Property Management Blog

AB 1482 - Rent Control

Palomar Property Services - Tuesday, January 21, 2020

The start of 2020 brought a big change for California renters and property owners. AB 1482, formally titled “The Tenant Protection Act of 2019,” was passed in October 2019 and became enforceable January 1, 2020. The law imposes statewide rent control to specified properties and affects both rent increases and just cause evictions.

WHO DOES AB 1482 AFFECT?
This new law primarily affects the following:

* Multifamily units that are over 15 years old
* Properties that are wholly or partly owned by a corporation
your Property is Exempt if you meet one of the following Exemptions:

Exemption #1: Properties that are newer than 15 years old. No matter the size or number of units, any rental property is exempt for fifteen years from the date of its first certificate of occupancy. The establishment of age is a “rolling” calculation - when this law goes into effect on 1/1/20, the age exemption will apply to all units constructed after 1/1/05. With each passing day, the construction exemption moves forward.

Exemption #2: Any property that is “separately alienable”. This is a legal, real estate concept which means that you can transfer ownership of your ONE unit separately from any other unit. Typically, this is the case for Single Family Residences or Condos. HOWEVER, this particular exemption does not apply if ownership of the property is held by a REIT (real estate investment trust), a corporation, or an LLC (limited liability company) in which at least one member is a corporation. In those instances, even a separately alienable property WOULD be subject to the Tenant Protection Act.

Exemption #3: The property in question is a duplex and the owner is currently living in one unit as their primary residence.

Exemption #4: You are renting a room in your own house, with shared bath and kitchen access/usage.

Exemption #5: The rental property is ALREADY under regulation by a MORE restrictive local rent control ordinance. If that is the case, THAT law takes precedence over AB 1482.

Exemption #6: (this is a catch all, because these likely do not apply to many of our clientele) - dormitories, hotels and transient housing, deed-restricted low-income affordable housing units, hospitals, extended care and residential care facilities for the elderly.

restrictions for NON-EXEMPT properties:

RENT CAPS

The new law limits the amount that rent can be raised. It states that the rent increase for a 12-month period cannot exceed 5% plus the percentage change in the cost of living over the previous year’s Consumer Price Index. It also cannot exceed 10% total. Additionally, the landlord is prohibited from increasing the rental rate in more than two increments over a 12-month period.

The gross rental rate will not include rent discounts or credits, incentives, or concessions.

At the time of this writing, the current cap for San Diego County is 7.21% (5% plus 2.21% change in the CPI).

JUST CAUSE PROVISIONS

Beginning on January 1st, 2020, California Civil Code 1946.2 states that after 12 months, a tenancy can only be terminated for a specific set of reasons: At-Fault and No-Fault.

AT FAULT REASONS

* Default in the payment of rent
* Breach of a material term
* Nuisance Activity or Waste - this is when the tenants are causing serious damage or harm to the property or common areas
* Criminal Activity
* Unauthorized Assignment or Subletting
* Refusal to Provide Access after being provided proper notice
* Refusal to sign a new lease under similar terms
* Unlawful Purpose

AT FAULT Termination
For “NO FAULT” notices to vacate, the owner must offer the tenant impacted by this action a “relocation benefit” in the amount of one full month of rent

* Intent to Demolish or Substantially Remodel - if the home will be uninhabitable for a long period of time due to repairs or renovations
* Withdrawal from the Rental Market
* Owner of Relative Occupancy
* Government Order

It is important to note that during the first twelve months of a resident’s tenancy in a property that is subject to AB 1482, the “Just Cause” provisions DO NOT APPLY, and a notice to vacate can be presented as long as it complies with all other appropriate landlord/tenant laws. There is an additional time extension to that initial twelve months in certain roommate situations. This provision to the law may result in the first twelve months of a tenancy becoming a closely watched probationary period where the owner is constantly assessing whether a particular tenant is the tenant that you want to continue after the initial twelve-month period.

All tenant that are in a property subject to the new law must receive a notice using statutory language disclosing that AB 1482 applies. This must be provided by August 1, 2020 if the tenancy existed prior to July 1, 2020. For any tenancy following that, the statement must be included as a lease addendum or as a written notice signed by the tenant.

All tenants in property under a management contract with Palomar Property Services will be served a notice that outlines if the property they live in is covered or exempt from AB 1482. If you would like a copy of the notice, or have questions or concerns about the content in the notice, please email owners@palomarps.com.

We thank you for your continued business and trust that you have placed in our abilities during this rapidly changing market.