Below are questions asked by rental property owners regarding California rent control laws followed by answers provided by Attorney Richard Beckman.
Question 1: Now that the state law has ended as of June 30, are we going back to ‘normal’?
Answer 1: There is a fair amount of confusion as to the impact of ‘June 30’ on landlord-tenant issues. When a member asks a question like this one, I assume they are referring to the last version of the various state statutes passed to address, primarily, the economic impact of the pandemic that began in earnest in March 2020, with ‘shelter in place’ orders, quarantines, business and court closures etc.
The first version, AB 3088, took effect in August 2020, and was designed to bring some ‘order’ to the hodgepodge of local laws that sprang up throughout California to address housing issues related to the pandemic, but primarily to protect tenants from eviction for on any reason other than a threat to public health and safety.
One of the provisions of AB 3088, which was followed by all of its successors (SB 91 in January 2021, AB 832 in June of 2021 and finally, AB 2179 in March 2022) was a provision that prohibited local jurisdictions from enacting any ordinance after August 19th of 2020 that expanded tenant eviction protections beyond what was provided for in the original statute and its successors. The final version of that particular provision is the one that expires on June 30th 2022. Starting July 1, local jurisdictions are again free to take local measures they feel necessary to address the pandemic, despite its near evaporation from most people’s day today lives. In certain cases, notably Alameda County, Oakland and Berkeley, the existing near-total eviction moratoriums were enacted prior to August of 2020, and so those draconian moratoriums have been allowed to survive under the ‘grandfather’ clause of the various state laws. The biggest question facing property owners now is whether local municipalities -cities or counties – will enact further tenant protections now that they are free to do so.
Certain jurisdictions, and Berkeley comes most immediately to mind, have what are in effect ‘trigger laws’ (and pardon the reference to the great national debate using that term in another context), but, which would, in effect, come into force as soon as the state law provision expired June 30th, assuming the state law was not extended, which it was not. In Berkeley’s case, that means that a ban on Ellis Act-based evictions which had been initiated by Berkeley in December of 2020, but which had been preempted by the state law, is no longer preempted, and it is anticipated that Berkeley will try to enforce this Ellis Act eviction moratorium. However, that is a legal battle, the result of which remains to be seen, as there is a strong argument that a local jurisdiction may not preempt a state law, which the Ellis Act is. As most owners know, the Ellis Act is the state law that allows any property owner who rents residential premises to go out of the rental business entirely by removing all rental units on any given parcel from the rental market. Invoking that right comes with many permitted local caveats and procedures, but essentially, that right cannot be undermined by a local ordinance seeking to inhibit it entirely. Again, that is for a court to decide, but that issue should get hearings pretty quickly.
The other major impact on landlord tenant law that changes as of July 1 is the end of special non-payment of rent notice requirements, and related elements of the unlawful detainer (eviction lawsuit) procedures. AB 2179 protected tenants from eviction if the tenant completed a rental application for COVID-related debt by March 31, 2022, and extended these protections through June 30, 2022. If a tenant had applied for rent relief by March 31, 2022, the tenant was somewhat protected from eviction while their rental relief application was pending, up through the end of June 2022. As of July 1, the non-payment of rent situation returns to ‘normal,’ at least in jurisdictions which did not have pre-existing restrictions like Alameda County, or in jurisdictions which do not enact new tenant protections to take effect July 1st or thereafter. Thus, property owners and managers will have to be aware of their own local city or counties’ particular provisions in this regard.
Also, under the provision that expired June 30, the court will no longer require a plaintiff to file a statement, under penalty of perjury, regarding a tenant’s application for government rental assistance to cover any part of the rental debt demanded from the defendants in the case. So, ‘normal’ also returns to the unlawful detainer court procedure effective July 1, 2022.
Question 2: When I have tenants on rental agreements that are now month-to-month because the initial 6-month minimum rental period in the agreement has passed, and they want to change or add occupants to the agreement, can I increase rent to market rate? Or change other outdated items in the agreement such as the cost we charge for certain amenities like parking, etc.?
Answer 2: Assuming your units are subject only to the state rent and eviction control laws under AB 1482, those restrictions only apply after the tenant has been in possession for at least one year, or, if people rotate in and out, after someone has lived there at least two years. If they qualify as subject to the eviction and rent control, then your rent increases must be in compliance with that particular law. Changes that reduce or alter services that were provided as part of the original tenancy and rental rate are a bit of a grey area, as reductions to such services etc., could be construed as a rent increase, to be added to the total actual amount of rent increase. If they are not yet covered, then you have significant leeway to impose rent increases or other changes to the terms of the tenancy.
Question 3: Is there an hourly rate a landlord can charge to clean the unit themselves or make repairs after the tenant moves out?
Answer 3: I don’t believe there is a fixed rate. Rather, it is what the owner’s time is worth generally, subject to industry comparables. As the applicable statute Civil Code Section 1-950.5 states: “If the landlord or landlord’s employee did the work, the itemized statement shall reasonably describe the work performed. The itemized statement shall include the time spent and the reasonable hourly rate charged.” That statement makes clear that it’s not the owner’s personal valuation of his or her time value, but rather a rate that would be charged by someone who does such work and charges a rate that is competitive toward other such providers.
