[00:00:00] Speaker A: It's time for California Law Updates simplified.
The show for California property managers, owners and HOA board members bringing clarity to California ordinances and compliance requirements.
You know, usually when we talk about a thriller on the show, we're talking about, I don't know, corporate espionage, maybe a supply chain collapse, something with some accidents. You're not usually talking about legislative updates.
[00:00:28] Speaker B: No. Legislative update is like the phrase you use to clear a room at a party is the cure for insomnia.
[00:00:34] Speaker A: Exactly. But today is different. We are digging into the landscape facing California landlords in 2026. And honestly, the suspense is real.
[00:00:43] Speaker B: It is. We are talking about a regulatory environment where one single piece of paperwork, maybe a wrong checkbox, can cost you millions of dollars in a class action suit. That's high stakes drama by any definition.
[00:00:55] Speaker A: So our mission for this deep dive is to act as a kind of survival guide. We're going to distill this, this huge stack of new laws, these so called zombie bills, and some really terrifying litigation trends into something you can actually use.
[00:01:10] Speaker B: Absolutely. And whether you own a huge apartment complex or, you know, a single duplex you inherited, or you're just interested in housing policy, this stuff affects you.
[00:01:19] Speaker A: So where do we start?
[00:01:20] Speaker B: Well, to understand the battlefield, you have to start with the concept that sets the stage for everything else.
The zombie bills.
[00:01:27] Speaker A: I love that term. It sounds like something out of a B movie. But in Sacramento, it's a very real strategy.
[00:01:32] Speaker B: It is. A lot of people think, oh, that bill failed in 2025. I'm safe, right?
[00:01:37] Speaker A: I can ignore it.
[00:01:38] Speaker B: But in the California legislature, bills are often on a two year cycle. So just because something died in committee last year doesn't mean it's buried. It's. It's just resting. It can come roaring back to life in 2026.
[00:01:50] Speaker A: And looking at these zombies tells us exactly what the legislature wants to do, even if they haven't quite pulled it off yet.
[00:01:56] Speaker B: Precise.
[00:01:57] Speaker A: And the biggest monster in that room seems to be the attack on Costa Hawkins. For anyone listening who isn't deep in California rental law, can you give us the quick version? Why does this matter so much?
[00:02:08] Speaker B: Sure. Costa Hawkins is basically the state law that keeps rent control from applying to everything.
It's the shield. It prevents cities from putting rent caps on single family homes, on condos, and crucially, on new construction.
[00:02:23] Speaker A: Okay.
[00:02:24] Speaker B: It also allows what's called vacancy decontrol. So if a tenant leaves, you can raise the rent to the market rate for the next person.
[00:02:31] Speaker A: Got it. So AB157, one of these zombie bills was a direct strike at that shield.
[00:02:37] Speaker B: A direct strike. The proposal aimed to just strip away those exemptions. So, so suddenly your rental house, your condo, that little ADU in your backyard, all of it would be under strict rent control.
[00:02:46] Speaker A: But it went further.
[00:02:47] Speaker B: It went much further. It tried to change the math entirely.
[00:02:49] Speaker A: This was the part that got me right now the state cap is 5% plus the consumer price index, the CPI. It, you know, moves with inflation.
[00:02:57] Speaker B: Exactly. AB157 wanted to crush that. They proposed a floor of 2% and a hard ceiling of 5%.
[00:03:03] Speaker A: Just 5%.
[00:03:04] Speaker B: So even if inflation is running at say 8% or 9% like we've seen recently, you're capped at 5%. You are losing money in real terms every single year.
[00:03:13] Speaker A: And even though that bill failed recently, the intent is still there. It's a zombie.
But it's not just the big stuff. There's this other category. The source highlighted, the nickel and diming legislation.
[00:03:23] Speaker B: Yeah, this is almost more insidious because it's so much harder to track. You've got bills like SB381, SB681, AB1248. The whole theme here is limiting pass throughs.
[00:03:34] Speaker A: So they're trying to ban landlords from charging for what exactly?
[00:03:38] Speaker B: The fer. Well, almost anything other than base rent. The list was extensive. They tried to ban pet rent, ban check processing fees, cap late fees at a tiny 2%.
[00:03:47] Speaker A: The detail that really stuck with me, and I want to make sure we explain this clearly because it sounds insane, was the part about decreased services, the shade tree example?
[00:03:54] Speaker B: Yes. This is a perfect illustration of how granular the regulation is getting.
[00:03:58] Speaker A: Walk us through it.
[00:03:59] Speaker B: Okay, so there's a push to define a decrease in housing services as a legal increase in rent.
