When you want to stay abreast of new laws, rules, and regs that could affect real estate investors and landlords, look to heavily regulated states first.
In this case, we're looking at none other than California, a state that has passed new laws for 2021. Guess who these laws mostly favor? If you guessed tenants at the expense of landlords and government at the expense of private enterprise, you'd be right. Here's a look at two laws from this state and one federal regulation to keep an eye on.
1. The house you bought at auction could be snatched away
In a law that puts investors who do the work to acquire a good foreclosure deal at risk of losing that acquisition, California has passed Senate Bill 1079. This bill would give tenants living in a house bought at auction 45 days to round up cash, including getting a mortgage, to buy back the house at the price the investor paid.
So an investor puts together a deal on a home, makes an offer, wins the offer, and buys the property. That should be the end of the story. But this new law means the deal you just struck might not stick. You might need to relinquish what you just bought. Not only that, you would need to inform the tenant of their right to buy the house from you for what you paid.
The reasoning: Sen. Nancy Skinner, D-Berkeley, said to investors, "California homes are not yours to gobble up."
The bill also prohibits foreclosed properties to be sold in bundles. Bidders must bid individually.
2. HOAs must allow more renters
A move that helps landlords of long-term rentals but can potentially hurt the short-term rental business and gets into the business of private homeowner associations (HOAs) is Assembly Bill 3182.
This California law requires HOAs to allow at least 25% of homes in the neighborhood to be rentals. This prevents HOAs from deciding for themselves whether they want rentals at all, and if so, how many.
The law does allow HOAs to prohibit short-term rentals of 30 days or less, such as Airbnb (NASDAQ: ABNB) types.
3. The eviction moratorium rages on
The Centers for Disease Control and Prevention (CDC) -- a health protection agency -- entered the landlord arena in September 2020 when it ordered a halt in residential evictions, a move that one Texas judge has since deemed unconstitutional.
The CDC says this edict is to stop the spread of coronavirus -- a go-to reason for everything these days. And this "temporary" eviction ban, which takes away a landlord's most basic protection venue, keeps being extended. As of now, landlords can't evict until March 31, 2021.
The Millionacres bottom line
Even if certain laws don't apply to you, it's a good idea to keep up with them anyway. That way, you won't be blindsided if legislators try to pass laws that could impact your business. Joining a local investor group or landlord group can help ensure your preferences are heard and your rights as a private businessperson are protected.