Question 1: In addition to the new statewide rent and eviction control law you wrote about last month, are there any other new laws coming up we should know about?
Answer 1: Yes, there are several. One pertains to the amount of notice that will be required to impose a rent increase exceeding 10%. One prohibits rejection of Section 8 applicants solely on the applicant’s reliance on a Section 8 housing voucher as part of his or her rent payment. There is also an act relating to providing housing to persons at risk of homelessness. Each new act is described below in some detail, with each one taking effect January 1, 2020, similarly to the new statewide rent and eviction control law covered in last month’s edition.
AB 1110 – Rent Increase Noticing Period
Existing law requires that if a landlord of a residential dwelling with a month-to-month tenancy increases the rent by 10% or less of the amount of the rent charged to a tenant annually, the landlord shall provide at least 30 days’ notice, before the effective date of the change. Existing law requires that if a landlord of a residential dwelling with a month-to-month tenancy increases the rent by more than 10% of the amount of the rent charged to a tenant annually, as specified, the landlord shall provide an additional 30 days’ notice, for a total of 60 days, before the effective date of the increase, except as specified.
This law will, instead, require 90 days’ notice if a landlord of a residential dwelling with a month-to-month tenancy increases the rent by more than 10% of the amount of the rent charged to a tenant annually.
SB 329 – Discrimination: Housing: Source of Income
This bill expands the definition of “source of income,” which is a category that California’s Fair Employment and Housing Act (FEHA) protects against discrimination. This bill prohibits landlords from discriminating against tenants who rely upon housing assistance paid directly to landlords, such as a Section 8 voucher, to help them pay the rent.
Existing law: 1) Makes it unlawful for the owner of any housing accommodation to discriminate against or harass any person because of the source of income of that person. 2) Defines “source of income” to mean lawful, verifiable income paid directly to a tenant or paid to a representative of a tenant, but specifies that a landlord is not considered a representative of a tenant.
This new law 1) Expands FEHA’s definition of “source of income” to include lawful, verifiable income paid to a housing owner or landlord on behalf of a tenant, including federal, state, or local public assistance and federal, state, or local housing subsidies, including, but not limited to, federal housing assistance vouchers under Section 8 of the U.S. Housing Act of 1937.
2) Declares that the Legislature’s intent in enacting this bill is to provide housing voucher program participants an opportunity to receive a thorough and fair vetting when seeking housing.
The legislature noted that several states across the country have already adopted laws that do the same thing as this bill: outlaw discrimination against tenants with housing vouchers, and that within California, Berkeley, Corte Madera, East Palo Alto, Fairfax, Novato, San Anselmo, San Diego, San Rafael, Santa Monica, Woodland, and Marin County have all passed local ordinances prohibiting such discrimination.
As the legislative analysis states, the bill only prohibits discrimination and landlords retain other rights. While this bill prohibits landlords from discriminating against tenants on the basis of their participation in a housing voucher program, landlords would remain free to reject tenancy applications from program participants, provided they do so on otherwise lawful grounds that are not based on a participant’s receipt of a housing subsidy. Landlords would also remain free to charge rents as allowed under law, and would not be required to reduce rents even if chosen rent levels would make a unit too expensive for a voucher holder to afford. Further, landlords would continue to be able to use appropriate financial and income standards in making rental decisions, like verifying income levels or checking creditworthiness. However, landlords would no longer have the option to forgo participation in housing subsidy programs when presented with a prospective tenant who is qualified to rent from them in all other respects.
In effect, the new law simply requires housing providers to give Section 8 (and similar housing assistance recipients) the same consideration in the application process as any other applicant, and apartment ads that state “No Section 8” will be de facto illegal. While it is not clear what guidelines a landlord may use in evaluating Section 8 applicants, those guidelines will need to be applied to every other applicant for the available unit. The primary difference is that the tenant’s income must be evaluated against the tenant’s share of the rent, rather than the entire rental amount.
AB 1188 – Dwelling Units: Persons at Risk of Homelessness
This bill authorizes a tenant to temporarily permit the occupancy of their dwelling unit by a person who is at risk of homelessness, as defined, regardless of the terms of the lease or rental agreement, with the written approval of the owner or landlord of the property, and subject to extension under certain circumstances. The bill would authorize an owner or landlord to adjust the rent payable under the lease during the time the person who is at risk of homelessness is occupying the dwelling unit, as compensation for the occupancy of that person, and would require the terms regarding the rent payable in those circumstances to be agreed to in writing by the owner or landlord and the tenant.
The bill would establish the rights and obligations of the person at risk of homelessness, the tenant, and the owner applicable under these circumstances. These conditions would include making the tenant liable for the actions of the person at risk of homelessness to the extent those actions are subject to the terms of the lease or property agreement and requiring a written agreement between the parties.