So let's say you have a parking lot with a big shade tree. You decide to chop it down. Maybe it's diseased. Maybe you want to build an ADU.
[00:04:12] Speaker A: There to add housing, which the state usually encourages. Right. We need more units, usually.
[00:04:17] Speaker B: But under this proposed rule, taking away that shade is a decrease in service. And that decrease is calculated as a monetary value.
So if the law decides that shade was worth, say, $50 a month, you have effectively just raised the rent by $50.
[00:04:34] Speaker A: And if you're already at the maximum.
[00:04:36] Speaker B: Rent allowed, then you have just broken the law. You've exceeded the rent cap because you chopped down a tree, you're now liable for penalties.
[00:04:42] Speaker A: It feels like a trap. Every move you make to maintain the property is a potential violation.
[00:04:47] Speaker B: That's the Feeling. And just to round out the zombie section. Yeah, we should mention the one pro landlord zombie that didn't make it. SB448.
[00:04:54] Speaker A: The squatter bill.
[00:04:56] Speaker B: Right. This would have helped owners remove trespasser squatters without going through a full months long eviction. It seems like common sense, right? Someone breaks in, you should be able to get them out.
[00:05:06] Speaker A: But it failed.
[00:05:07] Speaker B: It failed.
[00:05:08] Speaker A: So the zombies are still out there. Let's shift to the new rules of reality. These are the laws that actually passed. Let's talk about the spare act, AB747.
[00:05:19] Speaker B: This one's tricky. It doesn't fully kick in until January 2027, but you have to build your systems for it now. It completely changes how you serve notices. They call it the 333 rule.
[00:05:31] Speaker A: Sounds like a workout plan.
[00:05:32] Speaker B: It's a workout for your process server, that's for sure. If you need to serve a notice to pay rent or quit, you can't just tape it to the door anymore.
[00:05:39] Speaker A: So what do you do?
[00:05:40] Speaker B: Server has to make three attempts on three different days at three different times.
[00:05:44] Speaker A: Wow. But there's a tech layer to this that really stood out to me.
[00:05:47] Speaker B: Oh yeah? You need proof?
[00:05:49] Speaker A: Yeah.
[00:05:49] Speaker B: The law now requires the server to take a timestamped photo of the door during these attempts. And this is the real kicker. The photo has to have the GPS coordinates embedded in the metadata.
[00:06:01] Speaker A: GPS coordinates of the door. Why so specific?
[00:06:04] Speaker B: It's to prevent something called sewer service, where a server just tosses the papers and lies about it. But for an honest owner, it creates a huge technical hurdle. If your server uses an old flip phone or forgets to turn on location services, your service is invalid.
[00:06:20] Speaker A: And the consequence isn't just a do over.
[00:06:22] Speaker B: No. If a tenant doesn't show up and you get a default judgment, they can come back later and say, hey, check the metadata. If it's missing, the judgment gets tossed out, you're back to square one out, month of time and legal fees, all because of a JPEG file.
[00:06:35] Speaker A: Terrifying. It's a game of gotcha. And speaking of that, let's talk about habitability.
AB628. I'm calling it the fridge law.
[00:06:43] Speaker B: Yeah, this represents a huge shift. Previously, appliances were sort of amenities, nice to have. Now, stoves and refrigerators are explicitly part of the state habitability standards. You must provide a working stove and the fridge. Generally, yes, you have to provide it unless the tenant agrees in writing to bring their own. But the real devil is in the details. The law says the fridge has to maintain a temperature safe for food storage.
[00:07:07] Speaker A: Which is what, 42 degrees Fahrenheit or lower.
[00:07:09] Speaker B: Right. And this is where our source, Michael Brennan, shared a story that is both funny and scary.
He went home and tested his own personal fridge with a laser thermometer, and it was a 44 degrees.
[00:07:23] Speaker A: So under a strict reading of this law, the expert attorney's own house is uninhabitable.
[00:07:29] Speaker B: Exactly. And that opens up a massive question. If a tenant's fridge is running at 45 degrees, can they just withhold rent? Can they claim the unit is uninhabitable and stop paying? It creates a new frontier for lawsuits over 2 degrees of temperature.
[00:07:43] Speaker A: It really does. It shows how these laws are written by people who maybe don't understand the day to day reality of maintaining a building.
[00:07:49] Speaker B: And that continues with AB 1414, which touches on, of all things, Internet service providers.
[00:07:55] Speaker A: Yeah, this one surprised me. What's the issue there?
[00:07:57] Speaker B: So a lot of larger buildings sign bulk contracts with an isp. You know, to get a discount, they wire the whole building for spectrum or whatever. This law says you cannot force a tenant to use that specific isp.
