AB 911: Unlawfully restrictive covenants: affordable housing.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2023-10-11
Current Status:
Passed
(2023-10-11: Chaptered by Secretary of State - Chapter 750, Statutes of 2023.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
What does this bill do?
The bill changes how owners of affordable housing projects can record documents that remove old rules limiting how many or what size homes or how many people can live on a property. It requires the county recorder to promptly tell the owner when county counsel approves the change and lets the owner mail certified copies to people they know have an interest, with rules for when that notice is treated as given. A buyer with only a purchase agreement (a beneficial owner) cannot record the change until they close escrow and become the recorded owner, the recorder may charge the normal fee, and notified parties must sue within 35 days to challenge it.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
Existing law permits a person who holds or is acquiring an ownership interest of record in property that the person believes is the subject of an unlawfully restrictive covenant based on, among other things, the number of persons or families who may reside on the property, to record a restrictive covenant modification. Existing law entitles the owner of an affordable housing development to establish that an existing restrictive covenant is unenforceable by submitting a restrictive covenant modification document that modifies or removes any existing restrictive covenant language. Before recording the modification document, existing law requires the owner to submit to the county recorder a copy of the original restrictive covenant and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development for purposes of these provisions. As part of this process, existing law requires the county counsel to determine, among other things, if the property qualifies as an affordable housing development and if a modification document may be recorded. If the county counsel has authorized the county recorder to record the modification document, that authorization is required to be noted on the face of the modification or on a cover sheet affixed to it.
This bill would require the county recorder to notify the owner or submitting party of the county counsels determination without delay, so that notice may be given by the owner regarding the authorization to record the modification document. The bill would permit the owner, upon receipt of that notification, to mail copies of the modification documents and related materials by certified mail to anyone who the owner knows has an interest in the property or the restrictive covenant. The bill would also establish a process by which notice by the owner to the intended recipient would be deemed given. The bill would provide that notice by the owner is optional and failure to provide it does not invalidate a recorded restrictive covenant modification document.
Existing law prohibits the county recorder from recording the modification document if the county counsel finds that the original restrictive covenant document does not contain a prohibited restriction, or if the county counsel finds that the property does not qualify as an affordable housing development.
This bill would additionally prohibit the owner from recording the modification document if the owner of the property is not yet its record title owner but is instead a beneficial owner, as specified, until the owner closes escrow on the property and becomes its record title owner. For purposes of these provisions, the bill would define owner to mean any record title owner of the property, beneficial owner of the property, or individual controlling the property for purposes of developing an affordable housing project, as specified.
Existing law requires the county recorder to charge a standard recording fee to an owner who submits a modification document for recordation pursuant to these provisions.
This bill would, instead, authorize the county recorder to charge the above-described standard recording fee.
This bill would additionally require a suit that challenges the validity of a restrictive covenant modification document that is filed by a party that has been given notice as described above to be filed within 35 days of that notice. The bill would make conforming changes to these provisions.
By placing additional duties on county officials, the bill would impose a state-mandated local 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 no reimbursement is required by this act for a specified reason.
Existing law permits a person who holds or is acquiring an ownership interest of record in property that the person believes is the subject of an unlawfully restrictive covenant based on, among other things, the number of persons or families who may reside on the property, to record a restrictive covenant modification. Existing law entitles the owner of an affordable housing development to establish that an existing restrictive covenant is unenforceable by submitting a restrictive covenant modification document that modifies or removes any existing restrictive covenant language. Before recording the modification document, existing law requires the owner to submit to the county recorder a copy of the original restrictive covenant and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development for purposes of these provisions. As part of this process, existing law requires the county counsel to determine, among other things, if the property qualifies as an affordable housing development and if a modification document may be recorded. If the county counsel has authorized the county recorder to record the modification document, that authorization is required to be noted on the face of the modification or on a cover sheet affixed to it.
This bill would require the county recorder to notify the owner or submitting party of the county counsels determination without delay, so that notice may be given by the owner regarding the authorization to record the modification document. The bill would permit the owner, upon receipt of that notification, to mail copies of the modification documents and related materials by certified mail to anyone who the owner knows has an interest in the property or the restrictive covenant. The bill would also establish a process by which notice by the owner to the intended recipient would be deemed given. The bill would provide that notice by the owner is optional and failure to provide it does not invalidate a recorded restrictive covenant modification document.
Existing law prohibits the county recorder from recording the modification document if the county counsel finds that the original restrictive covenant document does not contain a prohibited restriction, or if the county counsel finds that the property does not qualify as an affordable housing development.
This bill would additionally prohibit the owner from recording the modification document if the owner of the property is not yet its record title owner but is instead a beneficial owner, as specified, until the owner closes escrow on the property and becomes its record title owner. For purposes of these provisions, the bill would define owner to mean any record title owner of the property, beneficial owner of the property, or individual controlling the property for purposes of developing an affordable housing project, as specified.
Existing law requires the county recorder to charge a standard recording fee to an owner who submits a modification document for recordation pursuant to these provisions.
This bill would, instead, authorize the county recorder to charge the above-described standard recording fee.
This bill would additionally require a suit that challenges the validity of a restrictive covenant modification document that is filed by a party that has been given notice as described above to be filed within 35 days of that notice. The bill would make conforming changes to these provisions.
By placing additional duties on county officials, the bill would impose a state-mandated local 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 no reimbursement is required by this act for a specified reason.
Existing law permits a person who holds or is acquiring an ownership interest of record in property that the person believes is the subject of an unlawfully restrictive covenant based on, among other things, the number of persons or families who may reside on the property, to record a restrictive covenant modification. Existing law entitles the owner of an affordable housing development to establish that an existing restrictive covenant is unenforceable by submitting a restrictive covenant modification document that modifies or removes any existing restrictive covenant language. Before recording the modification document, existing law requires the owner to submit to the county recorder a copy of the original restrictive covenant and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development for purposes of these provisions. As part of this process, existing law requires the county counsel to determine, among other things, if the property qualifies as an affordable housing development and if a modification document may be recorded. If the county counsel has authorized the county recorder to record the modification document, that authorization is required to be noted on the face of the modification or on a cover sheet affixed to it.
This bill would require the county recorder to notify the owner or submitting party of the county counsels determination without delay, so that notice may be given by the owner regarding the authorization to record the modification document. The bill would permit the owner, upon receipt of that notification, to mail copies of the modification documents and related materials by certified mail to anyone who the owner knows has an interest in the property or the restrictive covenant. The bill would also establish a process by which notice by the owner to the intended recipient would be deemed given. The bill would provide that notice by the owner is optional and failure to provide it does not invalidate a recorded restrictive covenant modification document.
Existing law prohibits the county recorder from recording the modification document if the county counsel finds that the original restrictive covenant document does not contain a prohibited restriction, or if the county counsel finds that the property does not qualify as an affordable housing development.
This bill would additionally prohibit the owner from recording the modification document if the owner of the property is not yet its record title owner but is instead a beneficial owner, as specified, until the owner closes escrow on the property and becomes its record title owner. For purposes of these provisions, the bill would define owner to mean any record title owner of the property, beneficial owner of the property, or individual controlling the property for purposes of developing an affordable housing project, as specified.
Existing law requires the county recorder to charge a standard recording fee to an owner who submits a modification document for recordation pursuant to these provisions.
This bill would, instead, authorize the county recorder to charge the above-described standard recording fee.
This bill would additionally require a suit that challenges the validity of a restrictive covenant modification document that is filed by a party that has been given notice as described above to be filed within 35 days of that notice. The bill would make conforming changes to these provisions.
By placing additional duties on county officials, the bill would impose a state-mandated local 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 no reimbursement is required by this act for a specified reason.
Existing law permits a person who holds or is acquiring an ownership interest of record in property that the person believes is the subject of an unlawfully restrictive covenant based on, among other things, the number of persons or families who may reside on the property, to record a restrictive covenant modification. Existing law entitles the owner of an affordable housing development to establish that an existing restrictive covenant is unenforceable by submitting a restrictive covenant modification document that modifies or removes any existing restrictive covenant language. Before recording the modification document, existing law requires the owner to submit to the county recorder a copy of the original restrictive covenant and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development for purposes of these provisions. As part of this process, existing law requires the county counsel to determine, among other things, if the property qualifies as an affordable housing development and if a modification document may be recorded. If the county counsel has authorized the county recorder to record the modification document, that authorization is required to be noted on the face of the modification or on a cover sheet affixed to it.
This bill would require the county recorder to notify the owner or submitting party of the county counsels determination within 5 business days without delay, so that notice may be given by the owner regarding the authorization to record the modification document. The bill would permit the owner, upon receipt of that notification, to mail copies of the modification documents and related materials by certified mail to anyone who the owner knows has an interest in the property or the restrictive covenant. The bill would also establish a process by which notice by the owner to the intended recipient would be deemed given. The bill would provide that notice by the owner is optional and failure to provide it does not invalidate a recorded restrictive covenant modification document.
Existing law prohibits the county recorder from recording the modification document if the county counsel finds that the original restrictive covenant document does not contain a restriction prohibited by this provision prohibited restriction, or if the county counsel finds that the property does not qualify as an affordable housing development.
This bill would additionally prohibit the county recorder owner from recording the modification document if the owner of the property is not yet its record title owner but is instead a beneficial owner, as specified, until the owner closes escrow on the property and becomes its record title owner. For purposes of these provisions, the bill would define owner to mean any record title owner of the property, beneficial owner of the property, or individual controlling the property for purposes of developing an affordable housing project, as specified.
This bill would require a suit that challenges the validity of a restrictive covenant modification document that is filed by a party that has been given notice as described above to be filed within 35 days of that notice. The bill would make conforming changes to these provisions.
By placing additional duties on county officials, the bill would impose a state-mandated local 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 no reimbursement is required by this act for a specified reason.
Existing law permits a person who holds or is acquiring an ownership interest of record in property that the person believes is the subject of an unlawfully restrictive covenant based on, among other things, the number of persons or families who may reside on the property, to record a restrictive covenant modification. Existing law entitles the owner of an affordable housing development to establish that an existing restrictive covenant is unenforceable by submitting a restrictive covenant modification document that modifies or removes any existing restrictive covenant language. Before recording the modification document, existing law requires the owner to submit to the county recorder a copy of the original restrictive covenant and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development for purposes of these provisions. As part of this process, existing law requires the county counsel to determine, among other things, if the property qualifies as an affordable housing development and if a modification document may be recorded. If the county counsel has authorized the county recorder to record the modification document, that authorization is required to be noted on the face of the modification or on a cover sheet affixed to it.
This bill would require the county recorder to notify the owner of the county counsels determination within 5 business days so that notice may be given by the owner regarding the authorization to record the modification document. The bill would permit the owner, upon receipt of that notification, to mail copies of the modification documents and related materials by certified mail to anyone who the owner knows has an interest in the property or the restrictive covenant. The bill would also establish a process by which notice by the owner to the intended recipient would be deemed given. The bill would provide that notice by the owner is optional and failure to provide it does not invalidate a recorded restrictive covenant modification document.
Existing law prohibits the county recorder from recording the modification document if the county counsel finds that the original restrictive covenant document does not contain a restriction prohibited by this provision or if the county counsel finds that the property does not qualify as an affordable housing development.
This bill would prohibit the county recorder from recording the modification document if the owner of the property is not yet its record title owner but is instead a beneficial owner, as specified, until the owner closes escrow on the property and becomes its record title owner. For purposes of these provisions, the bill would define owner to mean any record title owner of the property, beneficial owner of the property, or individual controlling the property for purposes of developing an affordable housing project, as specified.
This bill would require a suit that challenges the validity of a restrictive covenant modification document that is filed by a party that has been given notice as described above to be filed within 35 days of that notice. The bill would make conforming changes to these provisions.
By placing additional duties on county officials, the bill would impose a state-mandated local 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 no reimbursement is required by this act for a specified reason.
Existing law permits a person who holds or is acquiring an ownership interest of record in property that the person believes is the subject of an unlawfully restrictive covenant based on, among other things, the number of persons or families who may reside on the property, to record a restrictive covenant modification. Existing law entitles the owner of an affordable housing development to establish that an existing restrictive covenant is unenforceable by submitting a restrictive covenant modification document that modifies or removes any existing restrictive covenant language. Before recording the modification document, existing law requires the owner to submit to the county recorder a copy of the original restrictive covenant and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development for purposes of these provisions. As part of this process, existing law requires the county counsel to determine, among other things, if the property qualifies as an affordable housing development and if a modification document may be recorded. If the county counsel has authorized the county recorder to record the modification document, that authorization is required to be noted on the face of the modification or on a cover sheet affixed to it.
This bill would require an owner of an affordable housing development to mail copies of the restrictive covenant modification document and other materials described above by certified mail to anyone who the owner knows has an interest in the property. The bill would provide that failure to provide this notice does not invalidate a recorded restrictive covenant modification document, but the county recorder may require reasonable documentation to ensure compliance with this noticing requirement. The bill would authorize an owner of an affordable housing development to publish additional notice, as specified, in order to provide notice to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll.This bill would require the county recorder to notify the owner of the county counsels determination within 5 business days so that notice may be given by the owner regarding the authorization to record the modification document. The bill would permit the owner, upon receipt of that notification, to mail copies of the modification documents and related materials by certified mail to anyone who the owner knows has an interest in the property or the restrictive covenant. The bill would also establish a process by which notice by the owner to the intended recipient would be deemed given. The bill would provide that notice by the owner is optional and failure to provide it does not invalidate a recorded restrictive covenant modification document.
Existing law prohibits the county recorder from recording the modification document if the county counsel finds that the original restrictive covenant document does not contain a restriction prohibited by this provision or if the county counsel finds that the property does not qualify as an affordable housing development.
This bill would prohibit the county recorder from recording the modification document if the owner of the property is not yet its record title owner but is instead a beneficial owner, as specified, until the owner closes escrow on the property and becomes its record title owner. For purposes of these provisions, the bill would define owner to mean any record title owner of the property, beneficial owner of the property, or individual controlling the property for purposes of developing an affordable housing project, as specified.
This bill would require a suit that challenges the validity of a restrictive covenant modification document that is filed by a party that has been given notice as described above to be filed within 35 days of the modification document being recorded. that notice. The bill would make conforming changes to these provisions.
By placing additional duties on county officials, the bill would impose a state-mandated local 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 no reimbursement is required by this act for a specified reason.
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, the number of persons or families who may reside on the property, to record a restrictive covenant modification. Existing law entitles the owner of an affordable housing development to establish that an existing restrictive covenant is unenforceable by submitting a restrictive covenant modification document that modifies or removes any existing restrictive covenant language. Before recording the modification document, existing law requires the owner to submit to the county recorder a copy of the original restrictive covenant and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development for purposes of these provisions.
This bill would require an owner of an affordable housing development to mail copies of the restrictive covenant modification document and other materials described above by certified mail to anyone who the owner knows has an interest in the property. The bill would provide that failure to provide this notice does not invalidate a recorded restrictive covenant modification document, but the county recorder may require reasonable documentation to ensure compliance with this noticing requirement. The bill would authorize an owner of an affordable housing development to publish additional notice, as specified, in order to provide notice to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll.
This bill would require a suit that challenges the validity of a restrictive covenant modification document that is filed by a party that has been given notice as described above to be filed within 35 days of the modification document being recorded.
(a)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, size, or location of the residences that may be built on the property, or that restrict the number of persons or families who may reside on the property, shall not be enforceable against the owner of an affordable housing development, if an approved restrictive covenant affordable housing modification document has been recorded in the public record as provided for in this section, except as explicitly provided in this section.
(b)(1)The owner of an affordable housing development shall be entitled to establish that an existing restrictive covenant is unenforceable under subdivision (a) by submitting a restrictive covenant modification document pursuant to Section 12956.2 of the Government Code that modifies or removes any existing restrictive covenant language that restricts the number, size, or location of the residences that may be built on the property, or that restricts the number of persons or families 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)(A)The owner shall submit to the county recorder a copy of the original restrictive covenant, a copy of any notice the owner believes is required pursuant to paragraph (3) of subdivision (g), and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development under this section prior to, or simultaneously with, the submission of the request for recordation of the restrictive covenant modification document.
(B)Before recording the restrictive covenant modification document, pursuant to subdivision (b) of Section 12956.2 of the Government Code, the county recorder shall, within five business days of receipt, submit the documentation provided to the county recorder by the owner pursuant to subparagraph (A) 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), whether the owner has submitted documents sufficient to establish that the property qualifies as an affordable housing development under this section, whether any notice required under this section has been provided, whether any exemption provided in subdivision (g) or (h) applies, and whether the restriction 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)Pursuant to Section 12956.2 of the Government Code, the county counsel shall return the documents and inform the county recorder of the county counsels determination within 15 days of submission to the county counsel. If the county counsel is unable to make a determination, the county counsel shall specify the documentation that is needed in order to make the determination. If the county counsel has authorized the county recorder to record the modification document, that authorization shall be noted on the face of the modification or on a cover sheet affixed thereto, and the county recorder shall notify the owner or submitting party of the county counsels determination without delay so that the notice described in subparagraph (D) may be given.
(D)Upon being notified that the county counsel has authorized the county recorder to record the modification document, the owner may mail, by certified mail to anyone who the owner knows has an interest in the property or in the restrictive covenant, a copy of the modification document, together with a copy of this section and a written explanation that the modification has been applied for and approved for recordation by the county counsel pursuant to this section. That notice shall be deemed given if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipients address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll. The owner may also publish notice pursuant to Section 6061 of the Government Code identifying that a modification document pursuant to this section has been submitted to the county recorder and approved for recordation by the county counsel, and that the modification document is available for public inspection in the office of the county recorder. The notice shall also identify the property by assessors parcel number and mailing address. If no mailing address has been assigned for the property, then the property shall be identified instead by its nearest intersection. If the owner elects to publish notice in this manner, then notice shall be deemed given to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll. Notice as described in this subparagraph is optional, and failure to provide it shall not, in any manner, invalidate a restrictive covenant modification document recorded pursuant to this section.
(E)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 or if the county counsel finds that the property does not qualify as an affordable housing development. If the owner of the property is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, then the owner shall not record the modification document until the owner closes escrow on the property and becomes its record title owner.
(F)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, subject to any intervening amendments or modifications, except to the extent modified by the recorded modification document.
(3)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 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.
(4)A restrictive covenant that was originally invalidated by this section shall become and remain enforceable while the property subject to the restrictive covenant modification is utilized in any manner that violates the terms of the affordability restrictions required by this section.
(5)If the property is utilized in any manner that violates the terms of the affordability restrictions required by this section, the city or county may, after notice and an opportunity to be heard, record a notice of that violation. If the owner complies with the applicable affordability restrictions, the owner may apply to the agency of the city or county that recorded the notice of violation for a release of the notice of violation, and if approved by the city or county, a release of the notice of violation may be recorded.
(6)The county recorder may charge a standard recording fee to an owner who submits a modification document for recordation pursuant to this section.
(c)(1)Subject to paragraph (2), this section shall only apply to restrictive covenants that restrict the number, size, or location of the residences that may be built on a property or that restrict the number of persons or families 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)Paragraph (1) shall not apply to restrictive covenants, fees, and assessments that have not been consistently enforced or assessed prior to the construction of the affordable housing development.
(d)(1)Any suit filed by a party that is deemed to have been given notice as described in subparagraph (D) of paragraph (2) of subdivision (b), which challenges the validity of a restrictive covenant modification document pursuant to this section, shall be filed within 35 days of that notice.
(2)In any suit filed to enforce the rights provided in this section or defend against a suit filed against them, a prevailing owner of an affordable housing development, and any successors or assigns, or a holder of a conservation easement, shall be entitled to recover, as part of any judgment, litigation costs and reasonable attorneys fees, provided that any judgment entered shall be limited to those costs incurred after the modification document was recorded as provided by subdivision (b).
(3)This subdivision shall not prevent the court from awarding any prevailing party litigation costs and reasonable attorneys fees otherwise authorized by applicable law, including, but not limited to, subdivision (d) of Section 815.7 of the Civil Code.
(e)This section shall not 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 shall not be interpreted to 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)(1)Subject to paragraph (2), this section does not apply to:
(A)Any conservation easement, as defined in Section 815.1, that is recorded as required by Section 815.5, and held by any of the entities or organizations set forth in Section 815.3.
