AB 1482 – CA Rent Control

As you may be aware, California recently passed AB 1482 known as the Tenant Protection Act of 2019. This new law established statewide rent control for applicable rental properties. If you own rental property in a city where there are more stringent rent control laws already in place (ie/ San Francisco), then the local laws would control and not the state laws.  For any cities that did not previously have rent control laws, this new state law would apply to your city assuming your property is not exempted (see further discussion below).  

The new law caps the amount the landlord can charge for rent increases each year and requires “just cause” for termination of the lease for tenants who occupy a property for more than 12 months.

Rent Increase Cap:  The rent increase for all leases is capped at 5% plus the change in cost of living, or 10% whichever is lower.  The CPI obviously differs by county so you will need to consult the CPI for your area to determine the change in cost of living from April of the prior year to April of the current year.   For example, in San Diego County the CPI increase from last year is 1.7% so the most you could currently increase the rent in San Diego County would be 6.7%. If you increased the rent more than 6.7% after March 15, 2019, the rent on January 1, 2020 will be rolled back to the previous rent rate in effect on March 15, 2019 plus 6.7%.   Any landlords who attempt to increase the rent more than 6.7% in San Diego County after March 15, 2019 will not be able to collect those higher rents past December 31, 2019.

Rent Cap Exempted Properties: The following properties are exempted from the rent cap requirements:

(1) Housing restricted by deed as affordable housing for very low, low or moderate income

(2) Dormitories

(3) Housing subject to rent or price control through a public entity restriction

(4) Housing that has been issued a certificate of occupancy in the last 15 years (*Note this date is revolving)

(5) Single family homes (with no other units on the property), condos, or townhomes owned by individuals, family trusts, or limited liability companies so long as the LLC does not have any corporate members.  (*Note single family homes, condos, and townhomes owned by a corporation, real estate investment trust, or corporate member LLC are subject to the rent control law)

(6) A Duplex in which the owner occupies one of the units as his or her primary residence.

*NOTE: If your property qualifies for this category (5) exemption above, for all existing leases prior to July 1, 2020, the tenant must be given written notice, and for all new leases after July 1, 2020, the language must be included in the lease or addendum:

This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12 (d)(5) and 1946.2 (e)(8) of the Civil Code and the owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation.”

Just Cause for Termination: The following are the only permitted “just cause” reasons for termination of the lease where the tenant has resided in the unit for 12 months or more:

At-fault Just Cause: A landlord must serve the tenant with a written notice to cure for any of the “at fault” reasons below that are curable breaches before evicting, but may proceed with serving a 3 day quit notice for non-curable “at fault” breaches. 

  • Default in payment of rent
  • Breach of material term of the lease after notice to cure is served
  • Maintaining, committing or permitting a nuisance
  • Committing waste
  • Tenant’s lease terminated on or after January 1, 2020 and, after written request from the landlord, the tenant fails to execute a written extension or renewal of the lease for an additional term of similar duration
  • Criminal activity
  • Assigning or subletting in violation of the lease terms
  • Tenant’s refusal to allow the landlord to enter the premises after being given notice to enter
  • Use of the premises for an unlawful purpose
  •  Employee, agent, or licensee’s failure to vacate after termination as an employee, agent or licensee
  •  Tenant’s failure to vacate and surrender possession after giving the landlord notice of tenant’s intention to terminate the tenancy

No-Fault Just Cause: Requires the owner to provide the tenant with a relocation assistance payment (equal to one month’s rent) OR agree to waive the final month’s rent.  The landlord must give the tenant notice of the tenant’s right to relocation assistance or rent waiver in writing. Failure to comply with this renders the termination notice void.

  • Owner, spouse, domestic partner, children, parents, grandparents, grandchildren who intend to occupy the property as their primary residence provided the tenant agrees in writing, or the lease includes a provision allowing the owner to terminate to take back the property to reside in;
  • Withdrawal of the property from the rental market;
  • Owner has to comply with an order issued by a government agency or local ordinance requiring the tenant to vacate (*Note if the tenant caused the problem necessitating the termination, tenant shall not be entitled to relocation payments)
  • Intent to demolish or substantially remodel the unit (ie/ structural, electrical, plumbing, mechanical modifications that require a permit, or abatement of hazardous materials, which require the tenant to vacate for at least 30 days. This does NOT include cosmetic repairs)

Just Cause Exempted Properties: Not all properties are subject to the new state rent control law.  Keep in mind that the interpretation of the vaguely written language in the new Civil Code 1946.2 and 1947.12 have not yet been tested by a court of law, so this initial legal interpretation of the code may change over time as we see lawsuits being filed on this issue.  Exempted properties that do not have to comply with the just cause termination include all of the following: 

  1. Transient and tourist hotel occupancy under Civil Code 1940 (ie/ short term rentals for less than 30 days)
  2. Non-profit housing in a hospital, religious facility, extended care facility, elderly car facility, adult residential tenancy
  3. Dormitories
  4. Housing where the tenant shares bathroom or kitchen facilities in the owner’s primary residence
  5. Single family homes that are owner occupied, and the owner rents no more than two units or bedrooms (includes ADU)
  6. Duplex where an owner resides in one unit as a primary residence
  7. Housing where a certificate of occupancy was issued within the last 15 years (*Note this date is revolving)
  8. Single family homes, condos and townhomes owned by individuals, family trusts, or limited liability companies so long as the LLC does not have any corporate members.  (*Note single family homes, condos and townhomes owned by a corporation, real estate investment trust, or corporate member LLC are subject to the rent control law)
  9. Housing restricted by deed as affordable housing for very low, low or moderate income.

NOTE: If your property qualifies for this category (8) exemption above, for all existing leases prior to July 1, 2020, the tenant must be given written notice, and for all new leases after July 1, 2020, the language must be included in the lease or addendum:

“This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12 (d)(5) and 1946.2 (e)(8) of the Civil Code and the owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation.”H

If your property does NOT qualify for any of the exemptions in (1) through (9) above, you MUST provide your tenants with written notice in 12 point font of the new rent control law. 

  • For all leases that are in existence prior to July 1, 2020, written notice has to be given to all tenants no later than August 1, 2020. 
  • For all leases that renew or commence after July 1, 2020, the language must be included in the lease agreement or in an addendum signed by the tenant.   

“California law limits the amount your rent can be increased. See Section 1947.12 of the Civil Code for more information. California law also provides that after all of the tenants have continuously and lawfully occupied the property for 12 months or more or at least one of the tenants has continuously and lawfully occupied the property for 24 months or more, a landlord must provide a statement of cause in any notice to terminate a tenancy. See Section 1946.2 of the Civil Code for more information.”

This article is intended for informational purposes only and does not constitute legal advice. It is specific to the laws of the State of California. For specific questions related to this article, please contact the Law Office of Ashley M. Peterson.

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