Bill would give preferential treatment to certain groups when a rental property is for sale, delay the sales process for an extended time
If Assembly Bill 1703 comes to pass, sellers of rental properties throughout the State of California would have a host of new obligations and the transaction might be delayed for up to a year.
The legislation, spearheaded by Assemblyman Richard Bloom, a Democrat from Santa Monica, would require sellers to notify “qualified organizations” of their intent to put the rental property on the market. These organizations include nonprofits dedicated to affordable housing, land-trusts, and renters who have organized to buy the property.
Our community has many reservations about the proposed bill. In a time when landlords face an unprecedented number of regulations, AB-1703 would add a new layer of complexities when he or she wants to sell their rental property. Owners of single-family rentals would also be subjected to the law.
Groups who express interest in making an offer would be privy to reams of sensitive information about all tenants residing in the property, raising serious privacy concerns. Implementing the law would require a state-run registration system that is no easy feat to create and maintain, with the price tag estimated to be in the tens of millions of dollars.
Perhaps most ominously, it is likely that many prospective buyers who come to the table will not have the necessary funds in place to purchase the property and would be given an excessive amount of time to secure financing.
The bill is reminiscent of San Francisco’s Community Opportunity to Purchase Act (COPA), an ordinance that gives qualified nonprofits first crack at purchasing multi-unit properties in the City, and subsequently matching or besting offers later made by private buyers in the open market. Our office can assist in this process from start to finish, and we have assembled several resources on COPA here.
Like all laws and regulations that impact the rental housing industry, Bornstein Law is committed to providing updates as they arise.