(B)Any interest in land comparable to a conservation easement that is held by any political subdivision and recorded in the office of the county recorder of the county where the land is situated.
(2)The exclusion from this section of conservation easements held by tax-exempt nonprofit organizations, as provided in subparagraph (A) of paragraph (1), applies only if the conservation easement satisfies one or more of the following:
(A)It was recorded in the office of the county recorder where the property is located before January 1, 2022.
(B)It is, as of the date of recordation of the conservation easement, held by a land trust or other entity that is accredited by the Land Trust Accreditation Commission, or any successor organization, or is a member of the California Council of Land Trusts, or any successor organization, and notice of that ownership is provided in the text of the recorded conservation easement document, or if that notice is not provided in the text of the recorded conservation easement document, the land trust or other entity provides documentation of that accreditation or membership within 30 days of receipt of either of the following:
(i)A written request for that documentation.
(ii)Any written notice of the intended modification of the conservation easement provided pursuant to paragraph (3).
(C)It was funded in whole or in part by a local, state, federal, or tribal government or was required by a local, state, federal, or tribal government as mitigation for, or as a condition of approval of, a project, and notice of that funding or mitigation requirement is provided in the text of the recorded conservation easement document.
(D)It is held by a land trust or other entity whose purpose is to conserve or protect indigenous cultural resources, and that purpose of the land trust or other entity is provided in the text of the recorded conservation easement document.
(E)It, as of the date of recordation of the conservation easement, burdens property that is located entirely outside the boundaries of any urbanized area or urban cluster, as designated by the United States Census Bureau.
(3)(A)At least 60 days before submission of a modification document modifying a conservation easement to a county recorder pursuant to subdivision (b), the owner of an affordable housing development shall provide written notice of the intended modification of any conservation easement to the parties to that conservation easement and any third-party beneficiaries or other entities that are entitled to receive notice of changes to or termination of the conservation easement with the notice being sent to the notice address of those parties as specified in the recorded conservation easement. The notice shall include a return mailing address of the owner of the affordable housing development, the approximate number, size, and location of intended structures to be built on the property for the purposes of affordable housing, and a copy of the intended modification document, and shall specify that it is being provided pursuant to this section.
(B)The county recorder shall not record any restrictive covenant modification document unless the county recorder has received confirmation from the county counsel that any notice required pursuant to subparagraph (A) was provided in accordance with subparagraph (A).
(h)This section shall not apply to any settlement, conservation agreement, or conservation easement, notice of which has been recorded, for which either of the following apply:
(1)It was entered into before January 1, 2022, and limits the density of or precludes development in order to mitigate for the environmental impacts of a proposed project or to resolve a dispute about the level of permitted development on the property.
(2)It was entered into after January 1, 2022, and limits the density of or precludes development where the settlement is approved by a court of competent jurisdiction and the court finds that the density limitation is for the express purpose of protecting the natural resource or open-space value of the property.
(i)The provisions of this section shall not apply to any recorded deed restriction, public access easement, or other similar covenant that was required by a state agency for the purpose of compliance with a state or federal law, provided that the recorded deed restriction, public access easement, or similar covenant contains notice within the recorded document, inclusive of its recorded exhibits, that it was recorded to satisfy a state agency requirement.
(j)For purposes of this section:
(1)Affordable housing development means a development located on the property that is the subject of the recorded restrictive covenant and that meets one of the following requirements:
(A)The property is subject to a recorded affordability restriction requiring 100 percent of the units, exclusive of a managers unit or units, be made available at affordable rent to, and be occupied by, lower income households for 55 years for rental housing, unless a local ordinance or the terms of a federal, state, or local grant, tax credit, or other project financing requires, as a condition of the development of residential units, that the development include a certain percentage of units that are affordable to, and occupied by, low-income, lower income, very low income, or extremely low income households for a term that exceeds 55 years for rental housing units.
(B)(i)The property is owned or controlled by an entity or individual that has submitted a permit application to the relevant jurisdiction to develop a project that complies with subparagraph (A).
(ii)For purposes of this subparagraph:
(I)Controlled includes, without limitation, the right to acquire the property under an option agreement, purchase and sale agreement, or similar agreement.
(II)Permit application includes, without limitation, a building permit application, an application pursuant to Chapter 4.5 (commencing with Section 65920) of Division 1 of Title 7 of the Government Code, including a preliminary application pursuant to Section 65941.1 of the Government Code, an application for a zoning or general plan amendment, an application for a specific plan or amendment to a specific plan, a notice of intent or an application for development pursuant to Section 65913.4 of the Government Code, or an application for development pursuant to Section 65912.110 of the Government Code.
(2)Affordable rent shall have the same meaning as defined in Section 50053 of the Health and Safety Code.
(3)Lower income households shall have the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(4)Modification document means a restrictive covenant modification document described in paragraph (1) of subdivision (b).
(5)Owner means any record title owner of the property, any beneficial owner of the property, or an entity or individual controlling the property for purposes of subparagraph (B) of paragraph (1).
(6)Restrictive covenant means any recorded covenant, condition, restriction, or 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, size, or location of the residences that may be built on the property or that restricts the number of persons or families who may reside on the property, as described in subdivision (a).
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)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, size, or location of the residences that may be built on the property, or that restrict the number of persons or families who may reside on the property, shall not be enforceable against the owner of an affordable housing development, if an approved restrictive covenant affordable housing modification document has been recorded in the public record as provided for in this section, except as explicitly provided in this section.
(b)(1)The owner of an affordable housing development shall be entitled to establish that an existing restrictive covenant is unenforceable under subdivision (a) by submitting a restrictive covenant modification document pursuant to Section 12956.2 of the Government Code that modifies or removes any existing restrictive covenant language that restricts the number, size, or location of the residences that may be built on the property, or that restricts the number of persons or families 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)(A)The owner shall submit to the county recorder a copy of the original restrictive covenant, a copy of any notice the owner believes is required pursuant to paragraph (3) of subdivision (g), and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development under this section prior to, or simultaneously with, the submission of the request for recordation of the restrictive covenant modification document.
(B)Before recording the restrictive covenant modification document, pursuant to subdivision (b) of Section 12956.2 of the Government Code, the county recorder shall, within five business days of receipt, submit the documentation provided to the county recorder by the owner pursuant to subparagraph (A) 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), whether the owner has submitted documents sufficient to establish that the property qualifies as an affordable housing development under this section, whether any notice required under this section has been provided, whether any exemption provided in subdivision (g) or (h) applies, and whether the restriction 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)Pursuant to Section 12956.2 of the Government Code, the county counsel shall return the documents and inform the county recorder of the county counsels determination within 15 days of submission to the county counsel. If the county counsel is unable to make a determination, the county counsel shall specify the documentation that is needed in order to make the determination. If the county counsel has authorized the county recorder to record the modification document, that authorization shall be noted on the face of the modification or on a cover sheet affixed thereto, and the county recorder shall notify the owner or submitting party of the county counsels determination without delay so that the notice described in subparagraph (D) may be given.
(D)Upon being notified that the county counsel has authorized the county recorder to record the modification document, the owner may mail, by certified mail to anyone who the owner knows has an interest in the property or in the restrictive covenant, a copy of the modification document, together with a copy of this section and a written explanation that the modification has been applied for and approved for recordation by the county counsel pursuant to this section. That notice shall be deemed given if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipients address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll. The owner may also publish notice pursuant to Section 6061 of the Government Code identifying that a modification document pursuant to this section has been submitted to the county recorder and approved for recordation by the county counsel, and that the modification document is available for public inspection in the office of the county recorder. The notice shall also identify the property by assessors parcel number and mailing address. If no mailing address has been assigned for the property, then the property shall be identified instead by its nearest intersection. If the owner elects to publish notice in this manner, then notice shall be deemed given to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll. Notice as described in this subparagraph is optional, and failure to provide it shall not, in any manner, invalidate a restrictive covenant modification document recorded pursuant to this section.
(E)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 or if the county counsel finds that the property does not qualify as an affordable housing development. If the owner of the property is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, then the owner shall not record the modification document until the owner closes escrow on the property and becomes its record title owner.
(F)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, subject to any intervening amendments or modifications, except to the extent modified by the recorded modification document.
(3)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 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.
(4)A restrictive covenant that was originally invalidated by this section shall become and remain enforceable while the property subject to the restrictive covenant modification is utilized in any manner that violates the terms of the affordability restrictions required by this section.
(5)If the property is utilized in any manner that violates the terms of the affordability restrictions required by this section, the city or county may, after notice and an opportunity to be heard, record a notice of that violation. If the owner complies with the applicable affordability restrictions, the owner may apply to the agency of the city or county that recorded the notice of violation for a release of the notice of violation, and if approved by the city or county, a release of the notice of violation may be recorded.
(6)The county recorder may charge a standard recording fee to an owner who submits a modification document for recordation pursuant to this section.
(c)(1)Subject to paragraph (2), this section shall only apply to restrictive covenants that restrict the number, size, or location of the residences that may be built on a property or that restrict the number of persons or families 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)Paragraph (1) shall not apply to restrictive covenants, fees, and assessments that have not been consistently enforced or assessed prior to the construction of the affordable housing development.
(d)(1)Any suit filed by a party that is deemed to have been given notice as described in subparagraph (D) of paragraph (2) of subdivision (b), which challenges the validity of a restrictive covenant modification document pursuant to this section, shall be filed within 35 days of that notice.
(2)In any suit filed to enforce the rights provided in this section or defend against a suit filed against them, a prevailing owner of an affordable housing development, and any successors or assigns, or a holder of a conservation easement, shall be entitled to recover, as part of any judgment, litigation costs and reasonable attorneys fees, provided that any judgment entered shall be limited to those costs incurred after the modification document was recorded as provided by subdivision (b).
(3)This subdivision shall not prevent the court from awarding any prevailing party litigation costs and reasonable attorneys fees otherwise authorized by applicable law, including, but not limited to, subdivision (d) of Section 815.7 of the Civil Code.
(e)This section shall not 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 shall not be interpreted to 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)(1)Subject to paragraph (2), this section does not apply to:
(A)Any conservation easement, as defined in Section 815.1, that is recorded as required by Section 815.5, and held by any of the entities or organizations set forth in Section 815.3.
(B)Any interest in land comparable to a conservation easement that is held by any political subdivision and recorded in the office of the county recorder of the county where the land is situated.
(2)The exclusion from this section of conservation easements held by tax-exempt nonprofit organizations, as provided in subparagraph (A) of paragraph (1), applies only if the conservation easement satisfies one or more of the following:
(A)It was recorded in the office of the county recorder where the property is located before January 1, 2022.
(B)It is, as of the date of recordation of the conservation easement, held by a land trust or other entity that is accredited by the Land Trust Accreditation Commission, or any successor organization, or is a member of the California Council of Land Trusts, or any successor organization, and notice of that ownership is provided in the text of the recorded conservation easement document, or if that notice is not provided in the text of the recorded conservation easement document, the land trust or other entity provides documentation of that accreditation or membership within 30 days of receipt of either of the following:
(i)A written request for that documentation.
(ii)Any written notice of the intended modification of the conservation easement provided pursuant to paragraph (3).
(C)It was funded in whole or in part by a local, state, federal, or tribal government or was required by a local, state, federal, or tribal government as mitigation for, or as a condition of approval of, a project, and notice of that funding or mitigation requirement is provided in the text of the recorded conservation easement document.
(D)It is held by a land trust or other entity whose purpose is to conserve or protect indigenous cultural resources, and that purpose of the land trust or other entity is provided in the text of the recorded conservation easement document.
(E)It, as of the date of recordation of the conservation easement, burdens property that is located entirely outside the boundaries of any urbanized area or urban cluster, as designated by the United States Census Bureau.
(3)(A)At least 60 days before submission of a modification document modifying a conservation easement to a county recorder pursuant to subdivision (b), the owner of an affordable housing development shall provide written notice of the intended modification of any conservation easement to the parties to that conservation easement and any third-party beneficiaries or other entities that are entitled to receive notice of changes to or termination of the conservation easement with the notice being sent to the notice address of those parties as specified in the recorded conservation easement. The notice shall include a return mailing address of the owner of the affordable housing development, the approximate number, size, and location of intended structures to be built on the property for the purposes of affordable housing, and a copy of the intended modification document, and shall specify that it is being provided pursuant to this section.
(B)The county recorder shall not record any restrictive covenant modification document unless the county recorder has received confirmation from the county counsel that any notice required pursuant to subparagraph (A) was provided in accordance with subparagraph (A).
(h)This section shall not apply to any settlement, conservation agreement, or conservation easement, notice of which has been recorded, for which either of the following apply:
(1)It was entered into before January 1, 2022, and limits the density of or precludes development in order to mitigate for the environmental impacts of a proposed project or to resolve a dispute about the level of permitted development on the property.
(2)It was entered into after January 1, 2022, and limits the density of or precludes development where the settlement is approved by a court of competent jurisdiction and the court finds that the density limitation is for the express purpose of protecting the natural resource or open-space value of the property.
(i)The provisions of this section shall not apply to any recorded deed restriction, public access easement, or other similar covenant that was required by a state agency for the purpose of compliance with a state or federal law, provided that the recorded deed restriction, public access easement, or similar covenant contains notice within the recorded document, inclusive of its recorded exhibits, that it was recorded to satisfy a state agency requirement.
(j)For purposes of this section:
(1)Affordable housing development means a development located on the property that is the subject of the recorded restrictive covenant and that meets one of the following requirements:
(A)The property is subject to a recorded affordability restriction requiring 100 percent of the units, exclusive of a managers unit or units, be made available at affordable rent to, and be occupied by, lower income households for 55 years for rental housing, unless a local ordinance or the terms of a federal, state, or local grant, tax credit, or other project financing requires, as a condition of the development of residential units, that the development include a certain percentage of units that are affordable to, and occupied by, low-income, lower income, very low income, or extremely low income households for a term that exceeds 55 years for rental housing units.
(B)(i)The property is owned or controlled by an entity or individual that has submitted a permit application to the relevant jurisdiction to develop a project that complies with subparagraph (A).
(ii)For purposes of this subparagraph:
(I)Controlled includes, without limitation, the right to acquire the property under an option agreement, purchase and sale agreement, or similar agreement.
(II)Permit application includes, without limitation, a building permit application, an application pursuant to Chapter 4.5 (commencing with Section 65920) of Division 1 of Title 7 of the Government Code, including a preliminary application pursuant to Section 65941.1 of the Government Code, an application for a zoning or general plan amendment, an application for a specific plan or amendment to a specific plan, a notice of intent or an application for development pursuant to Section 65913.4 of the Government Code, or an application for development pursuant to Section 65912.110 of the Government Code.
(2)Affordable rent shall have the same meaning as defined in Section 50053 of the Health and Safety Code.
(3)Lower income households shall have the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(4)Modification document means a restrictive covenant modification document described in paragraph (1) of subdivision (b).
(5)Owner means any record title owner of the property, any beneficial owner of the property, or an entity or individual controlling the property for purposes of subparagraph (B) of paragraph (1).
(6)Restrictive covenant means any recorded covenant, condition, restriction, or 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, size, or location of the residences that may be built on the property or that restricts the number of persons or families who may reside on the property, as described in subdivision (a).
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)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, size, or location of the residences that may be built on the property, or that restrict the number of persons or families who may reside on the property, shall not be enforceable against the owner of an affordable housing development, if an approved restrictive covenant affordable housing modification document has been recorded in the public record as provided for in this section, except as explicitly provided in this section.
(b)(1)The owner of an affordable housing development shall be entitled to establish that an existing restrictive covenant is unenforceable under subdivision (a) by submitting a restrictive covenant modification document pursuant to Section 12956.2 of the Government Code that modifies or removes any existing restrictive covenant language that restricts the number, size, or location of the residences that may be built on the property, or that restricts the number of persons or families 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)(A)The owner shall submit to the county recorder a copy of the original restrictive covenant, a copy of any notice the owner believes is required pursuant to paragraph (3) of subdivision (g), and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development under this section prior to, or simultaneously with, the submission of the request for recordation of the restrictive covenant modification document.
(B)Before recording the restrictive covenant modification document, pursuant to subdivision (b) of Section 12956.2 of the Government Code, the county recorder shall, within five business days of receipt, submit the documentation provided to the county recorder by the owner pursuant to subparagraph (A) 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), whether the owner has submitted documents sufficient to establish that the property qualifies as an affordable housing development under this section, whether any notice required under this section has been provided, whether any exemption provided in subdivision (g) or (h) applies, and whether the restriction 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)Pursuant to Section 12956.2 of the Government Code, the county counsel shall return the documents and inform the county recorder of the county counsels determination within 15 days of submission to the county counsel. If the county counsel is unable to make a determination, the county counsel shall specify the documentation that is needed in order to make the determination. If the county counsel has authorized the county recorder to record the modification document, that authorization shall be noted on the face of the modification or on a cover sheet affixed thereto, and the county recorder shall notify the owner or submitting party of the county counsels determination without delay so that the notice described in subparagraph (D) may be given.
(D)Upon being notified that the county counsel has authorized the county recorder to record the modification document, the owner may mail, by certified mail to anyone who the owner knows has an interest in the property or in the restrictive covenant, a copy of the modification document, together with a copy of this section and a written explanation that the modification has been applied for and approved for recordation by the county counsel pursuant to this section. That notice shall be deemed given if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipients address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll. The owner may also publish notice pursuant to Section 6061 of the Government Code identifying that a modification document pursuant to this section has been submitted to the county recorder and approved for recordation by the county counsel, and that the modification document is available for public inspection in the office of the county recorder. The notice shall also identify the property by assessors parcel number and mailing address. If no mailing address has been assigned for the property, then the property shall be identified instead by its nearest intersection. If the owner elects to publish notice in this manner, then notice shall be deemed given to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll. Notice as described in this subparagraph is optional, and failure to provide it shall not, in any manner, invalidate a restrictive covenant modification document recorded pursuant to this section.
(E)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 or if the county counsel finds that the property does not qualify as an affordable housing development. If the owner of the property is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, then the owner shall not record the modification document until the owner closes escrow on the property and becomes its record title owner.
(F)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, subject to any intervening amendments or modifications, except to the extent modified by the recorded modification document.
(3)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 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.
(4)A restrictive covenant that was originally invalidated by this section shall become and remain enforceable while the property subject to the restrictive covenant modification is utilized in any manner that violates the terms of the affordability restrictions required by this section.
(5)If the property is utilized in any manner that violates the terms of the affordability restrictions required by this section, the city or county may, after notice and an opportunity to be heard, record a notice of that violation. If the owner complies with the applicable affordability restrictions, the owner may apply to the agency of the city or county that recorded the notice of violation for a release of the notice of violation, and if approved by the city or county, a release of the notice of violation may be recorded.
(6)The county recorder shall may charge a standard recording fee to an owner who submits a modification document for recordation pursuant to this section.
(c)(1)Subject to paragraph (2), this section shall only apply to restrictive covenants that restrict the number, size, or location of the residences that may be built on a property or that restrict the number of persons or families 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)Paragraph (1) shall not apply to restrictive covenants, fees, and assessments that have not been consistently enforced or assessed prior to the construction of the affordable housing development.
(d)(1)Any suit filed by a party that is deemed to have been given notice as described in subparagraph (D) of paragraph (2) of subdivision (b), which challenges the validity of a restrictive covenant modification document pursuant to this section, shall be filed within 35 days of that notice.
(2)In any suit filed to enforce the rights provided in this section or defend against a suit filed against them, a prevailing owner of an affordable housing development, and any successors or assigns, or a holder of a conservation easement, shall be entitled to recover, as part of any judgment, litigation costs and reasonable attorneys fees, provided that any judgment entered shall be limited to those costs incurred after the modification document was recorded as provided by subdivision (b).
(3)This subdivision shall not prevent the court from awarding any prevailing party litigation costs and reasonable attorneys fees otherwise authorized by applicable law, including, but not limited to, subdivision (d) of Section 815.7 of the Civil Code.
(e)This section shall not 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 shall not be interpreted to 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)(1)Subject to paragraph (2), this section does not apply to:
(A)Any conservation easement, as defined in Section 815.1, that is recorded as required by Section 815.5, and held by any of the entities or organizations set forth in Section 815.3.
