Legislative Update 2018 for Commercial Landlords and Property Managers
Wednesday, March 14, 2018
by: BOMA San Diego

Section: News

The legislative session for 2017 has come to a close, and many new laws were passed which will directly impact California commercial landlords. Below is information about new laws for 2018 along with other significant trends which may affect California commercial landlords.

For your convenience, the new laws and trends are divided into five sections: Landlord/Tenant, Fair Housing, Disability Access, and Real Estate License Laws.

Landlord / Tenant Laws and Trends
AB 1108 Self-Service Storage Facility Act Amendments:  Through 2020 lien notices may be served by email if the rental agreement provides for email service. It also allows auctions to be either in-person or through an internet auction website.

SB 2 Increased Recording Fees: Effective September 29, 2017, adds additional recording fees of $75 to fund affordable housing development. There are two exemptions: the fee won’t be charged (1) in connection with a transfer of a home to an owner-occupant, or (2) when a documentary transfer tax is paid. Typically the additional recording fees will be charged for refinances or reconveyances.
SB 745 Water Conserving Plumbing Fixture Replacement (2014): Originally passed in 2014, and codified in Civil Code §1101.5, it requires water conserving plumbing fixtures be installed in property constructed before January 1, 1994. To be compliant, plumbing fixtures may not use more than the following amounts of water:
  1. Toilets - 1.6 gallons per flush
  2. Urinals - 1 gallon per flush
  3. Showerheads - 2.5 gallons per minute
  4. Interior faucets -2.2 gallons per minute
Beginning on January 1, 2014, noncompliant plumbing in multifamily and commercial property were required to be replaced in certain situations.
By January 1, 2019, multifamily and commercial properties must be in full compliance.
An article with information about water-conserving plumbing fixtures required in California is available at http://clientportal.kts- law.com/resource_library/breg/documents/WaterConservingPlumbingFixturesRequiredinCalifornia.pdf.
E-Filing for Unlawful Detainers: Throughout the state, courts are moving towards e-filing civil actions (including unlawful detainers). As the name implies, e-filing allows parties to transmit documents directly to a court electronically. The system is being utilized by an increasing number of courts seeking to create a faster, paperless system.  E-filing is now available in some form in 12 counties throughout California. AB 976 authorizes all trial courts in the State of California to, by local rule, require the electronic filing and service of documents in civil actions. Currently, courts in 35 of California’s 58 counties have active electronic filing programs underway, with the majority of those expected to be implemented by the end of 2017.  
Marijuana: In 2016, voters passed Proposition 64 legalizing recreational marijuana in California.  Under this new state law, codified in California Health and Safety Code §11362 et seq., people 21 years of age and older can possess, process, transport, purchase obtain or give away (without compensation) up to 28.5 grams of non-concentrated cannabis and up to 8 grams of concentrated cannabis as well as possess, plant, cultivate, harvest, dry or process up to 6 living plants. Retail sales and taxation for adult use of recreational marijuana are anticipated to begin in Jan of 2018. Legalization of recreational marijuana in California has impacted many commercial property owners. Commercial property owners who would like assistance regarding marijuana related issues (including prospective tenants who want to use property for marijuana-related businesses) can contact Kimball, Tirey & St. John for assistance.

Recycling: The last 5 years have seen increased legislative attention in the area of recycling. As of 2016, businesses must arrange for recycling services for organic waste. This year, AB 1158 will require that a manufacturer of carpets used in commercial or residential buildings, develop and submit a plan to achieve a 24-percent recycling for post-consumer carpet by 2020.    
In July 2017, the City of Los Angeles released a new franchise waste hauling system, known as RecycLA, meant to expand recycling opportunities to businesses while simultaneously reducing the number of trucks on the streets. Under this system, businesses are only allowed to contact for waste services with one of the limited companies identified by the City of Los Angeles as an approved vendor. This has led to a substantial increase in trash related service charges, with many businesses reporting that the amount which they pay for trash removal charges has doubled or tripled under the new system.   

