Two BOMA Cal-Sponsored Bills Signed into Law!
From Matthew Hargrove, BOMA California Administration
BOMA Cal members from across the State helped push this forward and it would not have become law without lots of people working on it. However, a special shout out to Sarahann Shapiro who spent a lot of time “lawyering” this thing and providing context and information directly to legislators and writing and re-writing and re-writing again, statutory language. Also a big thanks to Mike Kent from Orange County who was key in helping us connect with local resources in SoCal early on to help work out some bugs. Finally, to the folks at BOMA Greater Los Angeles who worked hard to help us find authors and then worked behind the scenes to make sure we kept up good communications with them throughout the process.
Below are information and links regarding the two new laws:
SPONSORED BILL SIGNED INTO LAW: AB 2173 (Santiago; D-Los Angeles) – Abandoned Property
Sponsored by BOMA California and signed into law by Governor Brown in July, this bill updates the state's commercial/retail abandoned property laws by increasing the threshold amount needed to trigger an official disposition (auction) process. The new threshold is now $2,500 or an amount equal to one month's rent for the premises the tenant occupied, whichever is greater.
Under current law, a commercial property owner/manager is obligated to go through an expensive public notification and auction when a business moves out and leaves behind unwanted items, believed to be $750 or more in value or the equivalent of $1 per square foot of the rental for the property, whichever is less.
If a company moves out of a leased space and purposefully abandons property (i.e. old shelving, a few desks and chairs, or obsolete computer equipment) that low threshold is very easily met and triggers an expensive auction process for a relatively small amount of money on items that were unwanted to begin with.
Due to AB 2173, state law now better reflects the practical realities in the commercial real estate industry by setting a new commercial threshold. This proposed new threshold amount more appropriately aligns with the actual costs of storage and disposal of abandoned property in commercial real estate.
AB 2173 (Santiago; D-Los Angeles) Governor's Signature Press Release and Click here to read the text of the new law.
SPONSORED BILL SIGNED INTO LAW: AB 2847 (Rubio; D-Baldwin Park) – Separating Residential and Commercial Leasing Language
Sponsored by BOMA California and signed into law by Governor Brown in July, this bill continues the effort to separate commercial from residential sections in statute where it does not make sense to have them intermingled.
AB 2847 clarifies that current Civil Code §1951.3 pertains to residential real estate only and creates a new section mirroring it to deal with commercial/retail. This fix was needed as the statute provided certain obligations/protections for residential owners/tenants without parallel in commercial context.
The current section requires that when property is deemed “abandoned” the property owner must wait until the fifteenth of the following month to start the Notice of Abandonment. This waiting period does not make sense on the commercial side as there are strict contractual obligations guiding property leases. This bill clarifies that the residential and commercial sections are not comingled which may lead to further reform in the future.
AB 2847 (Rubio; D-Baldwin Park) Governor's Signature Press Release and click here to read the text of the new law.