(B)Any interest in land comparable to a conservation easement that is held by any political subdivision and recorded in the office of the county recorder of the county where the land is situated.
(2)The exclusion from this section of conservation easements held by tax-exempt nonprofit organizations, as provided in subparagraph (A) of paragraph (1), applies only if the conservation easement satisfies one or more of the following:
(A)It was recorded in the office of the county recorder where the property is located before January 1, 2022.
(B)It is, as of the date of recordation of the conservation easement, held by a land trust or other entity that is accredited by the Land Trust Accreditation Commission, or any successor organization, or is a member of the California Council of Land Trusts, or any successor organization, and notice of that ownership is provided in the text of the recorded conservation easement document, or if that notice is not provided in the text of the recorded conservation easement document, the land trust or other entity provides documentation of that accreditation or membership within 30 days of receipt of either of the following:
(i)A written request for that documentation.
(ii)Any written notice of the intended modification of the conservation easement provided pursuant to paragraph (3).
(C)It was funded in whole or in part by a local, state, federal, or tribal government or was required by a local, state, federal, or tribal government as mitigation for, or as a condition of approval of, a project, and notice of that funding or mitigation requirement is provided in the text of the recorded conservation easement document.
(D)It is held by a land trust or other entity whose purpose is to conserve or protect indigenous cultural resources, and that purpose of the land trust or other entity is provided in the text of the recorded conservation easement document.
(E)It, as of the date of recordation of the conservation easement, burdens property that is located entirely outside the boundaries of any urbanized area or urban cluster, as designated by the United States Census Bureau.
(3)(A)At least 60 days before submission of a modification document modifying a conservation easement to a county recorder pursuant to subdivision (b), the owner of an affordable housing development shall provide written notice of the intended modification of any conservation easement to the parties to that conservation easement and any third-party beneficiaries or other entities that are entitled to receive notice of changes to or termination of the conservation easement with the notice being sent to the notice address of those parties as specified in the recorded conservation easement. The notice shall include a return mailing address of the owner of the affordable housing development, the approximate number, size, and location of intended structures to be built on the property for the purposes of affordable housing, and a copy of the intended modification document, and shall specify that it is being provided pursuant to this section.
(B)The county recorder shall not record any restrictive covenant modification document unless the county recorder has received confirmation from the county counsel that any notice required pursuant to subparagraph (A) was provided in accordance with subparagraph (A).
(h)This section shall not apply to any settlement, conservation agreement, or conservation easement, notice of which has been recorded, for which either of the following apply:
(1)It was entered into before January 1, 2022, and limits the density of or precludes development in order to mitigate for the environmental impacts of a proposed project or to resolve a dispute about the level of permitted development on the property.
(2)It was entered into after January 1, 2022, and limits the density of or precludes development where the settlement is approved by a court of competent jurisdiction and the court finds that the density limitation is for the express purpose of protecting the natural resource or open-space value of the property.
(i)The provisions of this section shall not apply to any recorded deed restriction, public access easement, or other similar covenant that was required by a state agency for the purpose of compliance with a state or federal law, provided that the recorded deed restriction, public access easement, or similar covenant contains notice within the recorded document, inclusive of its recorded exhibits, that it was recorded to satisfy a state agency requirement.
(j)For purposes of this section:
(1)Affordable housing development means a development located on the property that is the subject of the recorded restrictive covenant and that meets one of the following requirements:
(A)The property is subject to a recorded affordability restriction requiring 100 percent of the units, exclusive of a managers unit or units, be made available at affordable rent to, and be occupied by, lower income households for 55 years for rental housing, unless a local ordinance or the terms of a federal, state, or local grant, tax credit, or other project financing requires, as a condition of the development of residential units, that the development include a certain percentage of units that are affordable to, and occupied by, low-income, lower income, very low income, or extremely low income households for a term that exceeds 55 years for rental housing units.
(B)(i)The property is owned or controlled by an entity or individual that has submitted a permit application to the relevant jurisdiction to develop a project that complies with subparagraph (A).
(ii)For purposes of this subparagraph:
(I)Controlled includes, without limitation, the right to acquire the property under an option agreement, purchase and sale agreement, or similar agreement.
(II)Permit application includes, without limitation, a building permit application, an application pursuant to Chapter 4.5 (commencing with Section 65920) of Division 1 of Title 7 of the Government Code, including a preliminary application pursuant to Section 65941.1 of the Government Code, an application for a zoning or general plan amendment, an application for a specific plan or amendment to a specific plan, a notice of intent or an application for development pursuant to Section 65913.4 of the Government Code, or an application for development pursuant to Section 65912.110 of the Government Code.
(2)Affordable rent shall have the same meaning as defined in Section 50053 of the Health and Safety Code.
(3)Lower income households shall have the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(4)Modification document means a restrictive covenant modification document described in paragraph (1) of subdivision (b).
(5)Owner means any record title owner of the property, any beneficial owner of the property, or an entity or individual controlling the property for purposes of subparagraph (B) of paragraph (1).
(6)Restrictive covenant means any recorded covenant, condition, restriction, or 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, size, or location of the residences that may be built on the property or that restricts the number of persons or families who may reside on the property, as described in subdivision (a).
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)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, size, or location of the residences that may be built on the property, or that restrict the number of persons or families who may reside on the property, shall not be enforceable against the owner of an affordable housing development, if an approved restrictive covenant affordable housing modification document has been recorded in the public record as provided for in this section, except as explicitly provided in this section.
(b)(1)The owner of an affordable housing development shall be entitled to establish that an existing restrictive covenant is unenforceable under subdivision (a) by submitting a restrictive covenant modification document pursuant to Section 12956.2 of the Government Code that modifies or removes any existing restrictive covenant language that restricts the number, size, or location of the residences that may be built on the property, or that restricts the number of persons or families 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)(A)The owner shall submit to the county recorder a copy of the original restrictive covenant, a copy of any notice the owner believes is required pursuant to paragraph (3) of subdivision (g), and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development under this section prior to, or simultaneously with, the submission of the request for recordation of the restrictive covenant modification document.
(B)Before recording the restrictive covenant modification document, pursuant to subdivision (b) of Section 12956.2 of the Government Code, the county recorder shall, within five business days of receipt, submit the documentation provided to the county recorder by the owner pursuant to subparagraph (A) 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), whether the owner has submitted documents sufficient to establish that the property qualifies as an affordable housing development under this section, whether any notice required under this section has been provided, whether any exemption provided in subdivision (g) or (h) applies, and whether the restriction 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)Pursuant to Section 12956.2 of the Government Code, the county counsel shall return the documents and inform the county recorder of the county counsels determination within 15 days of submission to the county counsel. If the county counsel is unable to make a determination, the county counsel shall specify the documentation that is needed in order to make the determination. If the county counsel has authorized the county recorder to record the modification document, that authorization shall be noted on the face of the modification or on a cover sheet affixed thereto, and the county recorder shall notify the owner or submitting party of the county counsels determination within five business days without delay so that the notice described in subparagraph (D) may be given.
(D)Upon being notified that the county counsel has authorized the county recorder to record the modification document, the owner may mail, by certified mail to anyone who the owner knows has an interest in the property or in the restrictive covenant, a copy of the modification document, together with a copy of this section and a written explanation that the modification has been applied for and approved for recordation by the county counsel pursuant to this section. That notice shall be deemed given if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipients address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll. The owner may also publish notice pursuant to Section 6061 of the Government Code identifying that an application a modification document pursuant to this section has been filed with submitted to the county recorder and approved for recordation by the county counsel, and that the modification document is available for public inspection in the office of the county recorder. The notice shall also identify the property by assessors parcel number and mailing address. If no mailing address has been assigned for the property, then the property shall be identified instead by its nearest intersection. If the owner elects to publish notice in this manner, then notice shall be deemed given to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll. Notice as described in this subparagraph is optional, and failure to provide it shall not, in any manner, invalidate a restrictive covenant modification document recorded pursuant to this section.
(E)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 or if the county counsel finds that the property does not qualify as an affordable housing development. If the owner of the property is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, then the county recorder owner shall not record the modification document until the owner closes escrow on the property and becomes its record title owner.
(F)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, subject to any intervening amendments or modifications, except to the extent modified by the recorded modification document.
(3)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 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.
(4)A restrictive covenant that was originally invalidated by this section shall become and remain enforceable while the property subject to the restrictive covenant modification is utilized in any manner that violates the terms of the affordability restrictions required by this section.
(5)If the property is utilized in any manner that violates the terms of the affordability restrictions required by this section, the city or county may, after notice and an opportunity to be heard, record a notice of that violation. If the owner complies with the applicable affordability restrictions, the owner may apply to the agency of the city or county that recorded the notice of violation for a release of the notice of violation, and if approved by the city or county, a release of the notice of violation may be recorded.
(6)The county recorder shall charge a standard recording fee to an owner who submits a modification document for recordation pursuant to this section.
(c)(1)Subject to paragraph (2), this section shall only apply to restrictive covenants that restrict the number, size, or location of the residences that may be built on a property or that restrict the number of persons or families 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)Paragraph (1) shall not apply to restrictive covenants, fees, and assessments that have not been consistently enforced or assessed prior to the construction of the affordable housing development.
(d)(1)Any suit filed by a party that is deemed to have been given notice as described in subparagraph (D) of paragraph (2) of subdivision (b), which challenges the validity of a restrictive covenant modification document pursuant to this section, shall be filed within 35 days of that notice.
(2)In any suit filed to enforce the rights provided in this section or defend against a suit filed against them, a prevailing owner of an affordable housing development, and any successors or assigns, or a holder of a conservation easement, shall be entitled to recover, as part of any judgment, litigation costs and reasonable attorneys fees, provided that any judgment entered shall be limited to those costs incurred after the modification document was recorded as provided by subdivision (b).
(3)This subdivision shall not prevent the court from awarding any prevailing party litigation costs and reasonable attorneys fees otherwise authorized by applicable law, including, but not limited to, subdivision (d) of Section 815.7 of the Civil Code.
(e)This section shall not 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 shall not be interpreted to 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)(1)Subject to paragraph (2), this section does not apply to:
(A)Any conservation easement, as defined in Section 815.1, that is recorded as required by Section 815.5, and held by any of the entities or organizations set forth in Section 815.3.
(B)Any interest in land comparable to a conservation easement that is held by any political subdivision and recorded in the office of the county recorder of the county where the land is situated.
(2)The exclusion from this section of conservation easements held by tax-exempt nonprofit organizations, as provided in subparagraph (A) of paragraph (1), applies only if the conservation easement satisfies one or more of the following:
(A)It was recorded in the office of the county recorder where the property is located before January 1, 2022.
(B)It is, as of the date of recordation of the conservation easement, held by a land trust or other entity that is accredited by the Land Trust Accreditation Commission, or any successor organization, or is a member of the California Council of Land Trusts, or any successor organization, and notice of that ownership is provided in the text of the recorded conservation easement document, or if that notice is not provided in the text of the recorded conservation easement document, the land trust or other entity provides documentation of that accreditation or membership within 30 days of receipt of either of the following:
(i)A written request for that documentation.
(ii)Any written notice of the intended modification of the conservation easement provided pursuant to paragraph (3).
(C)It was funded in whole or in part by a local, state, federal, or tribal government or was required by a local, state, federal, or tribal government as mitigation for, or as a condition of approval of, a project, and notice of that funding or mitigation requirement is provided in the text of the recorded conservation easement document.
(D)It is held by a land trust or other entity whose purpose is to conserve or protect indigenous cultural resources, and that purpose of the land trust or other entity is provided in the text of the recorded conservation easement document.
(E)It, as of the date of recordation of the conservation easement, burdens property that is located entirely outside the boundaries of any urbanized area or urban cluster, as designated by the United States Census Bureau.
(3)(A)At least 60 days before submission of a modification document modifying a conservation easement to a county recorder pursuant to subdivision (b), the owner of an affordable housing development shall provide written notice of the intended modification of any conservation easement to the parties to that conservation easement and any third-party beneficiaries or other entities that are entitled to receive notice of changes to or termination of the conservation easement with the notice being sent to the notice address of those parties as specified in the recorded conservation easement. The notice shall include a return mailing address of the owner of the affordable housing development, the approximate number, size, and location of intended structures to be built on the property for the purposes of affordable housing, and a copy of the intended modification document, and shall specify that it is being provided pursuant to this section.
(B)The county recorder shall not record any restrictive covenant modification document unless the county recorder has received confirmation from the county counsel that any notice required pursuant to subparagraph (A) was provided in accordance with subparagraph (A).
(h)This section shall not apply to any settlement, conservation agreement, or conservation easement, notice of which has been recorded, for which either of the following apply:
(1)It was entered into before January 1, 2022, and limits the density of or precludes development in order to mitigate for the environmental impacts of a proposed project or to resolve a dispute about the level of permitted development on the property.
(2)It was entered into after January 1, 2022, and limits the density of or precludes development where the settlement is approved by a court of competent jurisdiction and the court finds that the density limitation is for the express purpose of protecting the natural resource or open-space value of the property.
(i)The provisions of this section shall not apply to any recorded deed restriction, public access easement, or other similar covenant that was required by a state agency for the purpose of compliance with a state or federal law, provided that the recorded deed restriction, public access easement, or similar covenant contains notice within the recorded document, inclusive of its recorded exhibits, that it was recorded to satisfy a state agency requirement.
(j)For purposes of this section:
(1)Affordable housing development means a development located on the property that is the subject of the recorded restrictive covenant and that meets one of the following requirements:
(A)The property is subject to a recorded affordability restriction requiring 100 percent of the units, exclusive of a managers unit or units, be made available at affordable rent to, and be occupied by, lower income households for 55 years for rental housing, unless a local ordinance or the terms of a federal, state, or local grant, tax credit, or other project financing requires, as a condition of the development of residential units, that the development include a certain percentage of units that are affordable to, and occupied by, low-income, lower income, very low income, or extremely low income households for a term that exceeds 55 years for rental housing units.
(B)(i)The property is owned or controlled by an entity or individual that has submitted a permit application to the relevant jurisdiction to develop a project that complies with subparagraph (A).
(ii)For purposes of this subparagraph:
(I)Controlled includes, without limitation, the right to acquire the property under an option agreement, purchase and sale agreement, or similar agreement.
(II)Permit application includes, without limitation, a building permit application, an application pursuant to Chapter 4.5 (commencing with Section 65920) of Division 1 of Title 7 of the Government Code, including a preliminary application pursuant to Section 65941.1 of the Government Code, an application for a zoning or general plan amendment, an application for a specific plan or amendment to a specific plan, a notice of intent or an application for development pursuant to Section 65913.4 of the Government Code, or an application for development pursuant to Section 65912.110 of the Government Code.
(2)Affordable rent shall have the same meaning as defined in Section 50053 of the Health and Safety Code.
(3)Lower income households shall have the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(4)Modification document means a restrictive covenant modification document described in paragraph (1) of subdivision (b).
(5)Owner means any record title owner of the property, any beneficial owner of the property, or an entity or individual controlling the property for purposes of subparagraph (B) of paragraph (1).
(6)Restrictive covenant means any recorded covenant, condition, restriction, or 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, size, or location of the residences that may be built on the property or that restricts the number of persons or families who may reside on the property, as described in subdivision (a).
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)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, size, or location of the residences that may be built on the property, or that restrict the number of persons or families who may reside on the property, shall not be enforceable against the owner of an affordable housing development, if an approved restrictive covenant affordable housing modification document has been recorded in the public record as provided for in this section, except as explicitly provided in this section.
(b)(1)The owner of an affordable housing development shall be entitled to establish that an existing restrictive covenant is unenforceable under subdivision (a) by submitting a restrictive covenant modification document pursuant to Section 12956.2 of the Government Code that modifies or removes any existing restrictive covenant language that restricts the number, size, or location of the residences that may be built on the property, or that restricts the number of persons or families 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)(A)The owner shall submit to the county recorder a copy of the original restrictive covenant, a copy of any notice the owner believes is required pursuant to paragraph (3) of subdivision (g), and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development under this section prior to, or simultaneously with, the submission of the request for recordation of the restrictive covenant modification document.
(B)Before recording the restrictive covenant modification document, pursuant to subdivision (b) of Section 12956.2 of the Government Code, the county recorder shall, within five business days of receipt, submit the documentation provided to the county recorder by the owner pursuant to subparagraph (A) 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), whether the owner has submitted documents sufficient to establish that the property qualifies as an affordable housing development under this section, whether any notice required under this section has been provided, whether any exemption provided in subdivision (g) or (h) applies, and whether the restriction 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)Pursuant to Section 12956.2 of the Government Code, the county counsel shall return the documents and inform the county recorder of the county counsels determination within 15 days of submission to the county counsel. If the county counsel is unable to make a determination, the county counsel shall specify the documentation that is needed in order to make the determination. If the county counsel has authorized the county recorder to record the modification document, that authorization shall be noted on the face of the modification or on a cover sheet affixed thereto, and the county recorder shall notify the owner of the county counsels determination within five business days so that the notice described in subparagraph (D) may be given.
(D)Upon being notified that the county counsel has authorized the county recorder to record the modification document, the owner may mail, by certified mail to anyone who the owner knows has an interest in the property or in the restrictive covenant, a copy of the modification document, together with a copy of this section and a written explanation that the modification has been applied for and approved for recordation by the county counsel pursuant to this section. That notice shall be deemed given if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipients address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll. The owner may also publish notice pursuant to Section 6061 of the Government Code identifying that an application pursuant to this section has been filed with the county recorder and approved for recordation by the county counsel, and that the modification document is available for public inspection in the office of the county recorder. The notice shall also identify the property by assessors parcel number and mailing address. If no mailing address has been assigned for the property, then the property shall be identified instead by its nearest intersection. If the owner elects to publish notice in this manner, then notice shall be deemed given to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll. Notice as described in this subparagraph is optional, and failure to provide it shall not, in any manner, invalidate a restrictive covenant modification document recorded pursuant to this section.
(E)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 or if the county counsel finds that the property does not qualify as an affordable housing development. If the owner of the property is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, then the county recorder shall not record the modification document until the owner closes escrow on the property and becomes its record title owner.
(F)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, subject to any intervening amendments or modifications, except to the extent modified by the recorded modification document.
(3)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 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.
(4)A restrictive covenant that was originally invalidated by this section shall become and remain enforceable while the property subject to the restrictive covenant modification is utilized in any manner that violates the terms of the affordability restrictions required by this section.
(5)If the property is utilized in any manner that violates the terms of the affordability restrictions required by this section, the city or county may, after notice and an opportunity to be heard, record a notice of that violation. If the owner complies with the applicable affordability restrictions, the owner may apply to the agency of the city or county that recorded the notice of violation for a release of the notice of violation, and if approved by the city or county, a release of the notice of violation may be recorded.
(6)The county recorder shall charge a standard recording fee to an owner who submits a modification document for recordation pursuant to this section.
(c)(1)Subject to paragraph (2), this section shall only apply to restrictive covenants that restrict the number, size, or location of the residences that may be built on a property or that restrict the number of persons or families 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)Paragraph (1) shall not apply to restrictive covenants, fees, and assessments that have not been consistently enforced or assessed prior to the construction of the affordable housing development.
(d)(1)Any suit filed by a party that is deemed to have been given notice as described in subparagraph (D) of paragraph (2) of subdivision (b), which suit challenges the validity of a restrictive covenant modification document pursuant to this section, shall be filed within 35 days of that notice.
(2)In any suit filed to enforce the rights provided in this section or defend against a suit filed against them, a prevailing owner of an affordable housing development, and any successors or assigns, or a holder of a conservation easement, shall be entitled to recover, as part of any judgment, litigation costs and reasonable attorneys fees, provided that any judgment entered shall be limited to those costs incurred after the modification document was recorded as provided by subdivision (b).
(3)This subdivision shall not prevent the court from awarding any prevailing party litigation costs and reasonable attorneys fees otherwise authorized by applicable law, including, but not limited to, subdivision (d) of Section 815.7 of the Civil Code.
(e)This section shall not 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 shall not be interpreted to 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)(1)Subject to paragraph (2), this section does not apply to:
(A)Any conservation easement, as defined in Section 815.1, that is recorded as required by Section 815.5, and held by any of the entities or organizations set forth in Section 815.3.
