On April 16, 2026, the California Court of Appeal invalidated a City of Los Angeles ordinance requiring housing providers to pay relocation assistance when a tenant voluntarily vacates in response to a lawful rent increase.
In recent years, several California cities, including the City of Pasadena and the City of Los Angeles, adopted ordinances requiring housing providers to pay relocation assistance to tenants who voluntarily vacated after a lawful rent increase. These requirements applied to units exempt from rent control under the Costa-Hawkins Rental Housing Act, effectively imposing a financial penalty on a housing provider’s right to raise rent.
Costa-Hawkins guarantees housing providers the right to set rents at market rate for certain properties (single-family homes, condominiums, and newer construction) and prohibits cities from imposing rent control on those units. While rent increases were not banned outright, the ability to raise rent was undermined in practice—effectively amounting to rent control in disguise.
Housing providers challenged these ordinances, arguing that they conflicted with state law, which explicitly prohibits cities from restricting rent-setting on exempt units both directly and indirectly. The City of Pasadena was the first test case, in which the California Court of Appeal agreed, holding that relocation assistance requirements tied to lawful rent increases violate Costa-Hawkins.
The case was appealed to the California Supreme Court, which declined to review the decision and denied requests to depublish it, allowing the ruling to stand as binding precedent statewide.
With that precedent in place, similar ordinances—such as Los Angeles’—faced legal challenges. Applying the same reasoning, the Court of Appeal subsequently struck down Los Angeles’ ordinance, reaffirming that cities cannot impose financial penalties on lawful rent increases for Costa-Hawkins-exempt units.
To read more about the opinion, click here.