July 1, 2024 Law for California Security Deposits

Yellow bungalow

Beginning July 1, 2024, under the passage of AB12, there will be significant changes to the security deposit law for residential property as follows:

• Rental property owners will only be able to demand or receive one month’s rent in addition to the first month’s rent, for security deposit, whether the unit is furnished or unfurnished.
• However, small property owners will be able to demand or receive two month’s rent in addition to the first month’s rent before initial occupancy. 
• A small rental property owner is defined as one who:
• Owns no more than two residential rental properties that collectively include no more than four dwelling units offered for rent.
• Is a natural person or LLC in which all members are natural persons. A family trust may also qualify as a small landlord.
• Exception: If the prospective tenant is a service member, then the exception for small landlords does not apply, and the small property owner is limited to one month’s rent in addition to the first month’s rent.
• 
  
• Owners who currently hold a security deposit or those who demand or collect a security deposit in excess of one month’s rent prior to July 1, 2024, may retain the security deposit even though it is more than one month’s rent.

Unfortunately, one month's rent really provides very little protection to the property owner who may have to engage in eviction costs, and/or damage costs.  An uncontested eviction cost alone may be over $1200, see this site for an idea of costs, and that does not cover the cost of repair and cleanup. One attorney recommends that the property owner review an applicant's credit and look for a score of at least 700 FICO which ideally would indicate a more responsible tenant. Applicants' professions and history, though, are not always proof of good behavior.  (I once lived near a married couple in a high rise condo building who kept cats--more than allowed on the lease agreement--and allowed them to completely ruin a bedroom which was used as the litter box, as well do nothing about controlling fleas. The owner had to leave the unit vacant for months in order to restore hygiene and flooring.) So back to  the amount of deposit -- another good option is to own property in an LLC.

Please contact me if you would like additional information on tenant/property owner issues.

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

Are You a California Rental Property Owner? The Upcoming Proposition for the Statewide November Ballot

Update:  7-18-2024 - taken off 2024 ballot, will be addressed lin 2025.

Update 7-15-2024, see below.

In 1995, in response to a growing number of rent control issues, the Costa-Hawkins Rental Housing Act  was enacted by the California state legislature. Today, there is a third push to repeal it in November. Known as the Justice for Renters Act, it states: "“The state may not limit the right of any city, county, or city and county to maintain, enact or expand residential rent control.” As a rental property owner, you probably know there is an increasing overlay of multiple county and municipal laws governing rents and rights of tenants, and if as a property owner you are in such a jurisdiction, then you are bound by those laws. Long Beach is one such city, so is City of Los Angeles, in total about 25 local governments which have enacted rent controls.  If not in one of those jurisdictions, your property is under statewide rent control. This is important for knowing your current ability to raise rents.

House with For Rent Sign

The Costa-Hawkins Act made exempt single family homes, condos, townhomes and newly constructed  apartment buildings from the rent control ordinances, "and allows landlords to reset the rental rate on rent-controlled rental units where they become vacant or where the last rent-controlled tenant no longer permanently resides at the unit." The ability to reset the rents after, for instance, a long-term tenant who has been paying less than market value rents, is a property owner right under the Costa-Hawkins Act.  The above proposed Justice for Renters Act would eliminate the owner's ability to charge the market rate when a tenant vacates, or "vacancy decontrol".

But if this proposition should pass, property owners would no longer have the protections of the Costa-Hawkins Act but would instantly activate whatever local jurisdiction controls are already in place, many of which are more restrictive.  Should an owner not be able to bring rents to market value, but rather be subject to some much lower rent increase requirement, their entire property value would be devalued, along with less funds to maintain a property, rising property taxes, increasing property insurance, and increasing utilities, and which will also be charged fees at current market rates by contractors to do their work. While a simplified picture for tenants is that they may pay less money if they have rent control, they may also be living in a less enhanced, less attractive, non-turnkey property over time, with repair issues.  Such strict rent control could affect the smaller properties in the rental market as those owners exit due to financial constraints, thus causing lower availability of housing for renters and lower quality.   UPDATE 7-15-2024:  Now known as Proposition 33 on 2024 ballot:

"Proposition 33, rent control: A vote in favor of this measure would expand rent control in California. If the proposition passes, it would get rid of a nearly three decade-old law, known as the Costa-Hawkins Rental Housing Act, that bans rent control on single-family homes finished after February 1, 1995.

"Cities and counties would have more power to limit rent increases for incoming and existing tenants, making it harder for landlords to hike up prices. The measure would also insert new language into California law that prohibits the state from limiting how cities and counties expand or maintain rent control. It’s backed by the Aids Healthcare Foundation and is the third time since 2018 that voters will decide on the issue: Similar ballot initiatives, in 2018 and 2020, failed by 19 and 20 points, respectively." https://www.sacbee.com/news/politics-government/capitol-alert/article289594036.html

If passed, this proposed Act could only be repealed by another ballot initiative, it does not address the statewide housing shortage, or address homelessness.  It's important to not lose the Costa-Hawkins Act, it still maintains property rights for owners, which are being eroded with each passing year.