(B)Any interest in land comparable to a conservation easement that is held by any political subdivision and recorded in the office of the county recorder of the county where the land is situated.
(2)The exclusion from this section of conservation easements held by tax-exempt nonprofit organizations, as provided in subparagraph (A) of paragraph (1), applies only if the conservation easement satisfies one or more of the following:
(A)It was recorded in the office of the county recorder where the property is located before January 1, 2022.
(B)It is, as of the date of recordation of the conservation easement, held by a land trust or other entity that is accredited by the Land Trust Accreditation Commission, or any successor organization, or is a member of the California Council of Land Trusts, or any successor organization, and notice of that ownership is provided in the text of the recorded conservation easement document, or if that notice is not provided in the text of the recorded conservation easement document, the land trust or other entity provides documentation of that accreditation or membership within 30 days of receipt of either of the following:
(i)A written request for that documentation.
(ii)Any written notice of the intended modification of the conservation easement provided pursuant to paragraph (3).
(C)It was funded in whole or in part by a local, state, federal, or tribal government or was required by a local, state, federal, or tribal government as mitigation for, or as a condition of approval of, a project, and notice of that funding or mitigation requirement is provided in the text of the recorded conservation easement document.
(D)It is held by a land trust or other entity whose purpose is to conserve or protect indigenous cultural resources, and that purpose of the land trust or other entity is provided in the text of the recorded conservation easement document.
(E)It, as of the date of recordation of the conservation easement, burdens property that is located entirely outside the boundaries of any urbanized area or urban cluster, as designated by the United States Census Bureau.
(3)(A)At least 60 days before submission of a modification document modifying a conservation easement to a county recorder pursuant to subdivision (b), the owner of an affordable housing development shall provide written notice of the intended modification of any conservation easement to the parties to that conservation easement and any third-party beneficiaries or other entities that are entitled to receive notice of changes to or termination of the conservation easement with the notice being sent to the notice address of those parties as specified in the recorded conservation easement. The notice shall include a return mailing address of the owner of the affordable housing development, the approximate number, size, and location of intended structures to be built on the property for the purposes of affordable housing, and a copy of the intended modification document, and shall specify that it is being provided pursuant to this section.
(B)The county recorder shall not record any restrictive covenant modification document unless the county recorder has received confirmation from the county counsel that any notice required pursuant to subparagraph (A) was provided in accordance with subparagraph (A).
(h)This section shall not apply to any settlement, conservation agreement, or conservation easement, notice of which has been recorded, for which either of the following apply:
(1)It was entered into before January 1, 2022, and limits the density of or precludes development in order to mitigate for the environmental impacts of a proposed project or to resolve a dispute about the level of permitted development on the property.
(2)It was entered into after January 1, 2022, and limits the density of or precludes development where the settlement is approved by a court of competent jurisdiction and the court finds that the density limitation is for the express purpose of protecting the natural resource or open-space value of the property.
(i)The provisions of this section shall not apply to any recorded deed restriction, public access easement, or other similar covenant that was required by a state agency for the purpose of compliance with a state or federal law, provided that the recorded deed restriction, public access easement, or similar covenant contains notice within the recorded document, inclusive of its recorded exhibits, that it was recorded to satisfy a state agency requirement.
(j)For purposes of this section:
(1)Affordable housing development means a development located on the property that is the subject of the recorded restrictive covenant and that meets one of the following requirements:
(A)The property is subject to a recorded affordability restriction requiring 100 percent of the units, exclusive of a managers unit or units, be made available at affordable rent to, and be occupied by, lower income households for 55 years for rental housing, unless a local ordinance or the terms of a federal, state, or local grant, tax credit, or other project financing requires, as a condition of the development of residential units, that the development include a certain percentage of units that are affordable to, and occupied by, low-income, lower income, very low income, or extremely low income households for a term that exceeds 55 years for rental housing units.
(B)(i)The property is owned or controlled by an entity or individual that has submitted a permit application to the relevant jurisdiction to develop a project that complies with subparagraph (A).
(ii)For purposes of this subparagraph:
(I)Controlled includes, without limitation, the right to acquire the property under an option agreement, purchase and sale agreement, or similar agreement.
(II)Permit application includes, without limitation, a building permit application, an application pursuant to Chapter 4.5 (commencing with Section 65920) of Division 1 of Title 7 of the Government Code, including a preliminary application pursuant to Section 65941.1 of the Government Code, an application for a zoning or general plan amendment, an application for a specific plan or amendment to a specific plan, or a notice of intent submitted pursuant to subdivision (b) of or an application for development pursuant to Section 65913.4 of the Government Code. Code, or an application for development pursuant to Section 65912.110 of the Government Code.
(2)Affordable rent shall have the same meaning as defined in Section 50053 of the Health and Safety Code.
(3)Lower income households shall have the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(4)Modification document means a restrictive covenant modification document described in paragraph (1) of subdivision (b).
(5)Owner means any record title owner of the property, any beneficial owner of the property, or an entity or individual controlling the property for purposes of subparagraph (B) of paragraph (1).
(6)Restrictive covenant means any recorded covenant, condition, restriction, or 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, size, or location of the residences that may be built on the property or that restricts the number of persons or families who may reside on the property, as described in subdivision (a).
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)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, size, or location of the residences that may be built on the property, or that restrict the number of persons or families who may reside on the property, shall not be enforceable against the owner of an affordable housing development, if an approved restrictive covenant affordable housing modification document has been recorded in the public record as provided for in this section, except as explicitly provided in this section.
(b)(1)The owner of an affordable housing development shall be entitled to establish that an existing restrictive covenant is unenforceable under subdivision (a) by submitting a restrictive covenant modification document pursuant to Section 12956.2 of the Government Code that modifies or removes any existing restrictive covenant language that restricts the number, size, or location of the residences that may be built on the property, or that restricts the number of persons or families 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)(A)The owner shall submit to the county recorder a copy of the original restrictive covenant, a copy of any notice the owner believes is required pursuant to paragraph (3) of subdivision (g), and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development under this section prior to, or simultaneously with, the submission of the request for recordation of the restrictive covenant modification document.
(B)At the time the owner submits the materials required by subparagraph (A) to the county recorder, the owner shall mail copies of the materials, together with a copy of this section, by certified mail to anyone who the owner knows has an interest in the property, including any fee title owner of real property who is, by virtue of such ownership, a party or intended beneficiary of the restrictive covenant. Such notice shall be deemed given if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipients address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll. Failure to provide notice as required by this subparagraph shall not invalidate a restrictive covenant modification document recorded pursuant to this section, but the county recorder may require reasonable documentation to ensure compliance with this subparagraph.(C)In addition to the notice prescribed by subparagraph (B), the owner may publish notice pursuant to Section 6061 of the Government Code identifying that an application pursuant to this section has been filed with the county recorder and that the application materials are available for public inspection in the office of the county recorder. The notice shall also identify the property by assessors parcel number and mailing address. If no mailing address has been assigned for the property, then the property shall be identified instead by its nearest intersection. If the owner elects to publish notice in this matter, then the notice prescribed by subparagraph (B) shall be deemed given to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll. (D)(B)Before recording the restrictive covenant modification document, pursuant to subdivision (b) of Section 12956.2 of the Government Code, the county recorder shall, within five business days of receipt, submit the documentation provided to the county recorder by the owner pursuant to subparagraph (A) 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), whether the owner has submitted documents sufficient to establish that the property qualifies as an affordable housing development under this section, whether any notice required under this section has been provided, whether any exemption provided in subdivision (g) or (h) applies, and whether the restriction 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.
(E)(C)Pursuant to Section 12956.2 of the Government Code, the county counsel shall return the documents and inform the county recorder of the county counsels determination within 15 days of submission to the county counsel. If the county counsel is unable to make a determination, the county counsel shall specify the documentation that is needed in order to make the determination. If the county counsel has authorized the county recorder to record the modification document, that authorization shall be noted on the face of the modification or on a cover sheet affixed thereto. thereto, and the county recorder shall notify the owner of the county counsels determination within five business days so that the notice described in subparagraph (D) may be given.
(D)Upon being notified that the county counsel has authorized the county recorder to record the modification document, the owner may mail, by certified mail to anyone who the owner knows has an interest in the property or in the restrictive covenant, a copy of the modification document, together with a copy of this section and a written explanation that the modification has been applied for and approved for recordation by the county counsel pursuant to this section. That notice shall be deemed given if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipients address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll. The owner may also publish notice pursuant to Section 6061 of the Government Code identifying that an application pursuant to this section has been filed with the county recorder and approved for recordation by the county counsel, and that the modification document is available for public inspection in the office of the county recorder. The notice shall also identify the property by assessors parcel number and mailing address. If no mailing address has been assigned for the property, then the property shall be identified instead by its nearest intersection. If the owner elects to publish notice in this manner, then notice shall be deemed given to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll. Notice as described in this subparagraph is optional, and failure to provide it shall not, in any manner, invalidate a restrictive covenant modification document recorded pursuant to this section.
(F)(E)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 or if the county counsel finds that the property does not qualify as an affordable housing development. If the owner of the property is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, then the county recorder shall not record the modification document until the owner closes escrow on the property and becomes its record title owner.
(G)(F)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, subject to any intervening amendments or modifications, except to the extent modified by the recorded modification document.
(3)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 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.
(4)A restrictive covenant that was originally invalidated by this section shall become and remain enforceable while the property subject to the restrictive covenant modification is utilized in any manner that violates the terms of the affordability restrictions required by this section.
(5)If the property is utilized in any manner that violates the terms of the affordability restrictions required by this section, the city or county may, after notice and an opportunity to be heard, record a notice of that violation. If the owner complies with the applicable affordability restrictions, the owner may apply to the agency of the city or county that recorded the notice of violation for a release of the notice of violation, and if approved by the city or county, a release of the notice of violation may be recorded.
(6)The county recorder shall charge a standard recording fee to an owner who submits a modification document for recordation pursuant to this section.
(c)(1)Subject to paragraph (2), this section shall only apply to restrictive covenants that restrict the number, size, or location of the residences that may be built on a property or that restrict the number of persons or families 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)Paragraph (1) shall not apply to restrictive covenants, fees, and assessments that have not been consistently enforced or assessed prior to the construction of the affordable housing development.
(d)(1)Any suit filed by a party that is deemed to have been given notice as described in subparagraph (B) (D) of paragraph (2) of subdivision (b), which suit challenges the validity of a restrictive covenant modification document pursuant to this section, shall be filed within 35 days of recordation of the document. that notice.
(2)In any suit filed to enforce the rights provided in this section or defend against a suit filed against them, a prevailing owner of an affordable housing development, and any successors or assigns, or a holder of a conservation easement, shall be entitled to recover, as part of any judgment, litigation costs and reasonable attorneys fees, provided that any judgment entered shall be limited to those costs incurred after the modification document was recorded as provided by subdivision (b).
(3)This subdivision shall not prevent the court from awarding any prevailing party litigation costs and reasonable attorneys fees otherwise authorized by applicable law, including, but not limited to, subdivision (d) of Section 815.7 of the Civil Code.
(e)Nothing herein shall This section shall not 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 shall not be interpreted to 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)(1)Subject to paragraph (2), this section does not apply to:
(A)Any conservation easement, as defined in Section 815.1, that is recorded as required by Section 815.5, and held by any of the entities or organizations set forth in Section 815.3.
(B)Any interest in land comparable to a conservation easement that is held by any political subdivision and recorded in the office of the county recorder of the county where the land is situated.
(2)The exclusion from this section of conservation easements held by tax-exempt nonprofit organizations, as provided in subparagraph (A) of paragraph (1), applies only if the conservation easement satisfies one or more of the following:
(A)It was recorded in the office of the county recorder where the property is located before January 1, 2022.
(B)It is, as of the date of recordation of the conservation easement, held by a land trust or other entity that is accredited by the Land Trust Accreditation Commission, or any successor organization, or is a member of the California Council of Land Trusts, or any successor organization, and notice of that ownership is provided in the text of the recorded conservation easement document, or if that notice is not provided in the text of the recorded conservation easement document, the land trust or other entity provides documentation of that accreditation or membership within 30 days of receipt of either of the following:
(i)A written request for that documentation.
(ii)Any written notice of the intended modification of the conservation easement provided pursuant to paragraph (3).
(C)It was funded in whole or in part by a local, state, federal, or tribal government or was required by a local, state, federal, or tribal government as mitigation for, or as a condition of approval of, a project, and notice of that funding or mitigation requirement is provided in the text of the recorded conservation easement document.
(D)It is held by a land trust or other entity whose purpose is to conserve or protect indigenous cultural resources, and that purpose of the land trust or other entity is provided in the text of the recorded conservation easement document.
(E)It, as of the date of recordation of the conservation easement, burdens property that is located entirely outside the boundaries of any urbanized area or urban cluster, as designated by the United States Census Bureau.
(3)(A)At least 60 days before submission of a modification document modifying a conservation easement to a county recorder pursuant to subdivision (b), the owner of an affordable housing development shall provide written notice of the intended modification of any conservation easement to the parties to that conservation easement and any third-party beneficiaries or other entities that are entitled to receive notice of changes to or termination of the conservation easement with the notice being sent to the notice address of those parties as specified in the recorded conservation easement. The notice shall include a return mailing address of the owner of the affordable housing development, the approximate number, size, and location of intended structures to be built on the property for the purposes of affordable housing, and a copy of the intended modification document, and shall specify that it is being provided pursuant to this section.
(B)The county recorder shall not record any restrictive covenant modification document unless the county recorder has received confirmation from the county counsel that any notice required pursuant to subparagraph (A) was provided in accordance with subparagraph (A).
(h)This section shall not apply to any settlement, conservation agreement, or conservation easement, notice of which has been recorded, for which either of the following apply:
(1)It was entered into before January 1, 2022, and limits the density of or precludes development in order to mitigate for the environmental impacts of a proposed project or to resolve a dispute about the level of permitted development on the property.
(2)It was entered into after January 1, 2022, and limits the density of or precludes development where the settlement is approved by a court of competent jurisdiction and the court finds that the density limitation is for the express purpose of protecting the natural resource or open-space value of the property.
(i)The provisions of this section shall not apply to any recorded deed restriction, public access easement, or other similar covenant that was required by a state agency for the purpose of compliance with a state or federal law, provided that the recorded deed restriction, public access easement, or similar covenant contains notice within the recorded document, inclusive of its recorded exhibits, that it was recorded to satisfy a state agency requirement.
(j)For purposes of this section:
(1)Affordable housing development means a development located on the property that is the subject of the recorded restrictive covenant and that meets one of the following requirements:
(A)The property is subject to a recorded affordability restriction requiring 100 percent of the units, exclusive of a managers unit or units, be made available at affordable rent to, and be occupied by, lower income households for 55 years for rental housing, unless a local ordinance or the terms of a federal, state, or local grant, tax credit, or other project financing requires, as a condition of the development of residential units, that the development include a certain percentage of units that are affordable to, and occupied by, low-income, lower income, very low income, or extremely low income households for a term that exceeds 55 years for rental housing units.
(B)(i)The property is owned or controlled by an entity or individual that has submitted a permit application to the relevant jurisdiction to develop a project that complies with subparagraph (A).
(ii)For purposes of this subparagraph:
(I)Controlled includes, without limitation, the right to acquire the property under a an option agreement, purchase and sale agreement, or similar agreement.
(II)Permit application includes, without limitation, a building permit application, an application pursuant to Chapter 4.5 (commencing with Section 65920) of Division 1 of Title 7 of the Government Code, including a preliminary application pursuant to Section 65941.1 of the Government Code, an application for a zoning or general plan amendment, an application for a specific plan or amendment to a specific plan, or a notice of intent submitted pursuant to subdivision (b) of Section 65913.4 of the Government Code.
(2)Affordable rent shall have the same meaning as defined in Section 50053 of the Health and Safety Code.
(3)Lower income households shall have the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(4)Modification document means a restrictive covenant modification document described in paragraph (1) of subdivision (b).
(5)Owner means any record title owner of the property, any beneficial owner of the property, or an entity or individual controlling the property for purposes of subparagraph (B) of paragraph (1).
(5)(6)Restrictive covenant means any recorded covenant, condition, restriction, or 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, size, or location of the residences that may be built on the property or that restricts the number of persons or families who may reside on the property, as described in subdivision (a).
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
(a)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, size, or location of the residences that may be built on the property, or that restrict the number of persons or families who may reside on the property, shall not be enforceable against the owner of an affordable housing development, if an approved restrictive covenant affordable housing modification document has been recorded in the public record as provided for in this section, except as explicitly provided in this section.
(b)(1)The owner of an affordable housing development shall be entitled to establish that an existing restrictive covenant is unenforceable under subdivision (a) by submitting a restrictive covenant modification document pursuant to Section 12956.2 of the Government Code that modifies or removes any existing restrictive covenant language that restricts the number, size, or location of the residences that may be built on the property, or that restricts the number of persons or families 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)(A)The owner shall submit to the county recorder a copy of the original restrictive covenant, a copy of any notice the owner believes is required pursuant to paragraph (3) of subdivision (g), and any documents the owner believes necessary to establish that the property qualifies as an affordable housing development under this section prior to, or simultaneously with, the submission of the request for recordation of the restrictive covenant modification document.
(B)At the time the owner submits the materials required by subparagraph (A) to the county recorder, the owner shall mail copies of the materials, together with a copy of this section, by certified mail to anyone who the owner knows has an interest in the property, including any fee title owner of real property who is, by virtue of such ownership, a party or intended beneficiary of the restrictive covenant. Such notice shall be deemed given if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipients address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll. Failure to provide notice as required by this subparagraph shall not invalidate a restrictive covenant modification document recorded pursuant to this section, but the county recorder may require reasonable documentation to ensure compliance with this subparagraph.
(C)In addition to the notice prescribed by subparagraph (B), the owner may publish notice pursuant to Section 6061 of the Government Code identifying that an application pursuant to this section has been filed with the county recorder and that the application materials are available for public inspection in the office of the county recorder. The notice shall also identify the property by assessors parcel number and mailing address. If no mailing address has been assigned for the property, then the property shall be identified instead by its nearest intersection. If the owner elects to publish notice in this matter, then the notice prescribed by subparagraph (B) shall be deemed given to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll.
(B)(D)Before recording the restrictive covenant modification document, pursuant to subdivision (b) of Section 12956.2 of the Government Code, the county recorder shall, within five business days of receipt, submit the documentation provided to the county recorder by the owner pursuant to subparagraph (A) 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), whether the owner has submitted documents sufficient to establish that the property qualifies as an affordable housing development under this section, whether any notice required under this section has been provided, whether any exemption provided in subdivision (g) or (h) applies, and whether the restriction 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)(E)Pursuant to Section 12956.2 of the Government Code, the county counsel shall return the documents and inform the county recorder of the county counsels determination within 15 days of submission to the county counsel. If the county counsel is unable to make a determination, the county counsel shall specify the documentation that is needed in order to make the determination. If the county counsel has authorized the county recorder to record the modification document, that authorization shall be noted on the face of the modification or on a cover sheet affixed thereto.
(D)(F)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 or if the county counsel finds that the property does not qualify as an affordable housing development.
(E)(G)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, subject to any intervening amendments or modifications, except to the extent modified by the recorded modification document.
(3)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 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.
(4)A restrictive covenant that was originally invalidated by this section shall become and remain enforceable while the property subject to the restrictive covenant modification is utilized in any manner that violates the terms of the affordability restrictions required by this section.
(5)If the property is utilized in any manner that violates the terms of the affordability restrictions required by this section, the city or county may, after notice and an opportunity to be heard, record a notice of that violation. If the owner complies with the applicable affordability restrictions, the owner may apply to the agency of the city or county that recorded the notice of violation for a release of the notice of violation, and if approved by the city or county, a release of the notice of violation may be recorded.
(6)The county recorder shall charge a standard recording fee to an owner who submits a modification document for recordation pursuant to this section.
(c)(1)Subject to paragraph (2), this section shall only apply to restrictive covenants that restrict the number, size, or location of the residences that may be built on a property or that restrict the number of persons or families 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)Paragraph (1) shall not apply to restrictive covenants, fees, and assessments that have not been consistently enforced or assessed prior to the construction of the affordable housing development.
