New California Laws Affecting Real Estate in 2022

by Mark E. Ellinghouse

After surviving holiday family dinners, a few-too-many champagne toasts, and a record-breaking snowstorm, this team is ready to turn its sights to a new year and the exciting projects that are in store.  To kick off our 2022 newsletter season (and hopefully in better fashion than the Sacramento Kings), we thought it would be helpful to summarize a few of California’s noteworthy new-for-2022 laws.[1] There aren’t any earth-shattering changes that will require substantial deviation to standard operating procedures, but some represent new requirements that will need to be considered in upcoming projects.

SB 9

In the highly publicized and controversial SB 9, the California legislature changed the process for review of subdivisions in single-family residential zones, which some have designated as the “end of single-family zoning.”  Specifically, this bill streamlines the process by which the owner of a single-family lot can subdivide that lot into two separate parcels, and to subsequently construct up to two units per parcel. In other words, a single-family lot can now bear up to four homes, subject to certain conditions. Proponents of the bill contend this will facilitate the construction of increased housing and density, helping to solve the ongoing housing crisis.  Opponents contend this change will undermine communities and is unlikely to make a material impact on the demand for housing in urban areas. This bill became effective January 1, 2022, and is part of a series of initiatives designed to increase housing, which also includes SB 8 (extending and expanding the Housing Crisis Act of 2019) and SB 10 (easing the process for developments up to 10 units in transit-dense areas).

SB 1383

In a move designed to reduce the emission of methane gases, SB 1383 requires the adoption of regulations to reduce organic waste, with the goal of having 20% of all organic waste being composted by 2025. This applies equally to individuals and businesses and therefore may change how operators in the retail industry are required to dispose of their organic waste.  Both landlords and tenants may now be forced to create composting areas in their retail centers and/or hire additional services for compost retention and removal, each of which may increase operating costs for those in the retail industry. SB 1383 regulations also require certain food-based businesses to donate the maximum amount of edible food that would otherwise be wasted and keep records of this food recovery, with the overall goal of recovering 20% of edible food that would otherwise be sent to landfills by 2025. Implementation is not immediate, but preparations should be made to address compost in retail centers in the next coming years.

AB 1084

AB 1084 is known as the gender-neutral retail law. This bill requires retail stores with more than 500 retail employees in the state that sell childcare items or toys to provide a gender-neutral area for the sale of such items and toys, regardless of whether they have been traditionally marketed for either girls or boys. Retailers will need to adjust how their goods are marketed in their stores, but the more important question is whether this will affect tenant needs for their leased retail premises and/or modifications to existing layouts. Enforcement will begin in 2024.

Lightning round:

  • Minimum wage increased state-wide to $15 per hour.
  • SB 389: Alcoholic beverages ‘to-go’ are here to stay, at least for a while and with purchase of a meal.
  • SB 762: If a contract of adhesion (a take-it-or-leave-it contract) specifies a time of performance, the time specified must be reasonable.
  • AB 1346: The sale of new gas-powered leaf blowers and other small off-road engines will be banned by 2024.
  • AB 286: Food delivery platforms cannot increase food prices or keep any portion of fees designated as tips or gratuity.
  • SB 395: Roadkill may soon be legal to collect and serve.

[1] While chaptered, the laws below are identified by their Assembly Bill (“AB”) or Senate Bill (“SB”) number for convenience.