Updated OCTOBER 8, 2019 — With his signature on Assembly Bill 1482 today, Governor Newsom has officially made California just the second state (and by far the largest) in the nation to enact state-wide rent control and just cause for eviction protections. The following guide has been created to help you better understand the new laws and how they will effect you.
How does this effect landlords in Oakland?
Since many of our readers are Oakland landlords, let’s start here.
If you had previously been exempt from rent control under Costa-Hawkins because your building was built after 1983 (the year Oakland enacted it’s local rent control ordinance), that exemption may no longer stand. Under the new state law, only buildings with a certificate of occupancy issued in the last 15 years will be exempt from this new rent control. This is a rolling 15-year window, meaning each year, new buildings will come out of the exemption window as they age past the 15 year threshold.
Second, your total allowable rent increases may be going down. While the local Oakland ordinance makes room for rent increases up to 10% per year through things like banked rent increases and capital improvement passthroughs, the new state law puts a cap of 5% plus CPI on all rent increases.
Lastly, there are changes for landlords of single-family homes. You may be losing the single-family home rent control exemption if the home is owned by a corporation or real estate trust. There will also be new written notice requirements for single-family homes that are owned by a natural person and still exempt under the new law. You may also be losing the shared bathroom or kitchen exemption if you rent out more than 2 rooms in your home on separate leases.
What are the new state-wide limits on rent increases?
The new law limits annual rent increases state-wide to 5% plus the annual percentage change in the regional CPI, with a 10% maximum cap.
What is the effective date of the new law?
While the full law will become effective January 1, 2020, the rent control provisions apply to all rent increases since March 15, 2019. This means that if rent has increased more than the amount specified above since March 15, 2019, the rent as of January 1, 2020 will be the rent as of March 15, 2019 plus the maximum permissible increase under this new law.
What types of units does this new rent control apply to?
All units not currently subject to stricter local rent control ordinances in the state will be covered under the new law, with some notable exemptions:
- Housing issued a certificate of occupancy in the past 15 years (this is a rolling 15-year window that will continue to shift)
- Single-family homes and condos, provided that:
- The owner is not a real estate investment trust, corporation, or LLC in which at least one member is a corporation
- The tenants have been provided a specific written notice regarding the exemption
- Duplexes where the owner occupied one of the units at the beginning of the tenancy and continues to live there (must be owner’s principal residence)
- Section 8 or other deed-restricted housing
Is this really a temporary measure?
To win support for the bill, the authors had framed this as an emergency anti-price-gouging measure, and thus have built in a 10-year sunset clause that has this new law set to expire January 1, 2030. We remain highly skeptical, however, of the prospect of real expiration due to the nature of California politics. If anything, we expect this law to become more restrictive over time.
I heard this bill also implements new just cause for eviction requirements?
Yes. The new law also limits a landlord’s ability to evict tenants who have occupied a unit for at least 12 months to a list of just causes. For most “At-fault” just causes, owners will be required to first give a notice of violation and an opportunity to cure the violation prior to issuing notice of termination. For “no-fault” just causes (such as an owner/relative move-in), owners will be required to make a relocation payment equal to one month’s rent or waive in writing the payment of rent for the final month prior to the rent becoming due.
What are the ‘At-fault’ just causes:
- Non-payment of rent
- Material breach of rental agreement
- Damaging property
- Non-renewal of lease
- Criminal activity on the property or criminal activity or threat on/off the property directed at the owner or agent of the owner
- Subletting in violation of lease
- Denying landlord access
- Using the premises for an unlawful purpose
- Employee, agent, or licensee’s failure to vacate after termination
- Failure to deliver possession as provided in written notice/offer
What are the ‘No-fault’ just causes:
- Owner or relative move-in:
- Must be the owner or their spouse, domestic partner, children, grandchildren, parents, or grandparents.
- Requires written agreement or provision in lease after July 1, 2020
- Withdrawal of the property from the rental market (Ellis Act)
- Owner complying with a local ordinance or order from a government agency or court that necessitates vacating the property
- Intent to demolish or substantially remodel the property
What types of units do the just cause requirements apply to?
The units exempt from just cause requirements include those exempt from the new rent control, plus:
- Single-family owner-occupied residences, provided that owner-occupant is renting no more than two units or bedrooms
- Housing in which the tenant shares bathroom or kitchen facilities with the owner (must be owner’s principal residence)
- Transient and tourist hotels
- Nonprofit hospitals, religious facilities, and other care facilities
Properties will not be subject to both state and local just cause requirements. If your local jurisdiction has an existing ordinance requiring just cause for termination, that local ordinance shall apply. If your local jurisdiction adopts such an ordinance after September 1, 2019 that is more protective than this state law, the local ordinance will apply. If it is less protective, the state law will continue to apply.
Where can I get more information on how to comply with these new changes?
Our upcoming webinar on October 18th will be covering all of this in more detail, including how to comply with required notices and how to know if your local ordinances are more restrictive. Click the button below to register now, and visit our resources page for information on more upcoming classes.