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RENT CONTROL BILL SIGNED BY GOVERNOR NEWSOM

Sunday, October 13, 2019   /   by Scott Ivey

RENT CONTROL BILL SIGNED BY GOVERNOR NEWSOM

RENT CONTROL BILL SIGNED BY GOVERNOR NEWSOM
AB 1482 Limits Annual Rent Increases and Limits Powers to Evict
By: Alexander W. Munn, Esq.  
  
We all know that California has a housing crisis. Home prices are some of the highest in the nation, and rents have followed suit. In an attempt to address this problem, the California Legislature drafted and passed AB 1482, which limits the amount rent can be increased, and gives eviction protections for most tenants. In today's Blog post, we'll examine AB 1482 and its possible impacts.
 
Evictions: Prior to the passage of AB 1482, property owners could terminate a tenancy at the expiration of its term for any reason whatsoever. Not anymore. The new law breaks evictions into two categories: 'at-fault' just cause and 'no-fault' just cause. If a tenant has resided in the unit for 12 consecutive months, the owner can, under most circumstances, only evict for at-fault just cause, including:
  • Default in payment of rent
  • A breach of a material term of the lease after the tenant is given a written notice to correct the violation
  • Maintaining or permitting a nuisance
  • Committing waste at the property
  • Criminal activity
  • Failure to allow the property owner to inspect the property
The 12-month rule is interesting: a property owner could simply require leases for only an 11-month term to avoid the 'at-fault' provision of the statute. It will be interesting to see how this issue plays out in the coming months.
A property owner can evict the tenant under the 'no-fault' provisions if:
  • If the owner, spouse, domestic partner, children, grandchildren, parents or grandparents intend to occupy the property
  • Withdrawal of the property from the rental market
  • If an order from a governmental agency or court relating to the habitability of the property
  • Intent to demolish or substantially remodel the property
With 'no-fault' evictions there is a catch: the owner shall, regardless of the tenant's income, either pay the tenant one month's rent as relocation assistance or waive the final month rental payment (certain exceptions apply). So, if the rent for the property is $4,500 per month, the property owner must pay the tenant this sum. In theory, if the margins on the property are slim, a property owner could, via this payment, take a loss on the net operating income for the property. This is especially true in super-high rental markets like San Francisco and the Bay Area.
 
Limitations on Rent Increases
: owners of rental units may only increase the rent 5% per year, plus annual cost of living increases depending on location of the unit. The new law does exempt single family homes. While single family properties are owned by investment firms would be subject to the rent cap, those owned by "mom and pop" landlords - the vast majority of the single-family market - would be exempt. 

In sum, this new legislation isn't traditional 'rent control' where a landlord can only minimally increase (or not increase at all) the monthly rent, but instead is an 'anti-rent gouging' measure where monthly rents can be increased but only a certain amount. The most significant part of this legislation is the 'just cause' eviction provisions, which will severely limit a property owners' ability to remove tenants. The law is complicated, and this Blog is a general overview of its provisions. BPE Law recommends reading the full text, which can be found at the California Legislation Information website
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For more information please feel free to contact my friends at BPE Law or Call me at 916-899-4839

Scott Ivey
Realtor
(916) 899-4839
www.scottivey.net
DRE 01438657


The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters and have represented and advised brokers on their professional obligations as well as consumers on their rights. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.

The information presented in this Article is not to be taken as legal advice. Every person's situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.