Question 4: With the expiration of the eviction moratorium on July 1, can renters who are delinquent on their rents ($28,000) and who have vacated the property voluntarily be turned over to a collection agency to attempt to collect back rents or am I forced to use small claims court, and if so, what is the limit that can be sued for? (It used to be $5,000)
Answer 4: As discussed above, June 30 makes the expiration of the provision of the state law (AB 2179) which prohibited local jurisdictions (cities and counties), from passing laws more protective of tenants than what was contained in the state law. The provision against assigning COVID related rent debt to debt collectors expired as of October 2021, so you can assign it to a debt collection company. As to small claims court jurisdiction, for COVID related debt claims, it has been expanded from its current ceiling of $10,000 in every other matter, to an unlimited amount if the claim is for COVID related unpaid rent.
Question 5: Can a 3-Day notice be given if the tenant has not applied for rent relief through the Covid Related Rent Assistance Program? The tenant is behind two months’ rent. The property is in San Leandro.
Answer 5: Since the property is in Alameda County, a 3-Day Notice to Pay or Quit is not currently allowed, because of the continuing eviction moratorium in Alameda County. You might continue to reach out to the Alameda County Board of Supervisors and plaster them with legitimate requests for how they justify the continuation of this unbelievably overbroad eviction moratorium. You can send the tenant reminders that they owe the rent and it’s piling up, but you cannot demand they pay it or move out.
Question 6: Did Oakland follow through on its threat to reduce the annual CPI increase from the approved 6.7% from July 1, 2022, to June 30, 2023, as you mentioned in last month’s article?
Answer 6: Yes. The City Council adopted an amendment to change the formula used to calculate the annual allowable rent increase to 60% of the change in CPI, or 3%, whichever is lower. Effective August 1, 2022, the new annual CPI rent increase will be 3%. The current 1.9% CPI increase will remain in effect until July 31, 2022. The previously approved 6.7% increase will not go into effect.
Question 7: For this Antioch property, I raised the rent by $100 to $2,500 effective 9/1/21. Then on 4/1/22, I raised it by $100 to $2,600. However, the tenant has refused to honor the second rent increase and not paid the increase for April, May and June. The rent is still well below the market which is at around $3,000. So, what are my options at this point? Ideally, I would like to raise the rent again effective 9/1/22 (one year from the first increase) to the maximum allowable.
Answer 7: If the rent increases were properly imposed, which requires that they were properly noticed and served, then they should be effective. If the tenant refuses to pay them the tenant is in default on their rent obligations, and subject to a 3-Day notice demanding the unpaid amount. Pretty straightforward. I’m not sure if there are any eviction moratoriums in place in the city of Antioch at the moment, so that would have to be confirmed by research of applicable Antioch and county ordinances. But … assuming none are in place, then a three-day notice that complies with current state law should be effective to compel the tenants to pay, or provide you basis to evict if the tenant fails to pay and has no valid affirmative defenses.
Question 8: The tenant’s unit had new carpet and paint when they moved in this past Dec 2021. They are breaking their lease early (bought house) and we are attempting to find a tenant now. Prospective tenants touring unit all are commenting on the pungent curry smell (the tenants have been out on a one-week vacation, and it is still strong). Great possible tenants didn’t want the unit because they think we will be unable to get the smell out. 1) Can we deduct the cost to remove the smell from the security deposit? 2) Should we tell the tenant now so they can try to clean the smell before they move out on July 9th?
Answer 8: Below is a section of the security deposit statute, Civil Code 1950.5, that may provide some guidance, particularly as to your question regarding giving the tenants an opportunity to cure the problem. In fact, you are required to give them that opportunity.
Whether the smell is a considered ‘damage beyond normal wear and tear’ is an interesting question. However, if the tenants had created an odor that survives their departure, which is offensive to incoming prospective tenants, it would make sense that fixing that problem would be a suitable deduction to the security deposit. However, that is probably for a small claims judge to decide if the parties are unable to reach an agreement.
(f)(1) Within a reasonable time after notification of either party’s intention to terminate the tenancy, or before the end of the lease term, the landlord shall notify the tenant in writing of his or her option to request an initial inspection and of his or her right to be present at the inspection. (See AOA form 135 – AB 2330-Initial Move-Out Inspection). The requirements of this subdivision do not apply when the tenancy is terminated pursuant to subdivision (2), (3), or (4) of Section 1161 of the Code of Civil Procedure. At a reasonable time, but no earlier than two weeks before the termination or the end of lease date, the landlord, or an agent of the landlord, shall, upon the request of the tenant, make an initial inspection of the premises prior to any final inspection the landlord makes after the tenant has vacated the premises. The purpose of the initial inspection shall be to allow the tenant an opportunity to remedy identified deficiencies, in a manner consistent with the rights and obligations of the parties under the rental agreement, in order to avoid deductions from the security. If a tenant chooses not to request an initial inspection, the duties of the landlord under this subdivision are discharged. If an inspection is requested, the parties shall attempt to schedule the inspection at a mutually acceptable date and time. The landlord shall give at least 48 hours’ prior written notice of the date and time of the inspection if either a mutual time is agreed upon, or if a mutually agreed time cannot be scheduled but the tenant still wishes an inspection. The tenant and landlord may agree to forgo the 48-hour prior written notice by both signing a written waiver. The landlord shall proceed with the inspection whether the tenant is present or not, unless the tenant previously withdrew his or her request for the inspection. Written notice by the landlord shall contain, in substantially the same form, the following:
“State law permits former tenants to reclaim abandoned personal property left at the former address of the tenant, subject to certain conditions. You may or may not be able to reclaim property without incurring additional costs, depending on the cost of storing the property and the length of time before it is reclaimed. In general, these costs will be lower the sooner you contact your former landlord after being notified that property belonging to you was left behind after you moved out.”
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 510-548-7474; email [email protected] or by visiting the website www.bfc-legal.com.