(d)(1)Any suit filed by a party that is deemed to have been given notice as described in subparagraph (B) of paragraph (2) of subdivision (b), which suit challenges the validity of a restrictive covenant modification document pursuant to this section, shall be filed within 35 days of recordation of the document.
(d)(2)In any suit filed to enforce the rights provided in this section or defend against a suit filed against them, a prevailing owner of an affordable housing development, and any successors or assigns, or a holder of a conservation easement, shall be entitled to recover, as part of any judgment, litigation costs and reasonable attorneys fees, provided that any judgment entered shall be limited to those costs incurred after the modification document was recorded as provided by subdivision (b). This
(3)This subdivision shall not prevent the court from awarding any prevailing party litigation costs and reasonable attorneys fees otherwise authorized by applicable law, including, but not limited to, subdivision (d) of Section 815.7 of the Civil Code.
(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 shall not be interpreted to 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)(1)Subject to paragraph (2), this section does not apply to:
(A)Any conservation easement, as defined in Section 815.1, that is recorded as required by Section 815.5, and held by any of the entities or organizations set forth in Section 815.3.
(B)Any interest in land comparable to a conservation easement that is held by any political subdivision and recorded in the office of the county recorder of the county where the land is situated.
(2)The exclusion from this section of conservation easements held by tax-exempt nonprofit organizations, as provided in subparagraph (A) of paragraph (1), applies only if the conservation easement satisfies one or more of the following:
(A)It was recorded in the office of the county recorder where the property is located before January 1, 2022.
(B)It is, as of the date of recordation of the conservation easement, held by a land trust or other entity that is accredited by the Land Trust Accreditation Commission, or any successor organization, or is a member of the California Council of Land Trusts, or any successor organization, and notice of that ownership is provided in the text of the recorded conservation easement document, or if that notice is not provided in the text of the recorded conservation easement document, the land trust or other entity provides documentation of that accreditation or membership within 30 days of receipt of either of the following:
(i)A written request for that documentation.
(ii)Any written notice of the intended modification of the conservation easement provided pursuant to paragraph (3).
(C)It was funded in whole or in part by a local, state, federal, or tribal government or was required by a local, state, federal, or tribal government as mitigation for, or as a condition of approval of, a project, and notice of that funding or mitigation requirement is provided in the text of the recorded conservation easement document.
(D)It is held by a land trust or other entity whose purpose is to conserve or protect indigenous cultural resources, and that purpose of the land trust or other entity is provided in the text of the recorded conservation easement document.
(E)It, as of the date of recordation of the conservation easement, burdens property that is located entirely outside the boundaries of any urbanized area or urban cluster, as designated by the United States Census Bureau.
(3)(A)At least 60 days before submission of a modification document modifying a conservation easement to a county recorder pursuant to subdivision (b), the owner of an affordable housing development shall provide written notice of the intended modification of any conservation easement to the parties to that conservation easement and any third-party beneficiaries or other entities that are entitled to receive notice of changes to or termination of the conservation easement with the notice being sent to the notice address of those parties as specified in the recorded conservation easement. The notice shall include a return mailing address of the owner of the affordable housing development, the approximate number, size, and location of intended structures to be built on the property for the purposes of affordable housing, and a copy of the intended modification document, and shall specify that it is being provided pursuant to this section.
(B)The county recorder shall not record any restrictive covenant modification document unless the county recorder has received confirmation from the county counsel that any notice required pursuant to subparagraph (A) was provided in accordance with subparagraph (A).
(h)This section shall not apply to any settlement, conservation agreement, or conservation easement, notice of which has been recorded, for which either of the following apply:
(1)It was entered into before January 1, 2022, and limits the density of or precludes development in order to mitigate for the environmental impacts of a proposed project or to resolve a dispute about the level of permitted development on the property.
(2)It was entered into after January 1, 2022, and limits the density of or precludes development where the settlement is approved by a court of competent jurisdiction and the court finds that the density limitation is for the express purpose of protecting the natural resource or open-space value of the property.
(i)The provisions of this section shall not apply to any recorded deed restriction, public access easement, or other similar covenant that was required by a state agency for the purpose of compliance with a state or federal law, provided that the recorded deed restriction, public access easement, or similar covenant contains notice within the recorded document, inclusive of its recorded exhibits, that it was recorded to satisfy a state agency requirement.
(j)For purposes of this section:
(1)Affordable housing development means a development located on the property that is the subject of the recorded restrictive covenant and that meets one of the following requirements:
(A)The property is subject to a recorded affordability restriction requiring 100 percent of the units, exclusive of a managers unit or units, be made available at affordable rent to, and be occupied by, lower income households for 55 years for rental housing, unless a local ordinance or the terms of a federal, state, or local grant, tax credit, or other project financing requires, as a condition of the development of residential units, that the development include a certain percentage of units that are affordable to, and occupied by, low-income, lower income, very low income, or extremely low income households for a term that exceeds 55 years for rental housing units.
(B)(i)The property is owned or controlled by an entity or individual that has submitted a permit application to the relevant jurisdiction to develop a project that complies with subparagraph (A).
(ii)For purposes of this subparagraph:
(I)Controlled includes, without limitation, the right to acquire the property under a purchase and sale or similar agreement.
(II)Permit application includes, without limitation, a building permit application, an application pursuant to Chapter 4.5 (commencing with Section 65920) of Division 1 of Title 7 of the Government Code, including a preliminary application pursuant to Section 65941.1 of the Government Code, an application for a zoning or general plan amendment, an application for a specific plan or amendment to a specific plan, or a notice of intent submitted pursuant to subdivision (b) of Section 65913.4 of the Government Code.
(2)Affordable rent shall have the same meaning as defined in Section 50053 of the Health and Safety Code.
(3)Lower income households shall have the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(4)Modification document means a restrictive covenant modification document described in paragraph (1) of subdivision (b).
(5)Restrictive covenant means any recorded covenant, condition, restriction, or 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, size, or location of the residences that may be built on the property or that restricts the number of persons or families who may reside on the property, as described in subdivision (a).
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Date
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Status
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|---|---|
| Oct 11, 2023 | Chaptered by Secretary of State - Chapter 750, Statutes of 2023. |
| Oct 11, 2023 | Approved by the Governor. |
| Sep 19, 2023 | Enrolled and presented to the Governor at 4 p.m. |
| Sep 12, 2023 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 64. Noes 13. Page 3238.). |
| Sep 12, 2023 | Assembly Rule 77 suspended. (Page 3228.) |
| Sep 11, 2023 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after September 13 pursuant to Assembly Rule 77. |
| Sep 11, 2023 | Read third time. Passed. Ordered to the Assembly. (Ayes 33. Noes 6. Page 2549.). |
| Aug 15, 2023 | Read second time. Ordered to third reading. |
| Aug 14, 2023 | From committee: Be ordered to second reading pursuant to Senate Rule 28.8. |
| Jul 11, 2023 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 10. Noes 1.) (July 10). Re-referred to Com. on APPR. |
| Jun 28, 2023 | From committee: Do pass and re-refer to Com. on HOUSING. (Ayes 10. Noes 1.) (June 27). Re-referred to Com. on HOUSING. |
| Jun 19, 2023 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on JUD. |
| Jun 14, 2023 | Referred to Coms. on JUD. and HOUSING. |
| Jun 1, 2023 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 31, 2023 | Read third time. Passed. Ordered to the Senate. (Ayes 64. Noes 14. Page 1994.) |
| May 22, 2023 | Read second time. Ordered to third reading. |
| May 18, 2023 | Read second time and amended. Ordered returned to second reading. |
| May 17, 2023 | From committee: Amend, and do pass as amended. (Ayes 12. Noes 4.) (May 17). |
| May 3, 2023 | In committee: Hearing postponed by committee. |
| Apr 18, 2023 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 8. Noes 3.) (April 18). Re-referred to Com. on APPR. |
| Apr 17, 2023 | Re-referred to Com. on JUD. |
| Apr 13, 2023 | Read second time and amended. |
| Apr 12, 2023 | From committee: Amend, and do pass as amended and re-refer to Com. on JUD. (Ayes 7. Noes 1.) (April 12). |
| Mar 2, 2023 | Re-referred to Com. on H. & C.D. |
| Mar 1, 2023 | From committee chair, with author's amendments: Amend, and re-refer to Com. on H. & C.D. Read second time and amended. |
| Feb 23, 2023 | Referred to Coms. on H. & C.D. and JUD. |
| Feb 15, 2023 | From printer. May be heard in committee March 17. |
| Feb 14, 2023 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 12, 2023 | AB 911 Schiavo Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Sep 11, 2023 | Assembly 3rd Reading AB911 Schiavo By Blakespear | Senate Floor |
Passed |
|
| Jul 10, 2023 | Do pass, but first be re-referred to the Committee on [Appropriations] | Senate Standing Committee on Housing |
Passed |
|
| Jun 27, 2023 | Do pass, but first be re-referred to the Committee on [Housing] | Senate Standing Committee on Judiciary |
Passed |
|
| May 31, 2023 | AB 911 Schiavo Assembly Third Reading | Assembly Floor |
Passed |
|
| May 17, 2023 | Do pass as amended. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 18, 2023 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Judiciary |
Passed |
|
| Apr 12, 2023 | Do pass as amended and be re-referred to the Committee on [Judiciary] | Assembly Standing Committee on Housing and Community Development |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| California community builders | ** Support | |
| California Housing Consortium | ** Support | |
| Monterey Bay Economic Partnership | ** Support | |
| Non-Profit Housing Association of Northern California | ** Support | |
| Resources for Community Development | ** Support | |
| San Francisco Bay Area Planning and Urban Research Association | ** Support | |
| Valley Oak Partners | ** Support | |
| Valley Oak Partners, LLC | ** Support | |
| Yimby Action | ** Support | |
| YIMBY Law | ** Support |
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 911
Author:(Schiavo)
As Amended Ver:June 19, 2023
Majority vote
SUMMARY
Establishes a process for a prospective purchaser of a property to receive notification if a county counsel has authorized the county recorder to record a modification document removing covenants that restrict the number, size, or location of affordable housing units that may be built on the property.
Senate Amendments
Make technical and minor changes.
COMMENTS
Restrictive Density Covenants: California invalidates restrictive covenants that target potential homeowners based on other protected classes, including religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, disability, veteran or military status, national origin, and source of income. California law provides any property owner who encounters such a covenant a process by which they can remove the covenant language from their property deeds. Government Code Section 12956.2 permits a property owner to file a Restrictive Covenant Modification with the county recorder who then submits the document to the county counsel's office for legal review to determine if the covenant is based on a protected class. If the county counsel concurs with the property owner's view that the covenant imposes an improper restriction on the basis of a protected class, then the covenant is removed.
In addition to racially restrictive language, some covenants limit the allowable density or number of units permitted on a property. Developers who purchase properties may be unaware of these limitations and face obstacles in developing the property, despite the fact that the zoning on the site conflicts with the restrictive covenant. In addition, these covenants are not consistent with a zoning ordinance or general plan, further undermining local community efforts to meet their regional housing needs and comply with state law to rezone sites for more housing.
In 2022, AB 721 (Bloom), Chapter 349, Statutes of 2021, made covenants and other recorded documents that restrict the number or size of the residences or the number of persons who may reside on the property unenforceable if the property is developed into 100% affordable housing. To qualify, a developer must enter into an agreement with a local government to deed-restrict the affordable housing units to 55 years. Developers can record a modification document provided by the county recorder if they choose. The county counsel is required to review the covenant to confirm that it limits the number and size of units on a property and that the modification document can be recorded.
AB 721 (Bloom) created a process for existing owners to modify restrictive covenants on a property that will be developed into affordable housing; however, it did not provide a process for prospective buyers to determine – before finalizing the purchase of a property – that the restrictive covenants may be modified. This bill creates a process for a prospective buyer with a right to purchase a property to submit a request to modify the restrictive covenants and receive a response from county counsel. An owner is not obligated to provide notice to prospective buyers, but may do so by either contacting any prospective buyers the owner knows of, or publishing a notice in a newspaper.
Existing Zoning Requirements: Cities are required to zone for enough housing every eight years to meet the community's housing needs for all income groups. As part of this process, cities must adopt a housing element and identify as part of it adequate sites to accommodate growth in population. This bill would not impact local zoning, and a developer would still be limited by the density allowed in the zoning ordinance, specific plan, housing element or the general plan. This bill only impacts developments that are 100 percent affordable to lower income households.
According to the Author
"For decades, some neighborhoods have included covenants on properties that limit the allowable density or number of units permitted on a property, even when they may conflict with local zoning ordinances. While recent legislation has forged a path for removing these covenants for 100% affordable housing, developers must own the property before seeking to remove the covenant. For some developers, this creates uncertainty in a process that requires sometimes millions in investment to address an administrative hurdle. AB 911 opens up the process of removing restrictive covenants for prospective buyers, providing confidence to investors that they can build on the properties they acquire."
Arguments in Support
According to the supporters, this bill clarifies that a developer who plans to develop 100 percent affordable housing with a right to purchase a property can submit an AB 721 application to a county recorder. This will allow the developer to confirm before buying the property that the restrictive covenant will be modified to allow for affordable housing once the developer becomes the recorded owner of title.
Arguments in Opposition
None on file.
FISCAL COMMENTS
According to the Assembly Appropriations Committee, local costs of an unknown amount, potentially significant, for county recorders to notify an owner of the county counsel's determination regarding the restrictive covenant modification document within five business days. County recorder costs are fee-supported and are not subject to state reimbursement.
VOTES:
ASM HOUSING AND COMMUNITY DEVELOPMENT: 7-1-0
YES: Wicks, Joe Patterson, Wendy Carrillo, Gabriel, Kalra, Quirk-Silva, Ward
NO: Sanchez
ASM JUDICIARY: 8-3-0
YES: Maienschein, Connolly, Haney, Kalra, Pacheco, Papan, Reyes, Robert Rivas
NO: Essayli, Dixon, Sanchez
ASM APPROPRIATIONS: 12-4-0
YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Robert Rivas, Weber, Ortega
NO: Megan Dahle, Dixon, Mathis, Sanchez
ASSEMBLY FLOOR: 64-14-2
YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon
NO: Boerner, Chen, Megan Dahle, Davies, Dixon, Essayli, Vince Fong, Gallagher, Mathis, Jim Patterson, Sanchez, Ta, Waldron, Wallis
ABS, ABST OR NV: Flora, Lackey
SENATE FLOOR: 33-6-1
YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
NO: Dahle, Grove, Jones, Nguyen, Niello, Seyarto
ABS, ABST OR NV: Caballero
UPDATED
VERSION: June 19, 2023
CONSULTANT: Lisa Engel / H. & C.D. / (916) 319-2085 FN: 0002327
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 911 |
THIRD READING
Bill No: AB 911
Author: Schiavo (D)
Amended: 6/19/23 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE: 10-1, 6/27/23
AYES: Umberg, Wilk, Allen, Ashby, Caballero, Durazo, Laird, Min, Stern, Wiener
NOES: Niello
SENATE HOUSING COMMITTEE: 10-1, 7/10/23
AYES: Wiener, Ochoa Bogh, Blakespear, Caballero, Cortese, McGuire, Padilla, Skinner, Umberg, Wahab
NOES: Seyarto
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 64-14, 5/31/23 - See last page for vote
SUBJECT: Unlawfully restrictive covenants: affordable housing
SOURCE: San Francisco Bay Area Planning and Urban Research Association
DIGEST:
This bill strengthens and clarifies the process whereby a purchaser of a property can remove a covenant, condition, or restriction limiting the property’s use for affordable housing.
ANALYSIS:
Existing law:
- Prohibits enforcement, against the owner of an affordable housing development, of any covenants, conditions, restrictions, or private limits on private or publicly owned land that restrict the number, size, or location of the residences that may be built on the property, or that restrict the number of persons or families who may reside on the property, if an approved restrictive covenant affordable housing modification document has been recorded in the public record, as specified. (Civ. Code § 714.6 (a).)
- Authorizes the owner of an affordable housing development to remove a covenant restricting the number or size of the residences that may be built on a property or the number of persons who may reside on the property by submitting a restrictive covenant modification document to the county recorder. (Civ. Code § 714.6 (b)(1).)
- Outlines the process for obtaining a modified covenant, in which the county counsel reviews for eligibility the covenant modification document submitted by the owner, and approves if eligible. (Civ. Code § 714.6 (b)(2).)
- Exempts the following from the prohibition on restrictive covenants related to affordable housing:
- Specified conservation easements; and
- Any interest in land comparable to a conservation easement that is held by any political subdivision and recorded in the office of the county recorder of the county where the land is situated. (Civ. Code § 714.6 (g).)
- Specifies that a county will not incur any liability for recording a covenant modification document that is not authorized by Civil Code section 714.6, and that liability for an unauthorized recording should be the sole responsibility of the owner that caused the unauthorized recordation. (Civ. Code § 714.6(b)(3).)
- Provides that a restrictive covenant invalidated under Civil Code section 714.6 will be enforceable if the property in question is utilized in a manner that violates the terms relating to affordable housing. (Civ. Code § 714.6(b)(4.)
- Provides a process through which a city or county may provide notice of a violation of the terms of this section relating to affordable housing when an owner who obtained a covenant modification under this section fails to utilize the property for affordable housing. (Civ. Code § 714.6(b)(5).)
- Provides that, in any suit to enforce the rights provided by Civil Code section 714.6 or to defend against any suit filed against those rights, a prevailing owner will be entitled to recover litigation costs and reasonable attorney’s fees. (Civ. Code § 714.6(d).)
- Authorizes the appointment of a county counsel by a county board of supervisors and vests the county counsel with the duties of a public prosecutor. (Gov. Code § 27640 et seq.)
- Authorizes a county counsel to represent and advise the officers and employees of special districts organized within the county and shall have exclusive charge and control of all civil actions and proceedings in which special districts, their officers or employees are concerned or are parties, as specified. (Gov. Code § 27645.)
- Provides that specified notices must be published, as specified, in a newspaper of general circulation for the period prescribed, the number of times, and in the manner provided. (Gov. Code § 6060.)
This bill:
- Provides that, upon authorization of a covenant modification by the county counsel, the county recorder shall notify the owner or submitting party of that authorization without delay.
- Provides that, upon notice by the county recorder of the authorization of the modification, the owner of the property may mail, by certified mail to anyone who the owner knows has an interest in the property or in the restrictive covenant, a copy of the modification document, together with a copy of the code section implicated by this bill and a written explanation that the modification has been applied for and approved for recordation by the county counsel.
- Requires notice to be deemed given to persons with interest in the property if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipient’s address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll.
- Authorizes a property owner to publish notice of the modification of the restrictive covenant in a newspaper of general circulation, as specified, in lieu of the mail notice.
- Provides that the above described notice provisions are optional and that a failure to provide the notice does not invalidate a restrictive covenant modification document recorded pursuant to existing law.
- Provides that, if the owner of the property subject to a covenant restricting affordable housing is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, the county recorder cannot record the modification document until the owner closes escrow on the property and becomes its record title owner.
- Provides that any lawsuit challenging the modification filed by a party that is deemed to have been given notice of the approved modification must be filed within 35 days of that notice.
- Defines “owner” for the purposes of Civil Code section 714.6 to include a record title owner of the property, a beneficial owner of the property, or an entity or individual with a right to acquire the property under an option agreement, purchase and sale agreement, or similar agreement.
Comments
To combat the negative effects that covenants restricting residential density have on the production of affordable housing and how these restrictions also lead to housing segregation, the Legislature passed AB 721 (Bloom, Chapter 349, Statutes of 2021) in 2021. Under the bill, any covenants, conditions, restrictions, or private limits on private or publicly owned land 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, would be unenforceable as against a property owner developing the land for housing composed exclusively of affordable units. To facilitate that end, the bill allowed an affordable housing developer to request the county recorder remove the covenant from the property deed, using much the same process that property owners can currently use to remove discriminatory restrictive covenants.
AB 721 included a number of provisions relating to the procedure that would take place to remove the restrictive covenant. To have the restrictive covenant removed and deemed unenforceable, an owner of an affordable housing project must submit a covenant modification document to the county recorder in much the same way that covenant modification documents must be submitted to remove racially restrictive covenants. The county recorder then has five business days to submit the documentation and modification document to the county counsel for review. The county counsel is required to determine if the request for modification meets the requirements under AB 721 to have the covenant removed within 15 business days of receiving the documents from the county recorder.
