2025’s New Laws and the Legislative Session Begins!

2025’s New Laws and the Legislative Session Begins!

By Kate Bell, Kate Bell Strategies

California Budget Update: Pending January 10^th

Governor Newsom will unveil his proposed 2025-26 budget around January 10, 2025. In the meantime, the Legislative Analyst’s Office (LAO) had issued a report saying that we are experiencing a fairly balanced budget going into 2025. The LAO publication may be found  https://lao.ca.gov/Publications/Report/4939.

Legislative Update

The Legislature returned to Sacramento on December 5^th to swear-in newly elected members of the Assembly and Senate. Legislators also took the opportunity to introduce bills for the new, 2025-26 legislative session. Of particular note:

• Democratic Assemblymember Lee has reintroduced his Social Housing Act as Assembly Bill 11.
• Republican Assemblymember DeMaio has introduced the Taxpayer Protection Act of 2025 as Assembly Bill 21.
• Senator Arreguin introduced Senate Bill 9, which would remove the owner-occupancy requirement for ADUs. 

There will be many more bills introduced when the Legislature comes back from the holidays in January, but the leaders of the Legislature, the Pro Tem of the Senate and Speaker of the Assembly have instituted a reduced limitation on the number of bills that each Legislator can introduce. According to the legislative leaders’ press release,

“This “bill limit” will allow legislators to invest additional energy on issues that matter most to Californians, such as lowering the cost of living, building more housing and improving public services. It also encourages legislators to spend more time on oversight and accountability, ensuring existing programs remain efficient and effective. So, this session, we are lowering the number of bills legislators can introduce from 50 to 35.”

New Legislation Effective in 2025

As a reminder and so that you are prepared as we go into 2025, here is a list of rental housing related legislation that passed and was signed by the Governor during the 2024 Legislative session, and which will be effective on January 1, 2025, or sometime during 2025.

• Assembly Bill 2347 (Kalra) - Eviction Delay – Extends the time for tenants to respond to an unlawful detainer (eviction) from 5 court days to 10 court days.
• Assembly Bill 2493 (Pellerin) - Rental Application Fees - Allows a rental housing provider to charge a lease application screening fee only if the housing provider offers an application screening process that considers applications in the order in which they are received or provides any applicant who is not selected for tenancy with a refund or credit for the application screening fee.
• Assembly Bill 2579 (Quirk-Silva) - Balcony Bill – Extends by one year, until January 1, 2026, the deadline for performing inspections of exterior elevated elements (e.g., balcony inspections) in all buildings containing three or more multifamily dwelling units.
• Assembly Bill 2747 (Haney) - Positive Rental Credit Reporting - Requires rental property owners or managers of buildings that have 16 or more rental units at a single parcel to offer each tenant the option of having the tenant's positive rental payment information reported to at least one nationwide consumer reporting agency. (See the upcoming February issue of “Apartment Age” magazine for an in-depth article on Assembly Bill 2747.)
• Assembly Bill 2801 (Friedman) - Security Deposits – This bill imposes restrictions on any deductions taken by a housing provider against a tenant’s security deposit by limiting such deductions to reasonable amounts and repairs that are “reasonable and necessary” to restore the premises back to the condition it was in before the tenancy, except for ordinary wear and tear. This bill also imposes a requirement to take photographs of the condition of the rental unit such that:
• • Beginning April 1, 2025, a landlord must take photographs of the unit within a reasonable time after the possession of the unit is returned to the landlord, but before any repairs or cleanings for which the landlord will deduct from the deposit are completed, and that the landlord take photographs of the unit within a reasonable time after the repairs or cleanings are completed.
  • For tenancies beginning on or after July 1, 2025, a landlord must take photographs of the leased unit immediately before, or at the inception of the tenancy.

• Assembly Bill 3057 (Wilson) - CEQA Exemption for Accessory Dwelling Units (ADUs) and Junior ADUs - Expands an existing California Environmental Quality Act (CEQA) exemption for city or county adoption of an ordinance to facilitate accessory dwelling units to also include adoption of an ordinance facilitating junior ADUs (Junior ADUs are ADUs that are up to 500 sq. ft. in size).
• Senate Bill 440 (Skinner) - Regional Housing Authorities - Authorizes two or more local governments to establish a regional housing finance authority (RHFA) to raise, administer, and allocate funding for affordable housing and provide technical assistance at a regional level for affordable housing development. (Editor’s Note: This new law could result in the establishment of a new bureaucracy and any RHFA that is established, could impose new fees or taxes, and create new regulations.)
• Senate Bill 1103 (Menjivar) - Commercial Tenancies - Requires commercial landlords to provide "qualified commercial tenants" contract translation and notice for month-to-month rent increases or tenancy termination, and places transparency and proportionality requirements on the fees a landlord may impose to recover building operating costs from qualified tenants. Qualified Commercial Tenants are specific types of small businesses that self-certify their Qualified Commercial Tenant status, including:
• Microenterprises. Small-scale businesses with five or fewer employees and limited access to funding.
• Small Restaurants. Establishments with 10 or fewer employees.
• Nonprofit Organizations. Businesses that are 501(c)(3) nonprofits with fewer than 20 employees.

Property owners that lease to Qualified Commercial Tenants must comply with new notification rules for, among other, like: rent increases, termination notices, and operating expenses. For rent increase notices, property owners must now provide 90-days written notice for rent increases in excess of 10% and thirty-days’ notice for rent increases under 10%. A notice of termination of month-to-month commercial tenants will now require that owners provide 60 days’ notice for ending such tenancies if the tenant has occupied the commercial space for more than 12 months; however, commercial tenants may still terminate tenancies with just 30 days’ notice.

• Senate Bill 1211 (Skinner) - Ministerial Approval of ADUs - Increases the number of detached ADUs eligible for ministerial approval on a lot with an existing multifamily dwelling from no more than two detached ADUs to no more than eight detached ADUs. Also, this bill prohibits a local agency from requiring replacement of uncovered parking spaces demolished to allow for the construction of an ADU.

Administrative Update

 The Department of Housing and Community Development (HCD) just released an updated Accessory Dwelling Unit (ADU) Handbook. The handbook provides updates, resulting from the Apartment Association of Greater Los Angeles’ past sponsored legislation addressing ADU height limitations and constructing streamlining. The handbook may be found at the California Housing and Community Development Department website at: https://www.hcd.ca.gov/sites/default/files/docs/policy-and-research/ADUHandbookUpdate.pdf.

Kate Bell, the Founder and Chief Executive Officer of Kate Bell Strategies is a former Partner of Capitol Advocacy, which is ranked among California’s top lobbying firms. Ms. Bell’s firm specializes in lobbying, strategic planning, coalition building, budget advocacy, procurement, and political involvement. Kate Bell Strategies and Capitol Advocacy represent the interests of the Apartment Association of Greater Los Angeles through its affiliation with the California Rental Housing Association. Both firms are based in Sacramento.