With the passage of AB 1482 the so called “Tenant Protection Act of 2019” there has been much confusion regarding its provisions. This column will attempt to shed some light on this new law.
Statewide Rent Control Instituted Even Though Proposition 10 Was Defeated
Even though Proposition 10 was soundly defeated by the voters, the State Legislators and the Governor ignored the will of the voters and passed their own “Tenant Welfare Act”. The Governor even claimed that the statute would have the effect of helping to solve the housing crisis. Clearly he needs to have counseling by reputable economists. I predict that not only will the statute only to the housing crisis, but it will cause rents to escalate. Landlords who raise rents infrequently, or only by a small percentage, will now raise rents on a yearly basis and by the maximum allowed by law.
Property Which is Already Subject To a Local Rent Control Statute
In general, if your property is subject to a local rent control ordinance, you would not be subject to the statewide rent control statute. There is an exception which relates to “good cause” to evict. If the local rent control ordinance is less restrictive then the statewide statute, then the state law would control. For example, the City of Glendale allows for a rent increase in excess of 7%. If you raise the rent 10%, the tenant would have the option to either pay the rent increase or they can ask the landlord to pay a relocation fee and move. Relocation is determined based on a formula by the City of Glendale. It is approximately the sum of two month’s rent plus $1,000. In this case, it would appear that the statewide ordinance is more restrictive than the local ordinance. The courts might interpret that owners cannot use that part of the Glendale ordinance. This has yet to be judicially determined at this point.
Properties That Are Exempt Under the New Statewide “Tenant Welfare” Statute
Single family homes, townhomes and condominiums are not subject to this statute. There is an exception if title is held in a corporation or a real estate investment trust (REIT). If that is the case, the property would be subject to the statute. Limited liability companies (LLC) or property held in a trust would NOT be subject to the statute, unless one of the managing members of the LLC is a corporation. A duplex or two houses on one lot would be under rent control. A duplex that is owner occupied would not be subject to the statute, if the owner occupied the unit prior to the initiation of the tenancy.
Good Cause Is Required to Terminate a Tenancy Which is Subject to the “Tenant Protection Act”
The so called “Tenant Protection Act, Tenant Welfare” does require good cause to evict. There is an important exception. If the tenant has lawfully occupied less than 12 months, good cause is not required. A landlord would be free to terminate a month to month tenancy with a 30 day notice, or just not renew an existing lease. On that basis, landlords should never issue a 1 year lease to new tenants. My suggestion would be to only offer a month-to-month tenancy or a six month lease. In this way, if you are unhappy with the attitude or actions of the tenant, you will be able to issue a 30 day notice to vacate or simply not renew the lease. No good cause would be required.
New Construction Is Exempt from State Statute
The State Legislature did exempt property where a certificate of occupancy has been issued within the last 15 years. Landlords need to be careful when determining if the property is subject to the statute. If your property received a certificate of occupancy 15 years ago, it would not be under rent control – however in the following year, it would be subject to the Tenant Welfare Statute!
Permissible Rent Increases Under the Statewide Rent Control Statute
There has been much confusion regarding the amount of the increase that the statute permits. I, myself, have altered my opinion. This is now my definitive answer to the question. You are entitled to a 5% rent increase plus the percentage change in the cost of living from April 1 of the prior year to April 1 of the current year in the regional Consumer Price Index for the region where the residential property is located. (Now you see why there is confusion!) Let me break this down. Online you can go to the US Bureau of Labor Statistic and review the Consumer Price Index. Look for the Western Region which is where California is located. Currently you only need to be concerned with the one published for April, 2019. The percentage for that year was 2.9%. Therefore, this year you will be able to charge a total of 7.9%. This will change from year to year, once the new index is published. I would encourage all landlords to increase their rents to the maximum allowable rate, assuming that would be considered fair market value. It will be only a matter of time when the percentage might change. If you are adventurous, here is the link to the Consumer Price Index:
https://www.bls.gov/regions/west/news-release/2019/consumerpriceindex_west_20190510.htm
Reasons to Evict For Just Cause-Tenant at Fault
The statute permits the tenancy to be terminated where the tenant is “At Fault”. The reasons are listed below:
(A) Default in the payment of rent.
