.(2021-2022)

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Date Published: 02/16/2021 09:00 PM
AB721:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 721


Introduced by Assembly Member Bloom

February 16, 2021


An act to add Section 714.6 to the Civil Code, relating to real property.


LEGISLATIVE COUNSEL'S DIGEST


AB 721, as introduced, Bloom. Covenants and restrictions: affordable housing.
Existing law permits a person who holds an ownership interest of record in property that the person believes is the subject of an unlawfully restrictive covenant based on, among other things, source of income, to record a Restrictive Covenant Modification, which is to include a copy of the original document with the illegal language stricken. Before recording the modification document, existing law requires the county recorder to submit the modification document and the original document to the county counsel who is required to determine whether the original document contains an unlawful restriction.
This bill would make any private recorded covenants, conditions, restrictions, or private limits on the use of private or publicly owned land contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale that restricts the number or size of the residences that may be built on the property, or that restricts the number of persons who may reside on the property unenforceable against the owner of an affordable housing development, as defined.
The bill would authorize the owner of an affordable housing development to record a restrictive covenant affordable housing modification document that modifies or removes any existing restrictive covenants, to the extent necessary to allow an affordable housing development to proceed. Before recording the restrictive covenant affordable housing modification document, the bill would require the county recorder to submit the modification document and the original document to the county counsel, and would require the county counsel to determine whether the original document contains an unlawful restriction in violation of these provisions.
The bill would specify that its provisions do not apply to restrictive covenants that relate to purely aesthetic objective design standards, provide for fees or assessments for the maintenance of common areas, or provide for limits on the amount of rent that may be charged to tenants.
This bill would declare that ensuring access to affordable and supportive housing and the production of additional affordable and supportive housing is a matter of statewide concern, not a municipal affair, and that this bill shall therefore apply statewide to all cities and counties, including charter cities, and to all conditions, covenants, restrictions, or private limits on the use of land, whether recorded previous to the effective date of this bill or recorded at any time thereafter.
By imposing additional duties on counties with regard to the recordation of covenants, the bill would impose a state-mandated program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) The lack of available and safe affordable and supportive housing equitably distributed throughout California presents a crisis for Californians that threatens the health of California citizens and their communities.
(b) The Legislature has previously taken action to expand access to affordable and supportive housing.
(c) Private covenants burdening real estate have historically been used to perpetuate discrimination and racial segregation in housing throughout the state and have hampered the effectiveness of efforts to expand the availability of affordable and supportive housing.
(d) The safety and welfare of the general public is promoted by eliminating the ability of private covenants, conditions, restrictions, or private limits on the use of land to prevent the construction or maintenance of additional affordable and supportive housing particularly in areas that have historically excluded this type of housing.
(e) Ensuring access to affordable and supportive housing and the production of additional affordable and supportive housing is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. It is the intent of the Legislature that this act therefore apply statewide to all cities and counties, including charter cities, and to all conditions, covenants, restrictions, or private limits on the use of land, whether recorded previous to the effective date of this act or recorded at any time thereafter.

SEC. 2.

 Section 714.6 is added to the Civil Code, to read:

714.6.
 (a) Private recorded covenants, conditions, restrictions, or private limits on the use of private or publicly owned land contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale of any interest in real property that restrict the number or size of the residences that may be built on the property, or that restrict the number of persons who may reside on the property, shall not be enforceable against the owner of an affordable housing development.
(b) (1) The owner of an affordable housing development shall be entitled, but not required, to record a restrictive covenant affordable housing modification document that modifies or removes any existing restrictive covenant that restricts the number or size of the residences that may be built on the property, or that restricts the number of persons that may reside on the property, to the extent necessary to allow the affordable housing development to proceed under the existing declaration of restrictive covenants.
(2) Recordation of an affordable housing modification document shall not be required in order to give effect to subdivision (a).
(3) (A) The owner shall submit to the county recorder any documents necessary to establish that the property qualifies as an affordable housing development under this section prior to, or simultaneously with, the submission of the modification document for recordation.
(B) Before recording the modification document, the county recorder shall, within two business days of receipt, submit both the original restrictive covenant document and the modification document to the county counsel for review. The county counsel shall determine whether the original restrictive covenant document restricts the property in a manner prohibited by subdivision (a), and whether the restrictions may no longer be enforced against the owner of the affordable housing development and that the owner may record a modification document pursuant to this section.
(C) The county counsel shall return the documents and inform the county recorder of its determination within 15 days of submission to the county counsel. If the county counsel is unable to make a determination, they shall specify the documentation that is needed in order to make the determination.
(D) The county recorder shall not record the modification document if the county counsel finds that the original restrictive covenant document does not contain a restriction prohibited by this section.
(E) A modification document shall be indexed in the same manner as the original restrictive covenant document being modified. It shall contain a recording reference to the original restrictive covenant document, in the form of a book and page or instrument number, and date of the recording. The effective date of the terms and conditions of the modification document shall be the same as the effective date of the original restrictive covenant document.
(4) The county recorder shall develop and make available to the public a restrictive covenant affordable housing modification form.
(5) If the holder of an ownership interest of record in property causes to be recorded a modification document pursuant to this section that modifies or removes a restrictive covenant that is not authorized by this section, the county recorder shall not incur liability for recording the document. The liability that may result from the unauthorized recordation shall be the sole responsibility of the holder of the ownership interest of record who caused the unauthorized recordation.
(6) If the property is utilized in any manner that violates the terms of the affordability restrictions required by this section or violates the agreement with the city or county to commit to record an affordability restriction, any restrictive covenant invalidated by this section shall become and remain enforceable and any recorded modification document shall become null and void until the owner complies with the applicable affordability restrictions.
(c) (1) Subject to paragraph (2), this section shall only apply to restrictive covenants that restrict the number or size of the residences that may be built on a property or that restrict the number of persons who may reside on a property. This section does not apply to any other covenant, including, but not limited to, covenants that:
(A) Relate to purely aesthetic objective design standards, as long as the objective design standards are not applied in a manner that renders the affordable housing development infeasible.
(B) Provide for fees or assessments for the maintenance of common areas.
(C) Provide for limits on the amount of rent that may be charged to tenants.
(2) This subdivision shall only apply to restrictive covenants, fees, and assessments that have, since the effective date of the restrictive covenant, been consistently enforced or assessed prior to the construction of the affordable housing development.
(d) In any suit filed to enforce the rights provided in this section or defend against a suit filed against it, a prevailing owner of an affordable housing development, and any successors or assigns, shall be entitled to recover reasonable attorney’s fees as part of any judgment.
(e) Nothing herein shall be interpreted to modify, weaken, or invalidate existing laws protecting affordable and fair housing and prohibiting unlawful discrimination in the provision of housing, including, but not limited to, prohibitions on discrimination in, or resulting from, the enforcement of restrictive covenants.
(f) (1) Provided that the restrictions are otherwise compliant with all applicable laws, this section does not invalidate local building codes or other rules regulating either of the following:
(A) The number of persons who may reside in a dwelling.
(B) The size of a dwelling.
(2) This section does not authorize any development that is not otherwise consistent with the local general plan, zoning ordinances, and any applicable specific plan that apply to the affordable housing development, including any requirements regarding the number of residential units, the size of residential units, and any other zoning restriction relevant to the affordable housing development.
(3)  This section does not prevent an affordable housing development from receiving any bonus or incentive pursuant to any statute listed in Section 65582.1 of the Government Code or any related local ordinance.
(g) For purposes of this section:
(1) “Affordable housing development” means a development that meets one of the following requirements:
(A) The property is subject to a recorded affordability restriction requiring 100 percent of the units be made available at affordable rent or at affordable housing cost to, and be occupied by, lower income households for at least 55 years.
(B) The property is owned or controlled by an entity or individual that has signed a binding agreement with the city or county in which the property is located to commit to record an affordability restriction that complies with subparagraph (A).
(2) “Affordable housing cost” shall have the same meaning as defined in Section 50052.5 of the Health and Safety Code.
(3) “Affordable rent” shall have the same meaning as defined in Section 50053 of the Health and Safety Code.
(4) “Lower income households” shall have the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(5) “Modification document” means a restrictive covenant affordable housing modification document described in paragraph (1) of subdivision (b).
(6) “Restrictive covenant” means any private recorded covenant, condition, restriction, or private limit on the use of private or publicly owned land contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale of any interest that restricts the number or size of the residences that may be built on the property or that restricts the number of persons who may reside on the property, as described in subdivision (a).

SEC. 3.

 If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.