SB 985 – Closing the “Loophole” in Costa-Hawkins

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Effective January 1, 2002, SB 985 amended the Costa-Hawkins Rental Housing Act to “close the loophole” allowing owners of apartment buildings to obtain a final public map for subdivision of an apartment building, never actually sell any units as condominiums. This would permit them to avoid local rent control ordinances that would otherwise apply to the apartment units, on the theory that the building now contained separately alienable units exempted under Costa-Hawkins. SB 985 amended Costa-Hawkins to require that condominiums be sold separately to bona fide purchasers for value. It is analyzed extensively in the case City of West Hollywood v. 1112 Investments Co..