Through that process, AB 721 vested authority in the county counsel to determine if the request for modification qualifies under the provisions of the statute. However, that decision, and the legality of the modification document, can theoretically be challenged at any time after the approval of the modification document. While AB 721 did include language relating to the recovery of litigation costs and reasonable attorney’s fees in any suit filed to enforce the rights of the statute or in any suit filed against those rights, it did not specify further regarding such types of suits. It did, however, include provisions allowing a county or city to notice a violation of the affordable housing requirements to qualify for the covenant modification.
This bill’s changes to the AB 721 process.
Since AB 721 did not provide a clear process for contesting a covenant modification, the authors assert that affordable housing developers are left without clarity. That could pose a risk to the developer well into the construction phase of the affordable housing project, since in theory an interested party could sue to challenge the validity of the modification at any time. To address this, this bill amends the civil code section codified by AB 721 (Civil Code section 714.6) to clarify a process for challenging a covenant modification document under AB 721. The process provides that the owner may, once notified by the county recorder that the county counsel approved the modification, provide notice of the modification to anyone who the owner knows has an interest in the property or the restrictive covenant. It also specifies that any suit challenging the validity of a restrictive covenant modification document by a person who was provided notice must be filed within 35 days of such notice. In amending the statute in this way, this bill places a clear limit for suits challenging an approved modification, though it does not require that notice be given of the modification. Considering the clarity and finality of this provision, affordable housing developers would likely voluntarily provide the notice allowed so that they can be sure that, after 35 days, they will not be subject to any suits challenging the validity of the modification.
AB 721 also only allowed a covenant modification document to be filed with the county recorder when an affordable housing developer owned the property subject to the restrictive covenant. The author asserts that this posed a problem for affordable housing developers because it created uncertainty because the developer would have to buy the property before even knowing if they would be able to receive the covenant modification to then build their affordable housing project. To overcome this uncertainty and the risk it poses to affordable housing developers, this bill amends the statute to clarify that an entity or individual with a right to acquire the property through an option agreement, a purchase and sale agreement, or other similar agreement can file a covenant modification document with the county recorder to remove the covenant. This allows the affordable housing developer to know, before they finalize purchase of the property, whether the modification will be approved and therefore removes a hurdle to the development of the property.
Related/Prior Legislation
AB 721 (Bloom, Chapter 349, Statutes of 2021) made covenants and other recorded documents that restrict the number or size of the residences or the number of persons who may reside on the property unenforceable if the property is developed into 100 percent affordable housing. Created a process for an owner to record a modification document through the county recorder to override the restrictive covenants.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT: (Verified 8/15/23)
San Francisco Bay Area Planning and Urban Research Association (source)
California Community Builders
California Housing Consortium
Monterey Bay Economic Partnership
Non-Profit Housing Association of Northern California
Resources for Community Development
Valley Oak Partners, LLC
YIMBY Action
YIMBY Law
OPPOSITION: (Verified 8/15/23)
None received
ARGUMENTS IN SUPPORT: According to the author of this bill:
For decades, some neighborhoods have included covenants on properties that limit the allowable density or number of units permitted on a property, even when they may conflict with local zoning ordinances. While recent legislation has forged a path for removing these covenants for 100% affordable housing, developers must own the property before seeking to remove the covenant. For some developers, this creates uncertainty in a process that requires sometimes millions in investments to address an administrative hurdle. AB 911 opens up the process of removing restrictive covenants for prospective buyers, providing confidence to investors that they can build on the properties they acquire.
ASSEMBLY FLOOR: 64-14, 5/31/23
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Connolly, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon
NOES: Boerner, Chen, Megan Dahle, Davies, Dixon, Essayli, Vince Fong, Gallagher, Mathis, Jim Patterson, Sanchez, Ta, Waldron, Wallis
NO VOTE RECORDED: Flora, Lackey
Prepared by: Ian Dougherty / JUD. / (916) 651-4113
8/16/23 14:25:28
**** END ****
SENATE COMMITTEE ON HOUSING
Senator Scott Wiener, Chair
2023 - 2024 Regular
Bill No: AB 911 Hearing Date: 7/10/2023
Author: | Schiavo | ||
Version: | 6/19/2023 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Aiyana Cortez | ||
SUBJECT: Unlawfully restrictive covenants: affordable housing
DIGEST: This bill strengthens and clarifies the process by which a purchaser of a property can remove a covenant, condition, or restriction limiting the property’s use for affordable housing.
ANALYSIS:
Existing law:
- Prohibits enforcement, against the owner of an affordable housing development, of any covenants, conditions, restrictions, or private limits on private or publicly owned land that restrict the number, size, or location of the residences that may be built on the property, or that restrict the number of persons or families who may reside on the property, if an approved restrictive covenant affordable housing modification document has been recorded in the public record, as specified.
- Authorizes the owner of an affordable housing development to remove a covenant restricting the number or size of the residences that may be built on a property or the number of persons who may reside on the property by submitting a restrictive covenant modification document to the county recorder.
- Outlines the process for obtaining a modified covenant, in which the county counsel reviews for eligibility the covenant modification document submitted by the owner, and approves if eligible.
- Exempts the following from the prohibition on restrictive covenants related to affordable housing:
- Specified conservation easements; and
- Any interest in land comparable to a conservation easement that is held by any political subdivision and recorded in the office of the county recorder of the county where the land is situated.
- Specifies that a county will not incur any liability for recording a covenant modification document that is not authorized, as specified, and that liability for an unauthorized recording should be the sole responsibility of the owner that caused the unauthorized recordation.
- Provides that a restrictive covenant invalidated as specified will be enforceable if the property in question is utilized in a manner that violates the terms relating to affordable housing.
- Provides a process through which a city or county may provide notice of a violation of the terms of this section relating to affordable housing when an owner who obtained a covenant modification under this section fails to utilize the property for affordable housing.
- Provides that, in any suit to enforce the rights, as specified, or to defend against any suit filed against those rights, a prevailing owner will be entitled to recover litigation costs and reasonable attorney’s fees.
- Authorizes the appointment of a county counsel by a county board of supervisors and vests the county counsel with the duties of a public prosecutor.
- Authorizes a county counsel to represent and advise the officers and employees of special districts organized within the county and shall have exclusive charge and control of all civil actions and proceedings in which special districts, their officers or employees are concerned or are parties, as specified.
- Provides that specified notices must be published, as specified, in a newspaper of general circulation for the period prescribed, the number of times, and in the manner provided.
This bill:
- Provides that, upon authorization of a covenant modification by the county counsel, the county recorder shall notify the owner or submitting party of that authorization without delay.
- Provides that, upon notice by the county recorder of the authorization of the modification, the owner of the property may mail, by certified mail to anyone who the owner knows has an interest in the property or in the restrictive covenant, a copy of the modification document, together with a copy of the code section implicated by this bill and a written explanation that the modification has been applied for and approved for recordation by the county counsel.
- Requires notice to be deemed given to persons with interest in the property if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipient’s address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll.
- In lieu of the mail notice, authorizes a property owner to publish notice of the modification of the restrictive covenant in a newspaper of general circulation, as specified.
- Provides that the above described notice provisions are optional and that a failure to provide the notice does not invalidate a restrictive covenant modification document recorded pursuant to existing law.
- Provides that, if the owner of the property subject to a covenant restricting affordable housing is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, the county recorder cannot record the modification document until the owner closes escrow on the property and becomes its record title owner.
- Provides that any lawsuit challenging the modification filed by a party that is deemed to have been given notice of the approved modification must be filed within 35 days of that notice.
- Defines “owner” to include a record title owner of the property, a beneficial owner of the property, or an entity or individual with a right to acquire the property under an option agreement, purchase and sale agreement, or similar agreement.
COMMENTS:
- Author’s statement. “AB 911 is clean-up measure to AB 721 (Bloom, 2021) and provides confidence to affordable housing developers who want to purchase real estate for 100% affordable development. For decades, some neighborhoods have included covenants on properties that limit the allowable density or number of units permitted on a property, even when they may conflict with local zoning ordinances. While recent legislation has forged a path for removing these covenants for 100% affordable housing, developers must own the property before seeking to remove the covenant. For some developers, this creates uncertainty in a process that requires sometimes millions in investment to address an administrative hurdle. AB 911 opens up the process of removing restrictive covenants for prospective buyers, providing confidence to investors that they can build on the properties they acquire.”
- Restrictive covenants in California. California property law enables the owner of property, upon subdivision of the land, to place covenants, restrictions, or other limitations on how the subdivided land may be used. These restrictions can then be enforced, through legal action if necessary, by any of the other owners of the subdivided property. The primary purpose of such restrictions is to provide assurance to those purchasing the property that the surrounding area will not develop in ways that they do not expect and do not want. Restrictive covenants can be used to ensure that all homes in a neighborhood conform to a certain architectural style.
However, historically, restrictive covenants have been used to exclude and discriminate against minorities. These covenants were used to prohibit the sale of a property to a person of color, thereby ensuring that a particular neighborhood or area of a city remained inhabited by white residents. The Federal government promoted and encouraged racially restrictive covenants, and accompanied with the practice of red-lining, in which entire sections of a city were designated as too risky for underwriting mortgage guarantees, confined minorities to poorer neighborhoods and denied them the ability to purchase property and accrue wealth. Such covenants were also similarly used to exclude religious minorities.
The United States Supreme Court eventually ruled such covenants were unenforceable as they violated the Equal Protection Clause of the Fourteenth Amendment (Shelley v. Kramer (1948) 334 U.S. 1.). Yet these covenants still exist in many housing deeds, even though they are unenforceable. There is now a process under California law through which a property owner can have a discriminatory covenant removed from their deed.
However, as racially restrictive covenants were banned, developers and neighborhood associations found new ways to subvert the Shelley ruling. Many developers and homeowners associations began adopting covenants that restricted the number or size of the residences that may be built on a property, or that restricted the number of persons who may reside on the property. Although race-neutral on their face, these covenants had the practical effect of maintaining white, single-family neighborhoods in California’s affluent suburban communities. These covenants are still enforceable, and prior to AB 721 were able to be used to block an affordable housing development that otherwise had been approved by the city.
- Removing unlawful restrictions. To combat the negative effects that covenants restricting residential density have on the production of affordable housing and how these restrictions also lead to housing segregation, the Legislature passed AB 721 in 2021. Under the bill, any covenants, conditions, restrictions, or private limits on private or publicly owned land 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, would be unenforceable as against a property owner developing the land for housing composed exclusively of affordable units. To facilitate that end, the bill allows an affordable housing developer to request the county recorder remove the covenant from the property deed, using much the same process that property owners can currently use to remove discriminatory restrictive covenants.
AB 721 included a number of provisions relating to the procedure that would take place to remove the restrictive covenant. To have the restrictive covenant removed and deemed unenforceable, an owner of an affordable housing project must submit a covenant modification document to the county recorder in much the same way that covenant modification documents must be submitted to remove racially restrictive covenants. The county recorder then has five business days to submit the documentation and modification document to the county counsel for review. The county counsel is required to determine if the request for modification meets the requirements under AB 721 to have the covenant removed within 15 business days of receiving the documents from the county recorder.
Through that process, AB 721 vested authority in the county counsel to determine if the request for modification qualifies under the provisions of the statute. However, that decision, and the legality of the modification document, can theoretically be challenged at any time after the approval of the modification document. While AB 721 did include language relating to the recovery of litigation costs and reasonable attorney’s fees in any suit filed to enforce the rights of the statute or in any suit filed against those rights, it did not specify further regarding such types of suits. It did, however, include provisions allowing a county or city to notice a violation of the affordable housing requirements to qualify for the covenant modification.
- A clear process for challenging covenants. Because AB 721 did not provide a clear process for contesting a covenant modification, the authors assert that affordable housing developers are left without clarity. That could pose a risk to the developer well into the construction phase of the affordable housing project, since in theory an interested party could sue to challenge the validity of the modification at any time. To address this ambiguity, this bill clarifies a process for challenging a covenant modification document under AB 721. The process provides that the owner may, once notified by the county recorder that the county counsel approved the modification, provide notice of the modification to anyone who the owner knows has an interest in the property or the restrictive covenant. It also specifies that any suit challenging the validity of a restrictive covenant modification document by a person who was provided notice must be filed within 35 days of such notice. In amending the statute in this way, this bill places a clear limit for suits challenging an approved modification, though it does not require that notice be given of the modification. Considering the clarity and finality of this provision, affordable housing developers would likely voluntarily provide the notice allowed so that they can be sure that, after 35 days, they will not be subject to any suits challenging the validity of the modification.
AB 721 also only allowed a covenant modification document to be filed with the county recorder when an affordable housing developer owned the property subject to the restrictive covenant. The author asserts that this posed a problem for affordable housing developers because it created uncertainty because the developer would have to buy the property before even knowing if they would be able to receive the covenant modification to then build their affordable housing project. To overcome this uncertainty and the risk it poses to affordable housing developers, this bill amends the statute to clarify that an entity or individual with a right to acquire the property through an option agreement, a purchase and sale agreement, or other similar agreement can file a covenant modification document with the county recorder to remove the covenant. This would allow the affordable housing developer to know, before they finalize purchase of the property, whether the modification will be approved and would therefore remove a hurdle to the development of the property.
- Double-referral. This bill was passed out of the Senate Judiciary Committee on June 27 with a vote of 10-1.
Related Legislation:
SB 721 (Bloom, Chapter 349, Statutes 2021) — created a process for existing owners to modify restrictive covenants on a property that will be developed into affordable housing.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
POSITIONS: (Communicated to the committee before noon on Wednesday,
July 5, 2023.)
SUPPORT:
California Community Builders
California Housing Consortium
Monterey Bay Economic Partnership
Resources for Community Development
San Francisco Bay Area Planning and Urban Research Association (SPUR)
Valley Oak Partners, LLC
OPPOSITION:
None received.
-- END --
Senator Thomas Umberg, Chair
2023-2024 Regular Session
Bill No: AB 911 (Author:Schiavo)
Version: June 19, 2023
Hearing Date: June 27, 2023
Fiscal: Yes
Urgency: No
Consultant: ID
SUBJECT
Unlawfully restrictive covenants: affordable housing
DIGEST
This bill strengthens and clarifies the process whereby a purchaser of a property can remove a covenant, condition, or restriction limiting the property’s use for affordable housing.
EXECUTIVE SUMMARY
California has a long and troubled history of utilizing restrictive covenants to promote segregation in housing and residential construction. Although racially restrictive covenants have been unlawful and unenforceable since 1948, California law still permits covenants that restrict the size and density of residential property, and these covenants have often been utilized to continue segregated neighborhoods. In 2021, the Legislature passed AB 721 to allow for the removal of these restrictive covenants for affordable housing projects in order to promote the development of affordable housing. However, since AB 721’s passage, affordable housing developers have encountered uncertainties in the process of removing the restrictive covenants. This bill addresses these issues and builds on AB 721 by creating an optional notice process whereby a property purchaser can provide notice to interested parties that they intend to remove the covenant, by creating a 35 day timeline for parties to file a lawsuit objecting to the covenant’s elimination upon the providing of such notice, and by clarifying that affordable housing developers may request the covenant be removed before they have finalized a purchase of the property in question.
AB 911 is sponsored by the San Francisco Bay Area Planning and Urban Research Association and is supported by California Community Builders, the California Housing Consortium, and Valley Oak Partners, LLC. It has no known opposition. Should the bill pass this Committee, it will then be heard in the Senate Housing Committee.
PROPOSED CHANGES TO THE LAW
Existing law:
- Prohibits enforcement, against the owner of an affordable housing development, of any covenants, conditions, restrictions, or private limits on private or publicly owned land that restrict the number, size, or location of the residences that may be built on the property, or that restrict the number of persons or families who may reside on the property, if an approved restrictive covenant affordable housing modification document has been recorded in the public record, as specified. (Civ. Code § 714.6 (a).)
- Authorizes the owner of an affordable housing development to remove a covenant restricting the number or size of the residences that may be built on a property or the number of persons who may reside on the property by submitting a restrictive covenant modification document to the county recorder. (Civ. Code § 714.6 (b)(1).)
- Outlines the process for obtaining a modified covenant, in which the county counsel reviews for eligibility the covenant modification document submitted by the owner, and approves if eligible. (Civ. Code § 714.6 (b)(2).)
- Exempts the following from the prohibition on restrictive covenants related to affordable housing:
- specified conservation easements; and
- any interest in land comparable to a conservation easement that is held by any political subdivision and recorded in the office of the county recorder of the county where the land is situated. (Civ. Code § 714.6 (g).)
- Specifies that a county will not incur any liability for recording a covenant modification document that is not authorized by section 714.6, and that liability for an unauthorized recording should be the sole responsibility of the owner that caused the unauthorized recordation. (Civ. Code § 714.6(b)(3).)
- Provides that a restrictive covenant invalidated under section 714.6 will be enforceable if the property in question is utilized in a manner that violates the terms relating to affordable housing. (Civ. Code § 714.6(b)(4.)
- Provides a process through which a city or county may provide notice of a violation of the terms of this section relating to affordable housing when an owner who obtained a covenant modification under this section fails to utilize the property for affordable housing. (Civ. Code § 714.6(b)(5).)
- Provides that, in any suit to enforce the rights provided by section 714.6 or to defend against any suit filed against those rights, a prevailing owner will be entitled to recover litigation costs and reasonable attorney’s fees. (Civ. Code § 714.6(d).)
- Authorizes the appointment of a county counsel by a county board of supervisors and vests the county counsel with the duties of a public prosecutor. (Gov. Code § 27640 et seq.)
- Authorizes a county counsel to represent and advise the officers and employees of special districts organized within the county and shall have exclusive charge and control of all civil actions and proceedings in which special districts, their officers or employees are concerned or are parties, as specified. (Gov. Code § 27645.)
- Provides that specified notices must be published, as specified, in a newspaper of general circulation for the period prescribed, the number of times, and in the manner provided. (Gov. Code § 6060.)
This bill:
- Provides that, upon authorization of a covenant modification by the county counsel, the county recorder shall notify the owner or submitting party of that authorization without delay.
- Provides that, upon notice by the county recorder of the authorization of the modification, the owner of the property may mail, by certified mail to anyone who the owner knows has an interest in the property or in the restrictive covenant, a copy of the modification document, together with a copy of the code section implicated by this bill and a written explanation that the modification has been applied for and approved for recordation by the county counsel.
- Requires notice to be deemed given to persons with interest in the property if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipient’s address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll.
- In lieu of the mail notice, authorizes a property owner to publish notice of the modification of the restrictive covenant in a newspaper of general circulation, as specified.
- Provides that the above described notice provisions are optional and that a failure to provide the notice does not invalidate a restrictive covenant modification document recorded pursuant to existing law.
- Provides that, if the owner of the property subject to a covenant restricting affordable housing is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, the county recorder cannot record the modification document until the owner closes escrow on the property and becomes its record title owner.
- Provides that any lawsuit challenging the modification filed by a party that is deemed to have been given notice of the approved modification must be filed within 35 days of that notice.
- Defines “owner” for the purposes of Civil Code section 714.6 to include a record title owner of the property, a beneficial owner of the property, or an entity or individual with a right to acquire the property under an option agreement, purchase and sale agreement, or similar agreement.
COMMENTS
- Author’s statement
According to the author:
For decades, some neighborhoods have included covenants on properties that limit the allowable density or number of units permitted on a property, even when they may conflict with local zoning ordinances. While recent legislation has forged a path for removing these covenants for 100% affordable housing, developers must own the property before seeking to remove the covenant. For some developers, this creates uncertainty in a process that requires sometimes millions in investments to address an administrative hurdle. AB 911 opens up the process of removing restrictive covenants for prospective buyers, providing confidence to investors that they can build on the properties they acquire.
- The history of restrictive covenants in California
California property law enables the owner of property, upon subdivision of the land, to place covenants, restrictions, or other limitations on how the subdivided land may be used. These restrictions can then be enforced, through legal action if necessary, by any of the other owners of the subdivided property. The primary purpose of such restrictions is to provide assurance to those purchasing the property that the surrounding area will not develop in ways that they do not expect and do not want. Restrictive covenants can be used to ensure that all homes in a neighborhood conform to a certain architectural style.