[00:08:07] Speaker A: Okay, that sounds like consumer choice.
Fair enough.
[00:08:10] Speaker B: Sure.
But it goes a step further.
If the landlord tries to charge the fee for that Internet, the tenant can opt out. And if the landlord insists, the tenant can just deduct that cost from the rent.
[00:08:23] Speaker A: Repair and deduct used to be for broken windows, now it's for unwanted WI fi.
[00:08:27] Speaker B: It's opt out and deduct. And then you have AD 863. About language. This one requires eviction summons to be in the tenant's primary language.
[00:08:36] Speaker A: On the surface, that seems reasonable, inclusive. But the source material brought up a really obvious problem.
[00:08:42] Speaker B: The million dollar question. Yeah, how is a landlord supposed to know the tenant's primary language?
[00:08:46] Speaker A: Right. If I meet you, we speak English. We sign a lease in English. How am I supposed to know your primary language is actually, say, Vietnamese?
[00:08:54] Speaker B: You don't. And here's the trap. If you start asking tenants, hey, what's your country of origin? What language do you speak at home?
You are potentially violating fair housing laws.
[00:09:03] Speaker A: You could be accused of discrimination based on national origin.
[00:09:07] Speaker B: So you're sued if you don't ask because you served in the wrong language. And you're sued if you do ask because of discrimination.
[00:09:14] Speaker A: It's a classic catch 22.
[00:09:16] Speaker B: The law puts the burden on the landlord, but gives you no safe way to get the information.
[00:09:21] Speaker A: What a minefield. And we haven't even touched on what the expert called backdoor rent. Control.
This was fascinating.
[00:09:28] Speaker B: This is a really sophisticated point. The theory is this, since the state can't fully repeal Costa Hawkins, yet, they are using price gouging laws to get the same result.
Specifically penal code 396.
[00:09:42] Speaker A: And that's supposed to be for emergencies, right? Like you can't charge $20 for a bottle of water during a fire.
[00:09:47] Speaker B: Correct. When there's a declared state of emergency, it triggers a 10% cap on price increases for essential goods. And housing is an essential good. So this cap applies even to vacant units or properties that are normally exempt.
[00:10:01] Speaker A: But emergencies are temporary. The fire goes out, is it?
[00:10:04] Speaker B: That's the loophole. The source points out that politicians, especially in a place like Los Angeles, just keep extending these emergency declarations. A fire from a year ago can be the justification for an order that's still in effect today.
[00:10:16] Speaker A: So they've effectively created a permanent 10% rent cap on all housing, bypassing Costa Hawkins. Just by constantly saying, we're in a state of emergency.
[00:10:25] Speaker B: Precisely. It's rent control by another name.
And alongside this, you have the cooling trend, SB605.
This declares a state policy that units must maintain a safe maximum indoor temperature.
[00:10:38] Speaker A: Again, sounds reasonable, but what does safe maximum mean for a building owner?
[00:10:43] Speaker B: Practically? It likely means mandatory air conditioning. And the expert points out a huge conflict here, especially with LA's housing stock. Think about those dingbat apartments from the 1950s, right?
[00:10:54] Speaker A: With the carports underneath, very old wiring, ancient.
[00:10:57] Speaker B: You might have a 50amp electrical panel for the whole unit. If the state forces you to install ac, that panel literally cannot handle the load. It will blow.
[00:11:06] Speaker A: So you have to upgrade the panel.
[00:11:07] Speaker B: You have to upgrade the panel, the wiring, maybe the transformer for the entire building. You're looking at tens of thousands of dollars in upgrades per building, all mandated by the state. And if you don't have the money.
[00:11:17] Speaker A: Then you're in violation of habitability standards. You can't even rent the unit.
[00:11:21] Speaker B: Today's episode is brought to you by Dr. Balcony, California's leading balcony inspection company for SB326 and SB721 compliance. With over 4,000 inspections completed, Dr. Balcony uses a patented, minimally invasive process that protects your property while ensuring safety and compliance, servicing all of California while providing fast inspection, report turnaround and backing it up with a 20% price beat guarantee, beating any competitor's bid by 20%.
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[email protected] SB721 and SB326, they just sound like, I don't know, random numbers.
But One of them probably protects you. So let's break them down.
[00:12:06] Speaker A: Yeah, it's important to know the difference. They cover different kinds of housing, and the rules are very different. Let's start with SB721. People call this one the apartment law.
[00:12:14] Speaker B: Okay, SB721. Who's it for?