Proposition 65: Proposition 65 requires businesses with 10 or more employees to provide warnings when they cause significant exposure to specific chemicals.  Proposition 65 requires disclosures by employers who have 10 or more employees and who may expose their employees or the public to specific listed chemicals. There are more than 850 chemicals listed. Some of the environmental hazards are contained in items common in commercial, such as building materials, cleaning materials, car exhaust, and tobacco smoke.
For some time, landlords have been uncertain about how to comply with their Proposition 65 obligations. “Clear and reasonable” warnings must be given.  Generally, in an effort to comply with Proposition 65, landlords have posted signage on their properties.  Some also have also included Proposition 65 warnings in their leases. 
Effective August 30, 2018, a new regulation changes the safe harbor warnings. Use of the new warnings is not required, but using the safe harbor warnings is an effective way for businesses to protect themselves from Proposition 65 claims. Businesses that use the safe harbor warnings will be deemed to have provided “clear and reasonable” warnings.
The new warnings say the product “can expose you to” a Proposition 65 chemical rather than saying the product “contains” the chemical. They also include:
  • The name of at least one listed chemical that prompted the warning,
  • The Internet address for OEHHA’s new Proposition 65 warnings website, https://www.p65warnings.ca.gov, which includes additional information on the health effects of listed chemicals and ways to reduce or eliminate exposure to them,
  • A triangular yellow warning symbol  on most warnings.
  • New “tailored” warnings that provide more specific information for certain kinds of exposures, products, and places. The specifically tailored warnings most likely to affect commercial property owners are the “enclosed parking facilities” warning (available at https://www.p65warnings.ca.gov/places/enclosed-parking-facilities) and “designated smoking areas” warning (available at https://www.p65warnings.ca.gov/places/designated-smoking-areas). 
For more information about the new Proposition 65 warnings, see https://www.p65warnings.ca.gov/new-proposition-65-warnings.
Fair Housing Laws and Trends
SB 179 Gender Recognition Act – Third Nonbinary Gender:  This bill creates a third nonbinary gender for California state identification documents. The law, parts of which will go into effect on September 1, 2018 and on January 1, 2019, provides for the following:
  1. Ensures that intersex, transgender, and nonbinary people have state-issued identification documents (drivers’ licenses, birth certificates, identity cards, and gender change court orders) that provide full legal recognition of their accurate gender identity.
  2. Requires the state to provide three equally recognized gender options on state-issued identification documents: female, male, and nonbinary. The State must also provide an efficient and fair process for individuals to amend their gender designation on state-issued identification documents and the identification documents must legally recognize a person’s gender identification. 
  3. Streamlines the legal process for one to change their gender marker. The law deletes the requirement that a person have undergone treatment to seek a court judgment to recognize their change in gender and would permit the individual to attest, under penalty of perjury, that their request is to conform their legal gender to their gender identity. The law also provides for modified procedures to obtain a court order for a change of name to conform to the person’s gender identity and a court judgment to recognize a change in the person’s gender. Lastly, a separate procedure is provided for those under 18 years of age to petition for a court judgment to recognize a change of gender to male, female, or nonbinary. 
The new law also defines the terms “intersex”, “binary” and “transgender” and recognizes the frequent discrimination, harassment, and violence faced by these individuals in housing, education, employment, health care and law enforcement. 
Assistive Animals: Many commercial landlords have noted an increase in the number of animals brought to properties, with tenants, employees and customers claiming that they are service animals or assistive animals. When these animals create noise, waste or allergy issues for others at the property, the landlord may receive complaints about the animals.  If you need help in this area, contact Kimball, Tirey & St. John’s Fair Housing Practice Group at FairHousing@kts-law.com for assistance.
Disability Access
AB 1148 CASp Inspections and Disclosures for Commercial Property: Existing law requires commercial leases signed on or after January 1, 2017 to specify whether the premises have been inspected by a Certified Access Specialist (CASp).   AB 1148 amends Civil Code 1938 effective July 21, 2017, to define “commercial property” as “property that is offered for rent or lease to persons operating, or intending to operate, a place of public accommodation as defined in Title 24 of the California Code of Regulations, Part 2, Chapter 2, Section 202, or a facility to which the general public is invited”.  A place of public accommodation includes a place of lodging such as an inn, hotel or motel or other short term rentals with amenities similar to a hotel, motel or inn; a restaurant or bar; a movie theater, concert hall or the like; a bakery, grocery store, shopping center, or other sales or rental establishments; most varieties of service establishments such as laundromat, bank or professional office; a museum, library, or the like; most types of schools including a nursery; a day-care center or other social service center establishments; a gym or other place of exercise or recreation; a religious facility; an office building; and a public curb or sidewalk.
Real Estate License Laws
SB 173 The BRE is now the DRE (Again): In 2012, the Department of Real Estate (DRE) became the Bureau of Real Estate (BRE).  On January 1, 2018, the BRE will again become the DRE.
SB 764 Fidelity Insurance for Real Estate Trust Fund Accounts: In the past, real estate brokers who allowed unlicensed employees signing authority on their trust accounts were required to have a fidelity bond. SB 764 amends Business and Professions Code §10145 to now allow brokers to purchase fidelity insurance (or a fidelity bond), beginning January 1, 2018.
AB 1650 Real Estate Licensee Advertisements: Under existing law, “first point of contact” solicitation materials from real estate licensee must include the name and license number of the licensee and identify the responsible broker. Before January 1, 2018, there was an exception for advertisements in print or electronic media, or for newspapers and magazines. This exception has been eliminated. An exception remains for open house, “for sale”, “for rent or for lease” and directional signs, as long as no identifying licensee information is included (or only the broker’s name appears). Real estate licensees should include their name and license number, and the responsible broker, on all solicitation materials, including business cards, stationary, advertising flyers, advertisements on television, in print, or electronic media, signage, and other materials designed to “solicit the creation of a professional relationship between the licensee and a consumer.” An article with more information about real estate license number disclosure requirements is available at http://clientportal.kts-law.com/resource_library/breg/documents/LicenseNumberDisclosureRequirementsforRealEstateAgentsandBrokers.pdf.
AB 1807 Real Estate License Publication of Disciplinary Action: Existing law allows the Bureau of Real Estate to include records of suspension and revocation of licensees on its license verification internet web page. This new law, passed in 2016, establishes a procedure that may be utilized as of January 1, 2018, in which, after 10 years from posting, a licensee may petition the Commissioner to remove notice of disciplinary action from the website when the petitioner can display that he or she has been rehabilitated and that the notice of discipline is no longer required in order to prevent a credible risk to members of the public. Petitions will be granted on a case-by-case basis.
AB 2330 Associate Real Estate Licensees: Beginning January 1, 2018, the Bureau of Real Estate (BRE) website will identify whether a licensee is an associate licensee and, if the associate licensee is a broker, will identify each responsible broker with whom the licensee is contractually associated. A real estate broker must immediately notify the commissioner in writing whenever a real estate broker acting as a salesperson enters the employ of or is terminated by the responsible real estate broker. This bill incorporates additional changes in Business and Professions Code §10083.2, proposed by AB 1807 (see AB 1807 above).

Any questions regarding new legislation can be directed to Jamie Sternberg at (800)574-5587 or jamie.sternberg@kts-law.com.