However, historically, restrictive covenants have been used to exclude and discriminate against minorities. These covenants were used to prohibit the sale of a property to a person of color, thereby ensuring that a particular neighborhood or area of a city remained inhabited by white residents. The Federal government promoted and encouraged racially restrictive covenants, and accompanied with the practice of red-lining, in which entire sections of a city were designated as too risky for underwriting mortgage guarantees, confined minorities to poorer neighborhoods and denied them the ability to purchase property and accrue wealth.[1] Such covenants were also similarly used to exclude religious minorities.
The United States Supreme Court eventually ruled such covenants were unenforceable as they violated the Equal Protection Clause of the Fourteenth Amendment. (Shelley v. Kramer (1948) 334 U.S. 1.). Yet these covenants still exist in many housing deeds, even though they are unenforceable. There is now a process under California law through which a property owner can have a discriminatory covenant removed from their deed. (Gov. Code § 12956.2.)
However, as racially restrictive covenants were banned, developers and neighborhood associations found new ways to subvert the Shelley ruling. Many developers and homeowners associations began adopting covenants that restricted the number or size of the residences that may be built on a property, or that restricted the number of persons who may reside on the property. Although race-neutral on their face, these covenants had the practical effect of maintaining white, single-family neighborhoods in California’s affluent suburban communities. These covenants are still enforceable, and prior to AB 721 were able to be used to block an affordable housing development that otherwise had been approved by the city.
- AB 721’s process for eliminating restrictive covenants for affordable housing projects
To combat the negative effects that covenants restricting residential density have on the production of affordable housing and how these restrictions also lead to housing segregation, the Legislature passed AB 721 in 2021. Under the bill, any covenants, conditions, restrictions, or private limits on private or publicly owned land 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, would be unenforceable as against a property owner developing the land for housing composed exclusively of affordable units. To facilitate that end, the bill allows an affordable housing developer to request the county recorder remove the covenant from the property deed, using much the same process that property owners can currently use to remove discriminatory restrictive covenants.
AB 721 included a number of provisions relating to the procedure that would take place to remove the restrictive covenant. To have the restrictive covenant removed and deemed unenforceable, an owner of an affordable housing project must submit a covenant modification document to the county recorder in much the same way that covenant modification documents must be submitted to remove racially restrictive covenants. The county recorder then has five business days to submit the documentation and modification document to the county counsel for review. The county counsel is required to determine if the request for modification meets the requirements under AB 721 to have the covenant removed within 15 business days of receiving the documents from the county recorder.
Through that process, AB 721 vested authority in the county counsel to determine if the request for modification qualifies under the provisions of the statute. However, that decision, and the legality of the modification document, can theoretically be challenged at any time after the approval of the modification document. While AB 721 did include language relating to the recovery of litigation costs and reasonable attorney’s fees in any suit filed to enforce the rights of the statute or in any suit filed against those rights, it did not specify further regarding such types of suits. It did, however, include provisions allowing a county or city to notice a violation of the affordable housing requirements to qualify for the covenant modification.
- AB 911’s changes to the AB 721 process
Because AB 721 did not provide a clear process for contesting a covenant modification, the authors assert that affordable housing developers are left without clarity. That could pose a risk to the developer well into the construction phase of the affordable housing project, since in theory an interested party could sue to challenge the validity of the modification at any time. To address this, AB 911 amends the civil code section codified by AB 721 (Civil Code section 714.6) to clarify a process for challenging a covenant modification document under AB 721. The process provides that the owner may, once notified by the county recorder that the county counsel approved the modification, provide notice of the modification to anyone who the owner knows has an interest in the property or the restrictive covenant. It also specifies that any suit challenging the validity of a restrictive covenant modification document by a person who was provided notice must be filed within 35 days of such notice. In amending the statute in this way, AB 911 places a clear limit for suits challenging an approved modification, though it does not require that notice be given of the modification. Considering the clarity and finality of this provision, affordable housing developers would likely voluntarily provide the notice allowed so that they can be sure that, after 35 days, they will not be subject to any suits challenging the validity of the modification.
AB 721 also only allowed a covenant modification document to be filed with the county recorder when an affordable housing developer owned the property subject to the restrictive covenant. The author asserts that this posed a problem for affordable housing developers because it created uncertainty because the developer would have to buy the property before even knowing if they would be able to receive the covenant modification to then build their affordable housing project. To overcome this uncertainty and the risk it poses to affordable housing developers, AB 911 amends the statute to clarify that an entity or individual with a right to acquire the property through an option agreement, a purchase and sale agreement, or other similar agreement can file a covenant modification document with the county recorder to remove the covenant. This would allow the affordable housing developer to know, before they finalize purchase of the property, whether the modification will be approved and would therefore remove a hurdle to the development of the property.
SUPPORT
San Francisco Bay Area Planning and Urban Research Association (sponsor)
California Community Builders
California Housing Consortium
Valley Oak Partners, LLC
OPPOSITION
None known
RELATED LEGISLATION
Pending Legislation: None known.
Prior Legislation:
AB 721 (Bloom, Ch. 349, Stats. 2021) made covenants and other recorded documents that restrict the number or size of the residences or the number of persons who may reside on the property unenforceable if the property is developed into 100 percent affordable housing. Created a process for an owner to record a modification document through the county recorder to override the restrictive covenants.
PRIOR VOTES:
Assembly Floor (Ayes 64, Noes 14)
Assembly Appropriations Committee (Ayes 12, Noes 4)
Assembly Judiciary Committee (Ayes 8, Noes 3)
Assembly Housing and Community Development Committee (Ayes 7, Noes 1)
**************
Farrell Evans, “How Neighborhoods Used Restrictive Housing Covenants to Block Nonwhite Families,” History (Dec. 15, 2022), available at https://www.history.com/news/racially-restrictive-housing-covenants [available as of June 19, 2023]. ↑
ASSEMBLY THIRD READING
ATR Bill Id:AB 911
Author:(Schiavo)
As Amended Ver:April 13, 2023
Majority vote
SUMMARY
Establishes a process for a prospective purchaser of a property to receive notification if a county counsel has authorized the county recorder to record a modification document removing covenants that restrict the number, size, or location of affordable housing units that may be built on the property.
Major Provisions
- Requires the county recorder to notify an owner of the county counsel's determination regarding reordering a modification document within five days of making the determination.
- Allows the owner of a property to provide, by certified mail, anyone the owner knows has an interest in the property a copy of the modification document, a copy of the code section authorizing the recordation of a modification document, and a written explanation that the modification has been applied for and approved for recordation by the county counsel.
- Provides that the notice shall be deemed given if the notice is actually received by the intended recipient, or if it is mailed by certified mail both to an address for notice indicated in the restrictive covenant and to the intended recipient's address as shown in the last equalized assessment roll.
- Provides that an owner may also publish the following in a notice in a newspaper:
- An application for a modification has been filed with the county recorder and approved for recordation by the county counsel, and that the modification document is available for public inspection in the office of the county recorder.
- The notice shall also identify the property by assessor's parcel number and mailing address. If no mailing address has been assigned for the property, then the property shall be identified instead by its nearest intersection.
- Provides that if an owner elects to publish notice in a newspaper, then notice shall be deemed given to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll.
- Provides that an owner is not required to provide a notice and failure to provide it shall not invalidate a restrictive covenant modification document recorded pursuant to this section.
- Provides that if the owner of the property is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, then the county recorder shall not record the modification document until the owner closes escrow on the property and becomes its record title owner.
- Requires a lawsuit filed by a party who was given notice of an application for a modification document or approval of a modification document challenging the validity of a restrictive covenant modification document to be filed within 35 days of the notice.
- Creates the following definitions for purposes of an affordable housing development owner seeking to declare unenforceable certain restrictive covenants:
- "Controlled" includes, without limitation, the right to acquire a property under an option agreement, purchase and sale agreement, or similar agreement;
- "Permit application" includes, without limitation, a building permit application, an application pursuant to the Housing Crisis Act, an application for a zoning or general plan amendment, an application for a specific plan or amendment to a specific plan, or a notice of intent to use SB 6 (Caballero), Chapter 659, Statutes of 2022; and
- "Owner" means any record title owner of the property, any beneficial owner of the property, or an entity or individual controlling the property for purposes developing affordable housing.
COMMENTS
Restrictive Density Covenants: California invalidates restrictive covenants that target potential homeowners based on other protected classes, including religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, disability, veteran or military status, national origin, and source of income. California law provides any property owner who encounters such a covenant a process by which they can remove the covenant language from their property deeds. Government Code Section 12956.2 permits a property owner to file a Restrictive Covenant Modification with the county recorder who then submits the document to the county counsel's office for legal review to determine if the covenant is based on a protected class. If the county counsel concurs with the property owner’s view that the covenant imposes an improper restriction on the basis of a protected class, then the covenant is removed.
In addition to racially restrictive language, some covenants limit the allowable density or number of units permitted on a property. Developers who purchase properties may be unaware of these limitations and face obstacles in developing the property, despite the fact that the zoning on the site conflicts with the restrictive covenant. In addition, these covenants are not consistent with a zoning ordinance or general plan, further undermining local community efforts to meet their regional housing needs and comply with state law to rezone sites for more housing.
In 2022, AB 721 (Bloom), Chapter 349, made covenants and other recorded documents that restrict the number or size of the residences or the number of persons who may reside on the property unenforceable if the property is developed into 100% affordable housing. To qualify, a developer must enter into an agreement with a local government to deed-restrict the affordable housing units to 55 years. Developers can record a modification document provided by the county recorder if they choose. The county counsel is required to review the covenant to confirm that it limits the number and size of units on a property and that the modification document can be recorded.
AB 721 (Bloom) created a process for existing owners to modify restrictive covenants on a property that will be developed into affordable housing; however, it did not provide a process for prospective buyers to determine – before finalizing the purchase of a property – that the restrictive covenants may be modified. This bill creates a process for a prospective buyer with a right to purchase a property to submit a request to modify the restrictive covenants and receive a response from county counsel. An owner is not obligated to provide notice to prospective buyers, but may do so by either contacting any prospective buyers the owner knows of, or publishing a notice in a newspaper.
Existing Zoning Requirements: Cities are required to zone for enough housing every eight years to meet the community's housing needs for all income groups. As part of this process, cities must adopt a housing element and identify as part of it adequate sites to accommodate growth in population. This bill would not impact local zoning, and a developer would still be limited by the density allowed in the zoning ordinance, specific plan, housing element or the general plan. This bill only impacts developments that are 100% affordable to lower income households.
According to the Author
"For decades, some neighborhoods have included covenants on properties that limit the allowable density or number of units permitted on a property, even when they may conflict with local zoning ordinances. While recent legislation has forged a path for removing these covenants for 100% affordable housing, developers must own the property before seeking to remove the covenant. For some developers, this creates uncertainty in a process that requires sometimes millions in investment to address an administrative hurdle. AB 911 opens up the process of removing restrictive covenants for prospective buyers, providing confidence to investors that they can build on the properties they acquire."
Arguments in Support
According to the supporters, this bill clarifies that a developer who plans to develop 100% affordable housing with a right to purchase a property can submit an AB 721 application to a county recorder. This will allow the developer to confirm before buying the property that the restrictive covenant will be modified to allow for affordable housing once the developer becomes the recorded owner of title.
Arguments in Opposition
None on file.
FISCAL COMMENTS
According to the Assembly Committee on Appropriations: Local costs of an unknown amount, potentially significant, for county recorders to notify an owner of the county counsel's determination regarding the restrictive covenant modification document within five business days. County recorder costs are fee-supported and are not subject to state reimbursement.
VOTES
ASM HOUSING AND COMMUNITY DEVELOPMENT: 7-1-0
YES: Wicks, Joe Patterson, Wendy Carrillo, Gabriel, Kalra, Quirk-Silva, Ward
NO: Sanchez
ASM JUDICIARY: 8-3-0
YES: Maienschein, Connolly, Haney, Kalra, Pacheco, Papan, Reyes, Robert Rivas
NO: Essayli, Dixon, Sanchez
ASM APPROPRIATIONS: 12-4-0
YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Robert Rivas, Weber, Ortega
NO: Megan Dahle, Dixon, Mathis, Sanchez
UPDATED
VERSION: April 13, 2023
CONSULTANT: Lisa Engel / H. & C.D. / (916) 319-2085 FN: 0000411
Date of Hearing: May 17, 2023
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Chris Holden, Chair
ABPCA Bill Id:AB 911
Author:(Schiavo) – As Amended Ver:April 13, 2023
Policy Committee: | Housing and Community Development | Vote: | 7 - 1 |
Judiciary | 8 - 3 | ||
|
|
Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill adds optional notification requirements and litigation filing timelines to existing procedures for removing a covenant that unlawfully restricts affordable housing development. This bill also establishes a process for a prospective buyer to determine – before finalizing the purchase of a property – that the restrictive covenants may be modified.
Specifically, this bill:
- Requires the county recorder to notify an owner of the county counsel’s determination regarding whether the original restrictive covenant document restricts the property in a manner inconsistent with existing law within five days of making the determination.
- Allows the owner of a property, upon being notified that the county counsel has authorized a modification of the restrictive covenant, to provide, by certified mail, to anyone the owner knows has an interest in the property a copy of the modification document, a copy of the code section authorizing the recordation of a modification document, and a written explanation that the modification has been applied for and approved for recordation by the county counsel.
- Requires the notice to be deemed given if the notice is actually received by the intended recipient, or if it is mailed by certified mail both to an address for notice indicated in the restrictive covenant and to the intended recipient’s address as shown in the last equalized assessment roll.
- In lieu of the mail notice prescribed in 2) and 3), authorizes a property owner to publish notice of the modification of the restrictive covenant in a newspaper of general circulation, as specified.
- Provides the above described notice provisions are optional and that a failure to provide the notice does not invalidate a restrictive covenant modification document recorded pursuant to existing law.
- Provides if the owner of the property subject to a covenant restricting affordable housing is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, then the county recorder cannot record the modification document until the owner closes escrow on the property and becomes its record title owner.
- Provides that any lawsuit filed by a party that is deemed to have been given notice pursuant to the provisions of 2) through 4) must be filed within 35 days of that notice.
FISCAL EFFECT:
Local costs of an unknown amount, potentially significant, for county recorders to notify an owner of the county counsel’s determination regarding the restrictive covenant modification document within five business days. County recorder costs are fee-supported and are not subject to state reimbursement.
COMMENTS:
- Purpose. This bill seeks to add clarity to the covenant removal process by creating litigation timelines. According to the author:
Our hope is that AB 911 streamlines the covenant removal process by allowing affordable housing developers to remove the restrictive density requirement prior to purchase of the property. This will allow for a faster delivery of affordable homes and financing of additional housing needs throughout California.
- Background. California invalidates restrictive covenants that target potential homeowners based on protected classes. California law provides any property owner who encounters such a covenant a process by which they can remove the covenant language from their property deeds. However, some developers and homeowners associations have adopted 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 the property. Although race-neutral on their face, these covenants have the practical effect of maintaining white, single-family home domination in some California neighborhoods and towns.
AB 721 (Bloom), Chapter 349, Statutes of 2021, formalized a process for eliminating covenants, conditions, restrictions, or private limits on the use of private or publicly owned land for affordable housing development. In order to qualify for the AB 721 procedures, a developer is required to enter into an agreement with a local government to deed-restrict the affordable housing units for 55 years. A developer can record a modification document provided by the county recorder if they choose. The county counsel is required to review the covenant to confirm the property qualifies as an affordable housing development and the modification document can be recorded. This bill requires the county recorder to notify the owner of the county counsel’s determination within five business days. In addition, by expanding the definition of “owner,” this bill also allows a prospective buyer with a right to purchase a property to submit a request to modify the restrictive covenants and receive a response from county counsel.
While AB 721 vested authority within county counsels’ offices to determine the legality of a covenant, and its eligibility for modification, it did not provide a clear process for contesting a covenant removal, thus leaving affordable housing developers at risk of a lawsuit arising well into the construction phase of an affordable housing community.
This bill creates an optional notice process whereby a property purchaser can provide notice to interested parties that they intend to remove the covenant prohibiting affordable housing. This notice can be accomplished by a mailing a notice to identified stakeholders or publishing the notice in a print publication in accordance with existing law. Once the voluntary notice is given, those receiving the notice are then given 35 days to challenge the covenant modification or lose the right to object to the process.
- Proposed Amendments. Proposed amendments strike the requirement for the county recorder to notify the owner of the county counsel’s determination “within five business days of receipt” and instead require the county recorder to notify the owner “without delay.” These amendments address cost concerns raised by county recorders. Although these costs are not reimbursable by the state, they potentially put pressure on county recorder fees.
Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081
Date of Hearing: April 18, 2023
ASSEMBLY COMMITTEE ON JUDICIARY
Brian Maienschein, Chair
ABPCA Bill Id:AB 911
Author:(Schiavo) – As Amended Ver:April 13, 2023
SUBJECT: Unlawfully restrictive covenants: affordable housing
KEY ISSUE: should optional notice provisions and litigation filing timelines be added to the existing procedures for eliminating a covenant that unlawfully restricts affordable housing development to provide greater clarity and finality to the process?
SYNOPSIS
Like much of the United States, California has a long and troubled history of utilizing zoning laws and restrictive covenants to promote segregation in housing and residential construction. Although racially restrictive covenants have been unlawful and unenforceable for over 50 years, California law permitted covenants that restrict the density of residential property to be enforced until the Legislature acted to ban these covenants in 2021 in order to promote the development of affordable housing. Although these covenants are now unlawful, proponents of this measure note that the existing process for removing the offending language from a property’s title can be difficult and leave uncertainty for property buyers. Accordingly, this measure builds on the 2021 effort to ban these covenants by creating an optional notice process whereby a property purchaser can provide notice to interested parties that they intend to remove the offending covenant, and upon providing the notice, a 35 day timeline for parties to file a lawsuit objecting to the covenant’s elimination, would commence. By creating the litigation timeline,e this bill adds certainty to the covenant removal process.
This measure is supported by several of the affordable housing advocates who backed the original 2021 effort to ban these covenants. They highlight that eliminating the litigation risk associated with removing covenants that block affordable housing will ensure that much needed housing units can be developed in a more expeditious manner. The bill has no known opposition and was previously heard and approved by the Committee on Housing and Community Development by a vote of seven to one.
SUMMARY: Strengthens and clarifies the process whereby a purchaser of a property can remove a covenant, condition, or restriction limiting the property’s use for affordable housing. Specifically, this bill:
- Requires the county recorder to notify an owner of the county counsel’s determination regarding whether the original restrictive covenant document restricts the property in a manner inconsistent with existing law within five days of making the determination.
- Provides that upon being notified that the county counsel has authorized a modification of the restrictive covenant, the owner of the property may mail, by certified mail to anyone who the owner knows has an interest in the property or in the restrictive covenant, a copy of the modification document, together with a copy of the code section implicated by this bill and a written explanation that the modification has been applied for and approved for recordation by the county counsel.
- Requires notice to be deemed given to persons with interest in the property if the notice is actually received by the intended recipient or if the notice is mailed by certified mail both to an address for notice indicated in the restrictive covenant, if any, and to the intended recipient’s address as shown in the last equalized assessment roll, if that address reasonably can be ascertained from the assessment roll.
- In lieu of the mail notice prescribed in 2) and 3), authorizes a property owner to publish notice of the modification of the restrictive covenant in a newspaper of general circulation, as specified.
- Provides that the above described notice provisions are optional and that a failure to provide the notice does not invalidate a restrictive covenant modification document recorded pursuant to existing law.
- Provides that if the owner of the property subject to a covenant restricting affordable housing is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, then the county recorder cannot record the modification document until the owner closes escrow on the property and becomes its record title owner.
- Provides that any lawsuit filed by a party that is deemed to have been given notice pursuant to the provisions of 2) through 4) must be filed within 35 days of that notice.
- Defines the following terms:
- “Controlled” includes, without limitation, the right to acquire the property under an option agreement, purchase and sale agreement, or similar agreement;
- “Permit application” includes, without limitation, a building permit application, an application subject to the Permit Streamlining Act, an application for a zoning or general plan amendment, an application for a specific plan or amendment to a specific plan, a notice of intent submitted for specified ministerial approvals by a local government, or specified by right permits.
