Bill Text: CA SB1212 | 2023-2024 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Real estate investment trusts: purchase, acquisition, and sale of housing.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-04-29 - April 30 set for first hearing canceled at the request of author. [SB1212 Detail]

Download: California-2023-SB1212-Amended.html

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Amended  IN  Senate  March 19, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 1212

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Introduced by Senator Skinner

February 15, 2024

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An act to add Chapter 5 (commencing with Section 745) to Title 2 of Part 1 of Division 2 of the Civil Code, relating to real property.

LEGISLATIVE COUNSEL'S DIGEST

SB 1212, as amended, Skinner. Investment entities: purchasing, acquiring, or leasing purchasing and acquisition interests in housing.

Existing law provides that all property has an owner, whether that owner is the state and the property is public, or the owner is an individual and the property is private.

This bill, on and after January 1, 2025, would prohibit an investment entity, as defined, from purchasing, acquiring, or leasing purchasing or acquiring an interest, as defined, in a single-family dwelling or other dwelling that consists of one or 2 residential units within this state. The bill would provide that a purchase, acquisition, or lease purchase or acquisition of an interest in housing in violation of this prohibition is void. The bill would define “investment entity” as a real estate investment trust or an entity that manages funds pooled from investors and owes a fiduciary duty to those investors. The bill would exempt nonprofit organizations and other organizations, entities primarily engaged in the construction or rehabilitation of housing housing, and governmental entities from the definition of “investment entity.” The bill would absolve a seller of housing from liability under these provisions if the seller obtains a written release signed by the buyer stating that the buyer is not an investment entity.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Chapter 5 (commencing with Section 745) is added to Title 2 of Part 1 of Division 2 of the Civil Code, to read:

CHAPTER  5. Corporate and real Estate Investment Trust Ownership of Housing

745.

 The Legislature finds and declares all of the following:

(a) California has a housing supply and housing affordability crisis of historic proportions. The consequences of failing to effectively and aggressively confront this crisis are hurting millions of Californians, robbing future generations of the chance to call California home, stifling economic opportunities for workers and businesses, worsening poverty and homelessness, and undermining the state’s environmental and climate objectives.

(b) Lack of supply and rising costs are compounding inequality and limiting advancement opportunities for many Californians.

(c) Home ownership has been a primary driver of household wealth, with homeowners holding over 40 times the median net worth of renters as of 2019.

(d) Large corporations have purchased tens of thousands of homes in California and hundreds of thousands of homes across the globe, limiting the available supply of housing for purchase by individuals and families.

(e) Investors purchased a record share of homes sold in the United States in 2021, purchasing nearly one out of every seven homes sold.

(f) It is incredibly difficult for individuals and families to compete with large corporations when trying to purchase a home because corporations have the funds to purchase homes in cash, buy multiple homes at once, and pay above market rate prices.

(g) Large corporate landlords are often less responsive to the needs of their tenants, raise rents more aggressively, and evict people more frequently than other types of landlords. These practices exasperate exacerbate housing insecurity and fuel California’s homelessness crisis.

(h) It is in the public and state’s interest to ensure that families and all Californians have a reasonable opportunity to purchase homes and to protect California’s housing market from monopolies. Large corporations purchasing family homes directly conflicts with those goals.

745.1.

 For purposes of this chapter:

(a) “Interest” means any estate, remainder, or reversion enumerated in Chapter 1 (commencing with Section 761) of Title 2 of Part 2, or portion of the estate, remainder, or reversion, or an option pursuant to which one party has a right to cause legal or equitable title to housing to be transferred.

(b) (1) “Investment entity” means both either of the following:

(A) A real estate investment trust as defined in Section 23000 of the Corporations Code.

(B) An entity that satisfies both of the following conditions:

(i) The entity manages funds pooled from investors.

(ii) The entity owes a fiduciary duty to those investors.

(2) “Investment entity” does not include either any of the following:

(A) An entity organized pursuant to Section 501(c)(3) of the Internal Revenue Code.

(B) An entity primarily engaged in the construction or rehabilitation of housing, provided that the entity does not offer any of the units constructed or rehabilitated for rent. of housing.

(C) Any governmental entity.

(c) “Housing” means a single-family dwelling or other dwelling that consists of one or two residential units.

745.2.

 (a) Notwithstanding any other law, on and after January 1, 2025, an investment entity shall not purchase, acquire, or lease purchase or acquire any interest in housing in this state.

(b) A purchase, acquisition, or lease purchase or acquisition of an interest in housing in violation of this section is void.

745.3.

 A seller of housing shall not be liable for any violation of this chapter if the seller obtains a written release signed by the buyer stating that the buyer is not an investment entity.