Go to Californians for Responsible Housing for more information on the effect of repealing the Costa-Hawkins Act. 

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

Understanding HOA Fees in a Homeowner Association

Houses facing street

When considering a move to a gated community in Long Beach, understanding Homeowners Association (HOA) fees is crucial. These fees are a significant factor in the overall cost of living and play a vital role in maintaining the quality and amenities of the community. They are also factored into a buyer's loan qualification before getting approval. Some HOAs are composed of multi-family style attached units (i.e., Stoneybrook), while others are made up of detached single family residences (i.e., Del Lago).

Multi unit building with balconies

Here’s a comprehensive guide to help you understand HOA fees in Long Beach gated communities.

What are HOA Fees?

HOA fees are monthly or annual payments made by homeowners to the Homeowners Association, which is responsible for managing and maintaining the community common  areas. These fees fund various services, amenities, and community upkeep. Not all the factors listed below will necessarily apply to the association under consideration, there may not be a guard gate, interior roads or a pool. In Long Beach, there are however numerous association which do include many features on the list. It's important to know all the features you may be paying for.

What Do HOA Fees Cover?

HOA fees in gated communities often cover a wide range of services and amenities, including:

1. Security Services

   • 24/7 security personnel
   • Gated entrance management
   • Surveillance cameras and security systems

2. Maintenance and Repairs

   • Landscaping and lawn care
   • Street and sidewalk maintenance
   • Common area repairs (e.g., clubhouses, pools)

3. Utilities

   • Water and sewage for common areas
   • Lighting for streets and common areas

4. Amenities

   • Upkeep of recreational facilities (pools, gyms, tennis courts)
   • Clubhouse maintenance
   • Community events and activities

5. Insurance

   • Insurance for common areas and community structures

6. Reserve Fund Contributions

   • Savings for future large-scale repairs and replacements (e.g., roofing, road resurfacing)

Factors Influencing HOA Fees

HOA fees can vary significantly based on several factors:

1. Community Size and Type

   • Larger communities with more homes often have lower fees due to shared costs.
   • Luxury communities with high-end amenities may have higher fees.

2. Amenities and Services Offered

   • Communities with extensive amenities (pools, fitness centers, golf courses) typically have higher fees.
   • Enhanced security measures can also increase fees.

3. Maintenance Requirements

   • Older communities may require more frequent repairs, leading to higher fees.
   • Communities with extensive landscaping or high-maintenance amenities may have higher costs.

4. Management Style

   • Professionally managed HOAs may have higher fees due to management company costs.
   • Self-managed communities might have lower fees but require active homeowner participation, and the knowledge to self-manage.
     

How Are HOA Fees Determined?

HOA fees are typically determined by the community’s budget, which is developed by the HOA board. This budget outlines all anticipated expenses for the year, including maintenance, amenities, and reserve fund contributions. Homeowners may have the opportunity to review and comment on the budget before fees are finalized.

Why Do HOA Fees Vary in Long Beach?

In Long Beach, the variation in HOA fees can be attributed to:

• Location: Communities closer to the coast or with scenic or ocean views usually have higher fees due to premium real estate values.
• Community Size: Smaller, exclusive communities may have higher fees to cover fixed costs among fewer homeowners.
• Amenity Quality: Communities offering high-end amenities or newer facilities often have higher fees to maintain these features.

Pros and Cons of HOA Fees

Pros

• Well-Maintained Community: Regular maintenance and repairs keep the community attractive and functional.
• Access to Amenities: HOA fees provide access to various amenities without additional out-of-pocket costs.
• Property Value: Well-maintained communities often see higher property values.

Cons

• Cost: HOA fees are an additional expense on top of mortgage payments and property taxes.
• Restrictions: HOAs may impose rules and regulations that limit how you use or modify your property.
• Financial Management: Poor financial management by the HOA can lead to unexpected fee increases or special assessments. Recent insurance increases in the market also have an impact.
  

Tips for Managing HOA Fees

1. Budget Accordingly: Factor in HOA fees when calculating your overall housing budget.
2. Understand the Rules: Familiarize yourself with the HOA’s rules and regulations to avoid fines.
3. Attend Meetings: Participate in HOA meetings to stay informed about budget decisions and fee changes.
4. Review Financial Statements: Regularly review the HOA’s financial statements to ensure funds are managed properly.

Conclusion

Understanding HOA fees is essential for anyone considering moving to a gated community. These fees ensure that the community remains secure, well-maintained, and equipped with desirable amenities. By understanding what HOA fees cover, how they are determined, and how to manage them, you can make an informed decision and enjoy a hassle-free living experience in your new community. When in escrow, make sure that all documents submitted to you as the buyer are reviewed before you investigation period expires.

For more personalized advice or to explore gated communities in Long Beach, feel free to contact me. With my experience in HOAs, I can provide detailed insights and help you find the perfect home.

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996