The bill would require that the landlord give seven days’ notice to the tenant in order to evict a person at risk of homelessness from the unit, unless specified exceptions apply. The bill would also give the tenant an opportunity to cure any violations cited by the landlord for evicting the person at risk of homelessness. The bill would provide that occupancy by a person at risk of homelessness is not permissible if the addition of another person in the dwelling unit would violate the building’s occupancy limits or other applicable building standards. The bill would not apply to any federally funded or assisted low-income housing. The bill would repeal these provisions on January 1, 2024.
Question 2: With rent control going into effect on all property in California on January 1, 2020, I understand we are restricted to 5% plus cost of living. We are planning on raising rents on January 1, 2020 and need to know where to find the cost of living index. To be safe, we are thinking about raising rents by 7%. We have units in Fresno, Fairfield & Chowchilla, CA.
Answer 2: As the new law states, the “’Percentage change in the cost of living’ means the percentage change 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 real property is located, as published by the United States Bureau of Labor Statistics. If a regional index is not available, the California Consumer Price Index for All Urban Consumers for all items, as determined by the Department of Industrial Relations, shall apply.” The Western region is 2.9% so the allowable raise would be 7.9%.
You can visit the website maintained by the United States Bureau of Labor Statistics, and in particularly its FAQ page, here: https://www.bls.gov/cpi/questions-and-answers.htm#
To find the California CPI, see the website https://www.dir.ca.gov/OPRL/CAPriceIndex.htm. Once there, select from the menu the item Consumer Price Index calculator (1989 – 2019) (Excel – 1.84MB) or (ZIP – 343KB), which allows you to request the annual CPI increase for your closest region for any period of time. In the case of rent increases under AB 1482, the applicable period is April 1, 2018, to April 2019.
Question 3: Are we allowed to tell a departing tenant that we would like to show the apartment while they are still in their 30-day departure notice period? For example, they are still occupying the apartment and the owner would like to show it to prospective tenants to cut the turnover time down. What are the rules if we are allowed to do this?
Answer 3: The easy answer is yes, you can, as long as you comply with the notice of entry requirements pursuant to Civil Code Section 1954. You can review that section at this website https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=1954 and it is relatively self-explanatory. If the tenant resists your noticed entries, which should not be abusive in terms of time, frequency etc., then you may need to consult counsel for follow-up efforts.
Question 4: Service Animals vs. Emotional Support Animals – Am I allowed to charge a deposit for Emotional Support Animals? Am I allowed to charge pet rent for Emotional Support Animals?
For Emotional Support animals, am I allowed to have the tenant sign a pet agreement?
For SERVICE animals, am I allowed to have the tenant sign a pet agreement?
Answer 4: Generally, no additional deposit or rent may be charged for ESAs (though that is legally not entirely established, it is the prevailing legal wisdom) and certainly no extra deposit or rent is allowed for true ‘service animals’. As for the agreement, I am not sure one is needed as the pet owner is already required to abide by all the rules in those agreements. Again, ESAs and service animals are treated differently under the applicable laws, but many ESA proponents do not see a distinction.
Question 5: I have an 8-unit building, in Burlingame, which is not under rent control at this time. But I have failed to raise rents over time. The market rent for one apartment is approximately $2,500. The tenant pays $2,000 per month. Is it still legal to raise his rent to $2,175.00 before statewide rent control comes into effect?
Answer 5: Any rent increase that exceeds the cap of 5% plus CPI (2.9% for the Western Region) which is 7.9%, will be rolled back as of January 1 to the March 2019 rent amount.
Question 5: Is it ok to lower rent for teachers?
Answer 5: I am not aware of any reason an owner may not, particularly in the interest of doing something to make the economic lives of teachers a bit easier, lower rents on teachers. While treating different classes of tenants differently almost always raises concerns about a discriminatory impact or effect on the various ‘classes’ of tenants affected, it would seem that there would need to be a ‘protected’ class issue before discrimination concerns could be raised. For example, if you favored Muslim tenants over Christian or Coptic tenants, and decided to lower rents on the Muslim tenants in the building, it is conceivable that the tenants whose rents were not lowered could claim discrimination based on religion. In effect, the non-favored religion-tenants were required to pay a higher rent than the favored religion-tenants solely on the basis of religion, a protected class. However, again, I don’t believe that argument applies in the context of favoring one profession over another, although a determined enough lawyer could fashion such a claim since there is case law that holds a tenant’s occupation may not be considered as a basis to discriminate in the tenant-application process. So, sadly, the only certain answer to your question is, ‘probably ok, but…’
Richard Beckman, of Beckman Feller & Chang P.C., has been practicing landlord-tenant law for over 26 years, primarily in rent-controlled jurisdictions such as San Francisco, Oakland and Berkeley. He represents clients in a broad range of real estate-related disputes, including partition of co-ownership interests, purchase contract disputes, insurance coverage analysis and land use. Mr. Beckman also specializes in all aspects of landlord-tenant issues, representing landlords and tenants in residential and commercial matters. He can be reached at 415-871-0070; email [email protected] or by visiting the website www.bfc-legal.com.