(B) A breach of a material term of the lease, as described in paragraph (3) of Section 1161 of the Code of Civil Procedure, including, but not limited to, violation of a provision of the lease after being issued a written notice to correct the violation.
(C) Maintaining, committing, or permitting the maintenance or commission of a nuisance as described in paragraph (4) of Section 1161 of the Code of Civil Procedure.
(D) Committing waste as described in paragraph (4) of Section 1161 of the Code of Civil Procedure.
(E) The tenant had a written lease that terminated on or after January 1, 2020, and after a written request or demand from the owner, the tenant has refused to execute a written extension or renewal of the lease for an additional term of similar duration with similar provisions, provided that those terms do not violate this section or any other provision of law.
(F) Criminal activity by the tenant on the residential real property, including any common areas, or any criminal activity or criminal threat, as defined in subdivision (a) of Section 422 of the Penal Code, on or off the residential real property that is directed at any owner or agent of the owner of the residential real property.
(G) Assigning or subletting the premises in violation of the tenant’s lease, as described in paragraph (4) of Section 1161 of the Code of Civil Procedure.
(H) The tenant’s refusal to allow the owner to enter the residential real property as authorized by Sections 1101.5 and 1954 of this code, and Sections 13113.7 and 17926.1 of the Health and Safety Code.
(I) Using the premises for an unlawful purpose as described in paragraph (4) of Section 1161 of the Code of Civil Procedure.
(J) The employee, agent, or licensee’s failure to vacate after their termination as an employee, agent, or a licensee as described in paragraph (1) of Section 1161 of the Code of Civil Procedure.
(K) When the tenant fails to deliver possession of the residential real property after providing the owner written notice as provided in Section 1946 of the tenant’s intention to terminate the hiring of the real property, or makes a written offer to surrender that is accepted in writing by the landlord, but fails to deliver possession at the time specified in that written notice as described in paragraph (5) of Section 1161 of the Code of Civil Procedure.
Reasons to Terminate A Tenancy – A “No Fault” Eviction
There are allowable reasons to evict the tenant where the tenant has not created a problem. These include:
(A) Intent to occupy the residential real property by the owner or their spouse, domestic partner, children, grandchildren, parents, or grandparents.
(B) Withdrawal of the residential real property from the rental market.
(C) The owner complying with any of the following:
(I) An order issued by a government agency or court relating to habitability that necessitates vacating the residential real property.
(II) An order issued by a government agency or court to vacate the residential real property.
(III) A local ordinance that necessitates vacating the residential real property.
(D) Intent to demolish or to substantially remodel the residential real property.
For purposes of this subparagraph, “substantially remodel” means the replacement or substantial modification of any structural, electrical, plumbing, or mechanical system that requires a permit from a governmental agency, or the abatement of hazardous materials, including lead-based paint, mold, or asbestos, in accordance with applicable federal, state, and local laws, that cannot be reasonably accomplished in a safe manner with the tenant in place and that requires the tenant to vacate the residential real property for at least 30 days. Cosmetic improvements alone, including painting, decorating, and minor repairs, or other work that can be performed safely without having the residential real property vacated, do not qualify as substantial rehabilitation.
If any of these grounds are used to terminate the tenancy, relocation funds in a sum equal to one month rent must be paid to the tenant. The relocation may be in the form of a cash payment or a rent credit.
Dennis Block, of Dennis P. Block & Associates can be reached for information on landlord/tenant law or evictions at any of the following offices: Los Angeles: 323.938.2868, Encino: 818.986.3147, Inglewood: 310.673.2996, Long Beach: 310.434.5000, Ventura: 805.653.7264, Pasadena: 626.798.1014, Orange: 714.634.8232, San Diego: 619.481.5423 or by visiting www.evict123.com. Now, you can also read Dennis Block on Twitter, www.twitter.com/dennisblock or text him at (818) 570-1557. “Landlord Tenant Radio Weekly Podcasts can be heard at any time at www.EVICT123.com or download the app “EVICT123”.