[00:12:17] Speaker A: It covers any apartment building with three or more units. So if you're a renter in a complex, this is probably the one that applies to you.
[00:12:23] Speaker B: And what does make the landlord? Do they have to check every single balcony?
[00:12:26] Speaker A: No. And this is where it gets a little controversial. The law requires a statistically significant sample. Specifically, they have to inspect 15% of each type of element.
[00:12:37] Speaker B: Hold on. Each type? What does that mean?
[00:12:39] Speaker A: So if your complex has, say, 100 balconies and 100 outdoor stairways, they have to inspect 15 of the balconies and 15 of the stairway.
[00:12:47] Speaker B: Only 15? That feels low.
What if balcony number 16 is the one with the problem?
[00:12:53] Speaker A: That is the risk. The thinking is that if the sample is clean, the construction was probably consistent. But, yeah, for apartments, it's basically a spot check every six years.
[00:13:01] Speaker B: Spot check. Okay, so how does that compare to the other one, SB326.
[00:13:05] Speaker A: SB326 is the condo and HOA law. This is for condominiums, townhomes, HOAs. Again, three units or more. But the standards here are. Wow. They're wildly different.
[00:13:16] Speaker B: How so?
[00:13:16] Speaker A: Instead of 15%, SB326 requires a 95% sample size.
[00:13:22] Speaker B: Whoa, 95. That's a huge jump.
[00:13:24] Speaker A: It's massive. And the expert, Tolgar, he points out that at that level, most inspection companies just do 100%. I mean, you're already there. You might as well check them all.
[00:13:33] Speaker B: So why the big difference is the state saying condo owners are more important than renters?
[00:13:38] Speaker A: It feels that way, doesn't it? The source doesn't really explain the reason, but it usually comes down to ownership and liability.
With condos, the HOA board has this legal duty to all the individual owners. It's just messier.
[00:13:52] Speaker B: So because there are shared walls and shared structures between private owners, they force them to check almost everything.
[00:14:00] Speaker A: That's the idea. And the timing is different, too. Condos have to do it every nine years.
[00:14:04] Speaker B: So apartments get checked less thoroughly, but more often every six years.
[00:14:09] Speaker A: And condos get checked almost completely, but less often every nine.
[00:14:12] Speaker B: Right. And this webinar last call is all about the deadline. The January 1, 2026 deadline is specifically for the apartments. For SB721, the condo deadline actually already Passed.
[00:14:25] Speaker A: Yeah. A lot of HOAs are already out of compliance and might not even know it.
[00:14:28] Speaker B: We'll get to the penalties for that because they're pretty severe. But first, let's clarify that term you used.
[00:14:34] Speaker A: E. Right. Exterior, elevated elements. It sounds like jargon, but the definition is really important.
[00:14:39] Speaker B: So what counts as an EE is it just my balcony?
[00:14:42] Speaker A: So to qualify, it has to be at least 6ft off the ground. It needs a walking surface for people.
And this is the key. It has to rely on wood for its structural support.
[00:14:53] Speaker B: So I live in one of those big concrete buildings, and the balcony is just a slab of concrete sticking out. I'm good.
[00:14:59] Speaker A: Generally. Yeah. Pure concrete or all metal structures are usually exempt. The moment wood gets involved in the support system, it falls under the law.
[00:15:08] Speaker B: And it's not just balconies. This is the part I think would surprise people.
[00:15:12] Speaker A: No, not at all. It includes external walkways, outdoor staircases, landings, even the entryways to some apartments. If you have to walk up a flight of wooden stairs on the outside of your building to get to your front door, that whole staircase is an E. Exactly. The scale is so much bigger than just the place you put your barbecue.
[00:15:31] Speaker B: Speaking of things you put on your balcony, there was this one really practical tip in the Source that I think everyone needs to hear. It's about potted plants.
[00:15:38] Speaker A: Oh, the potted plant danger.
[00:15:40] Speaker B: Yes.
[00:15:40] Speaker A: The expert was really passionate about this.
[00:15:43] Speaker B: It blew my mind because you see this everywhere. You know, these big, heavy pots sitting right on the stucco. I've done it.
[00:15:49] Speaker A: Everyone's done it. But he warns that those pots trap moisture. Every time you water the plant, the water seeps down and just sits there, wrapped between the pot and the surface.
[00:15:59] Speaker B: Creating a little rot incubator.
[00:16:01] Speaker A: Exactly. Plus the sheer weight. Wet soil is incredibly heavy, so you've got constant moisture weakening the waterproof seal and all this weight pressing down on that one spot.
[00:16:13] Speaker B: The advice was for owners to literally go out, pick up their plants, and look underneath.