- “Owner” means any record title owner of the property, any beneficial owner of the property, or an entity or individual controlling the property, as specified.
EXISTING LAW:
- Prohibits enforcement of any 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, size, or location of the residences that may be built on the property, or that restrict the number of persons or families who may reside on the property, if an approved restrictive covenant affordable housing modification document has been recorded in the public record, as specified. (Civil Code Section 714.6 (a).)
- Authorizes the owner of an affordable housing development to establish that an existing restrictive covenant is unenforceable by submitting a restrictive covenant modification document, as specified, that modifies or removes any existing restrictive covenant language that restricts the number, size, or location of the residences that may be built on the property, or that restricts the number of persons or families 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. (Civil Code Section 714.6 (b)(1).)
- Outlines the process whereby the owner of an affordable housing development works with county officials to remove the prior covenant restricting affordable housing. (Civil Code Section 714.6 (b)(2).)
- Exempts from the prohibition on restrictive covenants related to affordable housing the following:
- Specified conservation easements; and
- Any interest in land comparable to a conservation easement that is held by any political subdivision and recorded in the office of the county recorder of the county where the land is situated. (Civil Code Section 714.6 (g).)
- Defines “restrictive covenant” to mean any recorded covenant, condition, restriction, or 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, size, or location of the residences that may be built on the property or that restricts the number of persons or families who may reside on the property. (Civil Code Section 714.6 (j)(5).)
- Provides that any property owner of a property subject to an unlawfully restrictive covenant based on race, color, religion, sex, familial status, marital status, disability, national origin, or ancestry may submit for recordation a document striking out the unlawfully restrictive covenant. (Government Code Section 12956.1.)
- Provides that a county recorder may record the document, specified in 6), if all other requirements of recordation are met, or may direct the person to obtain a determination from the Department of Fair Employment and Housing. (Ibid.)
- Permits a person with an ownership interest in a property to file a "Restrictive Covenant Modification" form in order to remove any void or unenforceable covenant, condition, or restriction, as specified, and permits, but does not require, the county recorder to waive any fees for filing the modification. (Government Code Section 12956.2.)
- Authorizes the appointment of a county counsel by a county board of supervisors and vests the county counsel with the duties of a public prosecutor. (Government Code Section 27640 et seq.)
- Authorizes a county counsel to represent and advise the officers and employees of special districts organized within the county and shall have exclusive charge and control of all civil actions and proceedings in which special districts, their officers or employees are concerned or are parties, as specified. (Government Code Section 27645.)
- Provides that whenever any law requires that publication of notice is to be made pursuant to a designated section of this law, such notice must be published in a newspaper of general circulation for the period prescribed, the number of times, and in the manner provided in that section. (Government Code Section 6060.)
FISCAL EFFECT: As currently in print this bill is keyed fiscal.
COMMENTS: In 2021, the Legislature enacted AB 721 (Bloom) Chap. 349, Stats. 2021, that formalized a process for eliminating covenants, conditions, restrictions, or private limits on the use of private or publicly owned land for affordable housing development. In the intervening years, several ambiguities of that bill have become clear, including unclear timelines for challenging covenant modifications, resulting in a lack of legal finality for affordable housing developers. To that end, this bill adopts a voluntary notice procedure for property purchasers to utilize in order to draw out any potential legal challenges in an efficient manner. In support of this bill, the author states:
Our hope is that AB 911 streamlines the covenant removal process by allowing affordable housing developers to remove the restrictive density requirement prior to purchase of the property. This will allow for a faster delivery of affordable homes and financing of additional housing needs throughout California.
Local government’s authority over land use and zoning. California law provides local jurisdictions with significant authority to regulate land use and zoning within the jurisdiction. (Government Code Section 65000 et seq.) Although the state does prescribe what must be contained within local General Plans (relevant to this measure, General Plans must identify areas suitable for housing and provide targets for housing units within the jurisdiction), and how those plans must be adopted, the state generally permits local jurisdictions to adopt an extensive array of zoning ordinances to provide for parcel-level guidance as to how property can be utilized and developed. (See Government Code Section 65850.) Of note to this bill, one of the zoning powers of local government is the ability to determine the intensity of development on a given property. In the residential context, local governments have long been able to zone parcels as fit for single or multi-family development and specify the number of housing units that may be built on a given property. In recent years, as California’s lack of affordable housing is generating significant issues in the state, many local jurisdictions are moving to “up zone” neighborhoods, a process whereby neighborhoods that were previously zoned for single-family homes are being reclassified to permit multi-family property development or accessory dwelling units.
Restrictive covenants can be utilized to limit affordable housing in neighborhoods that seek to avoid diversifying so the Legislature has sought to limit the practice. Like much of America, California has a long and troubling history of utilizing real estate covenants (restrictions on how a property can be utilized or transferred in the future) to discriminate against minorities. In fact, racially restrictive covenants were tacitly endorsed by the federal government as the Federal Housing Administration gave higher loan scores to homes with racially restrictive covenants. (Rothstein, The Color of Law (2017) pp. 78-81.) The United States Supreme Court eventually ruled such covenants were unenforceable as they violated the Equal Protection Clause of the Fourteenth Amendments. (Shelley v. Kramer (1948) 334 U.S. 1.) However, such covenants remain in housing deeds across California.
As racially restrictive covenants were banned, developers and neighborhood associations found new ways to subvert the Shelley ruling. Many developers and homeowners associations began adopting covenants that restricted the number or size of the residences that may be built on a property, or that restricted the number of persons who may reside on the property. Although race-neutral on their face, these covenants had the practical effect of maintaining white, single-family hegemony in California’s burgeoning post-war suburbs. Because these covenants can remain valid without modification, in 2021, the Legislature enacted the aforementioned AB 721 to adopt a formal process for removing those covenants. In order to qualify for the AB 721 procedures, a developer is required to enter into an agreement with a local government to deed-restrict the affordable housing units to 55 years. While that bill was somewhat controversial, all stakeholders eventually reached an agreement to ensure that the bill would not inadvertently void important development restrictions, including the state-funded conservation easements that are critical to protecting open space from development, in the state.
While AB 721 vested authority within county counsels’ offices to determine the legality of a covenant, and its eligibility for modification, that decision is not absolute. Although the decision provides solid legal foundation to developers, in theory the decision could be subject to challenge in litigation which would have the detrimental impact of slowing the development of affordable housing.
This bill. As noted above, the covenants that AB 721 sought to ban could be enforced if not modified. That bill however, did not provide a clear process for contesting a covenant removal, thus leaving affordable housing developers at risk of a lawsuit arising well into the construction phase of an affordable housing community. This bill remedies this uncertainty by providing buyers of property with a notice process to inform potential interested parties about the removal of the covenant prohibiting affordable housing. This notice can be accomplished by mailing notice to identified stakeholders or publishing the notice in a print publication in accordance with existing law. Once the voluntary notice is conducted, those receiving the notice are then given 35 days to challenge the covenant modification or lose the right to object to the process. It should be noted that the bill does not require the notice, but simply allows it to become a tool to obtain certainty for affordable housing developers. This measure also makes several definitional changes to implement the new process.
Similar to its predecessor, this bill, generally, models existing processes for recording real estate documents. As noted, racially restrictive covenants are unenforceable. California law also invalidates other restrictive covenants that target potential homeowners based on other protected classes including, religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, disability, veteran or military status, national origin, and source of income. California law provides any property owner who encounters such a covenant a process by which they can remove the covenant language from their property deeds. Government Code Section 12956.2 permits a property owner to file a Restrictive Covenant Modification with the county recorder who then submits the document to the county counsel’s office for legal review to determine if the covenant is based on a protected class. If the county counsel concurs with the property owner’s view that the covenant imposes an improper restriction on the basis of a protected class, the covenant is removed. This bill simply clarifies the process and adds a sense of legal finality for affordable housing developers.
ARGUMENTS IN SUPPORT: This bill is supported by a coalition of affordable housing advocates who highlight the need for clarity and finality in the AB 721 process. In support of the bill, several members of the coalition note:
Signed into law in 2021, AB 721 (Bloom, 2021) clarified that private landowners cannot engage in exclusionary tactics through private restrictive covenants on parcels on which the local government and state housing law permit affordable housing development. In using this law, affordable housing developers have identified the following provisions needed for implementation:
1.) Clarification that an affordable housing developer with a right to purchase agreement for the property may submit an AB 721 application to the county recorder (i.e. a copy of the original restrictive covenant, the restrictive covenant modification document, etc.).
2.) Clarification as to what constitutes a "permit application" for purposes of establishing that a project qualifies as an “affordable housing development.”
3.) A specified time frame for a party with an interest in the property to file a suit that challenges the validity of a restrictive covenant modification document pursuant to AB 721.
As part of the due diligence process, the affordable housing developer with a right to purchase agreement on the property will be able to confirm before buying the property that the restrictive covenant will be modified to allow for the proposed 100% affordable housing development once the developer becomes its record title owner.
REGISTERED SUPPORT / OPPOSITION:
Support
California Housing Consortium
Non-profit Housing Association of Northern California (NPH)
Resources for Community Development
San Francisco Bay Area Planning and Urban Research Association (SPUR)
Valley Oak Partners, LLC
Yimby Action
Yimby Law
Opposition
None on file
Analysis Prepared by: Nicholas Liedtke / JUD. / (916) 319-2334
Date of Hearing: April 12, 2023
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Buffy Wicks, Chair
ABPCA Bill Id:AB 911 (
Author:Schiavo) – As Amended Ver:March 1, 2023
SUBJECT: Unlawfully restrictive covenants: affordable housing
SUMMARY: Establishes a process for a prospective purchaser of a property to receive notification if a county counsel has authorized the county recorder to record a modification document removing covenants that restrict the number, size, or location of affordable housing units that may be built on the property. Specifically, this bill:
- Requires the county recorder to notify an owner of the county counsel’s determination regarding reordering a modification document within five days of making the determination.
- Allows the owner of a property to provide, by certified mail, anyone the owner knows has an interest in the property a copy of the modification document, a copy of the code section authorizing the recordation of a modification document, and a written explanation that the modification has been applied for and approved for recordation by the county counsel.
- Provides that the notice shall be deemed given if the notice is actually received by the intended recipient, or if it is mailed by certified mail both to an address for notice indicated in the restrictive covenant and to the intended recipient’s address as shown in the last equalized assessment roll.
- Provides that an owner may also publish the following in a notice in a newspaper:
- An application for a modification has been filed with the county recorder and approved for recordation by the county counsel, and that the modification document is available for public inspection in the office of the county recorder.
- The notice shall also identify the property by assessor’s parcel number and mailing address. If no mailing address has been assigned for the property, then the property shall be identified instead by its nearest intersection.
- Provides that if an owner elects to publish notice in a newspaper, then notice shall be deemed given to anyone whose interest does not appear of record or for whom an address for notice does not appear of record and cannot reasonably be ascertained from the assessment roll.
- Provides that an owner is not required to provide a notice and failure to provide it shall not invalidate a restrictive covenant modification document recorded pursuant to this section.
- Provides that if the owner of the property is not yet its record title owner, but is instead a beneficial owner with a right pursuant to a purchase and sale or similar agreement to purchase the property, then the county recorder shall not record the modification document until the owner closes escrow on the property and becomes its record title owner.
- Requires a lawsuit filed by a party who was given notice of an application for a modification document or approval of a modification document challenging the validity of a restrictive covenant modification document to be filed within 35 days of the notice.
- Creates the following definitions for purposes of an affordable housing development owner seeking to declare unenforceable certain restrictive covenants:
- “Controlled” includes, without limitation, the right to acquire a property under an option agreement, purchase and sale agreement, or similar agreement;
- “Permit application” includes, without limitation, a building permit application, an application pursuant to the Housing Crisis Act, an application for a zoning or general plan amendment, an application for a specific plan or amendment to a specific plan, or a notice of intent to use SB 6 (Caballero), Chapter 659, Statutes of 2022; and
- “Owner” means any record title owner of the property, any beneficial owner of the property, or an entity or individual controlling the property for purposes developing affordable housing.
EXISTING LAW:
- Provides that recorded covenants, restrictions, or private limits that restrict the number, size, or location of the residences that may be built on a property, or that restrict the number of persons or families who may reside on the property, shall not be enforceable against the owner of an affordable housing development, as specified. (Civil Code (CC) Section 714.6)
- Defines an affordable housing development as one that is subject to a recorded affordability restriction requiring 100 percent of the units to be affordable to lower income housing for at least 55 years, and requires that the property is owned or controlled by an entity or individual that has submitted a permit application to the jurisdiction to develop the project. (CC 714.6)
- Establishes a process by which an affordable housing developer may to file a modification document with the county recorder to replace a non-compliant document, as follows:
- Authorizes an owner of an affordable housing development to submit a modification document to modify or remove any existing restrictive covenant language, as specified;
- Requires a county recorder, prior to recording the modification document, to submit it to the county counsel for review. Requires the county counsel to determine whether: the original restrictive covenant document restricts the property in a manner prohibited by 1) above; the owner has submitted sufficient documents to establish that the property qualifies as an affordable housing development; any notice required pursuant to this section of law has been provided; whether any exemptions apply, as specified; and whether restrictions may no longer be enforced against the owner of the affordable housing development;
- Requires the county counsel to inform the county recorder of its determination within 15 days. Requires the county counsel, if unable to make a determination, to specify the documentation needed to do so. Provides that if the county counsel has authorized the county recorder to record the document, the authorization shall be noted on the face of the modification or on an attached cover sheet;
- Requires a modification document to be indexed in the same manner as the original restrictive covenant document, and to include a recording reference to the original restrictive covenant document, as specified;
- Provides that a county shall not incur liability for recording a modification document that is not authorized by this bill;
- Provides that if the property is utilized in any manner that violates the terms of affordability restrictions required by this bill, the city or county may record a notice of the violation, at which point the modification shall become void and unenforceable; and
- Authorizes the county recorder to charge a $100 fee to an owner who submits a modification document. (CC 714.6)
FISCAL EFFECT: Unknown.
COMMENTS:
Author’s Statement: According to the author, “For decades, some neighborhoods have included covenants on properties that limit the allowable density or number of units permitted on a property, even when they may conflict with local zoning ordinances. While recent legislation has forged a path for removing these covenants for 100% affordable housing, developers must own the property before seeking to remove the covenant. For some developers, this creates uncertainty in a process that requires sometimes millions in investment to address an administrative hurdle. AB 911 opens up the process of removing restrictive covenants for prospective buyers, providing confidence to investors that they can build on the properties they acquire.”
Redlining: Formal, institutionalized discrimination based on race has a long history in American housing policy. Until the mid-20th century, federal, state, and local governments allowed for and often times mandated practices that encouraged residential segregation by race. Government- sanctioned practices included redlining, the use of racially restrictive covenants, and permitting actors in the real estate market to engage in overt discrimination.
California is no exception to this history. In 1890, San Francisco passed the Bingham Ordinance, which forbade Chinese San Franciscans from living in large areas of the city under the threat of imprisonment. In 1916, Berkeley was among the first cities nationally to establish single-family residential zoning, which the city recently acknowledged “has its roots in racist exclusionary zoning policy and leads to racial and economic segregation.” In 1943, the ubiquity of racially restrictive housing covenants that targeted Mexican-Americans in Orange County led to Doss v. Bernal, one of the earliest successful legal challenges to racially restrictive housing covenants in the U.S.
Restrictive Density Covenants: California invalidates restrictive covenants that target potential homeowners based on other protected classes, including religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, disability, veteran or military status, national origin, and source of income. California law provides any property owner who encounters such a covenant a process by which they can remove the covenant language from their property deeds. Government Code Section 12956.2 permits a property owner to file a Restrictive Covenant Modification with the county recorder who then submits the document to the county counsel’s office for legal review to determine if the covenant is based on a protected class. If the county counsel concurs with the property owner’s view that the covenant imposes an improper restriction on the basis of a protected class, then the covenant is removed.
In addition to racially restrictive language, some covenants limit the allowable density or number of units permitted on a property. Developers who purchase properties may be unaware of these limitations and face obstacles in developing the property, despite the fact that the zoning on the site conflicts with the restrictive covenant. In addition, these covenants are not consistent with a zoning ordinance or general plan, further undermining local community efforts to meet their regional housing needs and comply with state law to rezone sites for more housing.
In 2022, AB 721 (Bloom), Chapter 349, made covenants and other recorded documents that restrict the number or size of the residences or the number of persons who may reside on the property unenforceable if the property is developed into 100 percent affordable housing. To qualify, a developer must enter into an agreement with a local government to deed-restrict the affordable housing units to 55 years. Developers can record a modification document provided by the county recorder if they choose. The county counsel is required to review the covenant to confirm that it limits the number and size of units on a property and that the modification document can be recorded.
AB 721 (Bloom) created a process for existing owners to modify restrictive covenants on a property that will be developed into affordable housing; however, it did not provide a process for prospective buyers to determine – before finalizing the purchase of a property – that the restrictive covenants may be modified. This bill creates a process for a prospective buyer with a right to purchase a property to submit a request to modify the restrictive covenants and receive a response from county counsel. An owner is not obligated to provide notice to prospective buyers, but may do so by either contacting any prospective buyers the owner knows of, or publishing a notice in a newspaper.
Existing Zoning Requirements: Cities are required to zone for enough housing every eight years to meet the community’s housing needs for all income groups. As part of this process, cities must adopt a housing element and identify as part of it adequate sites to accommodate growth in population. This bill would not impact local zoning, and a developer would still be limited by the density allowed in the zoning ordinance, specific plan, housing element or the general plan. This bill only impacts developments that are 100 percent affordable to lower income households.
Arguments in Support: According to the supporters, this bill clarifies that a developer who plans to develop 100 percent affordable housing with a right to purchase a property can submit an AB 721 application to a county recorder. This will allow the developer to confirm before buying the property that the restrictive covenant will be modified to allow for affordable housing once the developer becomes the recorded owner of title.
Arguments in Opposition: None on file.
Committee Amendment:
Add the following cross references to AB 2011 (Wicks), Chapter 647, Statutes of 2022, and SB 35 (Wiener), Chapter 366, Statutes of 2017, to the definition of “permit application.” Both of these bills streamline 100 percent affordable housing developments and require a developer to submit a development application.
Amendment:
(II) “Permit application” includes, without limitation, a building permit application, an application pursuant to Chapter 4.5 (commencing with Section 65920) of Division 1 of Title 7 of the Government Code, including a preliminary application pursuant to Section 65941.1 of the Government Code, an application for a zoning or general plan amendment, an application for a specific plan or amendment to a specific plan, or a notice of intent submitted pursuant to subdivision (b) of Section 65913.4 of the Government Code, or application for development pursuant to subdivision 65912.110, or an application for development pursuant to Government Code Section 65913.4.
Technical amendment:
(d) (1) Any suit filed by a party that is deemed to have been given notice as described in subparagraph (D) of paragraph (2) of subdivision (b), which suit challenges the validity of a restrictive covenant modification document pursuant to this section, shall be filed within 35 days of that notice.
Related Legislation:
AB 721 (Bloom), Chapter 349, Statutes of 2022, made covenants and other recorded documents that restrict the number or size of the residences or the number of persons who may reside on the property unenforceable if the property is developed into 100 percent affordable housing. Created a process for an owner to record a modification document through the county recorder to override the restrictive covenants.
Double Referred: This bill was also referred to the Assembly Committee on Judiciary, where it will be heard should it pass out of this committee.
REGISTERED SUPPORT / OPPOSITION:
Support
San Francisco Bay Area Planning and Urban Research Association (Sponsor)
California Housing Consortium
Non-profit Housing Association of Northern California
Resources for Community Development
Valley Oak Partners
YIMBY Action
YIMBY Law
Opposition
None on file.
Analysis Prepared by: Lisa Engel / H. & C.D. / (916) 319-2085
Discussed in Hearing
2MIN
Senate Floor
6MIN
Senate Standing Committee on Housing
5MIN
Senate Standing Committee on Judiciary
1MIN
Assembly Floor
1MIN
Assembly Standing Committee on Appropriations
2MIN
Assembly Standing Committee on Judiciary
3MIN
Assembly Standing Committee on Housing and Community Development
Bill Author
Bill Co-Author(s):