[00:16:17] Speaker A: Yep. He said that's often where you'll see the first signs of trouble. Little cracks, water stains. Anything that shows the surface is compromised.
[00:16:24] Speaker B: So if you're listening to this and you have a giant plant that hasn't moved since you bought it, maybe go.
[00:16:29] Speaker A: Check under it, or at least put it up on a little stand so air can get underneath. It's so simple.
[00:16:33] Speaker B: Okay, so that's the check we can do. But the whole point of this law is that you can't see the real danger. The Berkeley balcony looked fine. So how do the pros see inside without just, you know, tearing the building apart.
[00:16:46] Speaker A: Right. That's the x ray vision problem.
They use a technique called borescopy. It's basically keyhole surgery for a building.
[00:16:54] Speaker B: How does that work?
[00:16:55] Speaker A: They drill a very small hole, about the size of a nickel, usually into the underside of the balcony. Then they insert a borescope, which is a tiny camera, on a flexible tube.
[00:17:05] Speaker B: Like one of those snake cameras a plumber would use.
[00:17:07] Speaker A: Exactly like that. And it lets them get a full 360 degree view inside the structure. They can see the wood joists directly. They can see if fungus is growing.
[00:17:16] Speaker B: And the source mentioned they're using AI now too.
[00:17:18] Speaker A: Yeah, which is pretty cool. We Dr. Balcony uses AI to quality check the video footage. It acts as a second set of eyes to make sure the human inspector didn't miss some subtle sign of rot.
[00:17:29] Speaker B: That's pretty reassuring. So after this, this building colonoscopy, what happens?
[00:17:35] Speaker A: You get a report, and it's a serious legal document. It has to be stamped by a licensed architect or an engineer. It details the condition of everything they saw.
[00:17:45] Speaker B: And this is where it gets real.
Lets say the camera goes in and finds a problem. The wood is mushy. What happens next?
[00:17:51] Speaker A: Well, it depends on how bad it is. The findings are classified into two.
Emergency and non emergency.
[00:17:58] Speaker B: What's an emergency?
[00:17:59] Speaker A: An emergency means it's an immediate hazard. The structure is unsafe right now. In that case, the owner has to block off access immediately. We're talking yellow tape boarding up the door undead. They have to start repairs within 15 days.
[00:18:12] Speaker B: Fifteen days? That's, that's impossible. Have you ever tried to get a construction permit in a big city? You can't even get someone to call you back in 15 days.
[00:18:20] Speaker A: That's the panic point for owners. It's an incredibly tight timeline.
[00:18:24] Speaker B: And what if it's a non emergency?
[00:18:26] Speaker A: You get a bit more time. You have 120 days to get your permits and then another 120 days after that to finish the work.
So about eight months total.
[00:18:35] Speaker B: Okay, that's better. But still a crunch. Especially when you think about thousands of buildings all trying to get permits for the same thing at the same time.
[00:18:42] Speaker A: The logjam is going to be a huge issue.
[00:18:45] Speaker B: So what happens if an owner just ignores it, throws the report in the trash and hopes no one notices?
[00:18:50] Speaker A: The consequences are severe. First there are the fines. The source talks about fines from 100 to $500 per day, per day.
[00:19:00] Speaker B: So you'd be looking at 15 grand a month easily.
[00:19:03] Speaker A: The expert said he's personally seen fines of $200 a day, but he says the fines are actually the least of your worries.
[00:19:09] Speaker B: What's worse than that?
[00:19:10] Speaker A: He calls it the ripple effect.
First, your insurance company carriers are starting to demand these compliance reports. If you don't have one, they might just drop your coverage entirely.
[00:19:20] Speaker B: And if you don't have insurance, your.
[00:19:22] Speaker A: Lender can call your loan. Plus, you can't refinance without the report.
And in the worst case scenario, the city can come out and red tag the building.
[00:19:31] Speaker B: Red tag means do not enter, right?
[00:19:34] Speaker A: It means the building is uninhabitable, you've lost all your rental income, you've displaced, replaced all your tenants, and you still have to pay for the repairs. It's a financial death spiral.
[00:19:43] Speaker B: It's interesting. We started this whole thing talking about a trust exercise, but really these laws are about forcing people to verify that trust. Thanks for listening to this deep dive. We hope you learned something new. Catch you next time. This deep dive was designed to arm you with that vital information.
Now the next step is yours. Take what you've learned today and dive even deeper into your own property's specific compliance needs.
Check those notices. Review those ETEs. Get ahead of those deadlines. We'll be back soon with another deep dive.
