Legal Q & A  By Richard Beckman, Esq.

Below are questions asked by rental property owners regarding California rent control laws followed by answers provided by Attorney Richard Beckman.

Question One:  I heard there was an important case affecting the San Francisco rent ordinance 10 day notice provision. Can you provide more detail?

Answer One:  Yes, there was a significant recent case on that provision of the SF Rent Ordinance. The provision required that before a tenant could be served a three day notice to cure or quit, the owner must first serve a 10 Day Notice to Cure. If the tenant remained in violation after that notice expired, the owner could then serve the appropriate three-day notice. On challenge by local housing organizations, the trial judge held the ordinance provision was valid, except for its application to non-payment of rent cases. The court held that as the requirement to pay rent was the fundamental obligation of the tenant, a local law could not extend the state law three day notice period for a notice to pay or quit.

Both sides appealed, and on September 11, 2024, the California Court of Appeal issued a decision in San Francisco Apartment Assoc. et al. v. City and County of San Francisco (Appeal No. A166228) that invalidated Ordinance No. 18-22 and bars its enforcement by the city. The appeals Court held that the entire ordinance is preempted by state law. On November 12th, the appellate court confirmed its ruling. Thus, as of that date, the ten day notice requirement is no longer in effect.

A very interesting issue was how the appeals court dealt with the fact that a prior appellate decision regarding Oakland’s similar ordinance was valid, but SF’s was preempted and invalid. See Rental Housing Association of Northern Alameda County v. City of Oakland (2009) 171 Cal.App.4th 741, 90 Cal.Rptr.3d 181. Essentially, this court decided that because Oakland’s extended notice period was instituted at the same time as its ‘just cause’ ordinance in 2002, it fell under a different legal analysis – a ‘substantive versus procedural analysis. While the two areas are often difficult to distinguish, the basic rule in preemption cases affecting the unlawful detainer statutes is whether a local law makes ‘substantive’ changes, which are permitted, or ‘procedural’ changes, which are not. This court held SF’s changes were purely procedural, and hence preempted by the state statutes that fully provide for the timing aspects of unlawful detainer actions.

Question Two:  We have a single-family home rental in Richmond and want to raise the rent.  The  property is owned by our LLC, and we were informed the state of California has certain legal rules regarding raising the rent.  Could you please advise us, as an LLC, the procedure to raise the rent and how much we could raise the rent?  If I’m reading this correctly, if the LLC isn’t listed as a corporation (i.e. members only LLC) then the rent cap does not apply? 

Answer Two:  You are not the first property owner to be confused by the collision of the state law you refer to (Tenant Protection Act, aka AB 1482) and local rent and eviction control ordinances such as the one in Richmond.

Under the state Costa Hawkins Act (the recent effort to repeal having failed) single family homes (SFD) and condominiums are exempt from local rent control (with limited exceptions that do not apply here). It does not matter how the properties are owned. Under the TPA, such properties can be made exempt from both rent and eviction control, if they are (essentially) not owned by a corporation and proper notice has been given to the tenant. However, the TPA does not apply in places that have a stricter local form of rent and eviction control, such as Richmond, and in such places, the local law can impose eviction restrictions (‘just cause’ requirements) on such properties.

So, in your case, you are not subject to Richmond’s rent control law, and can increase the rent to an amount that reflects current rental value for that unit. That amount can exceed 10% if that’s the current fair rental value (FRV). If so, a 90-day notice is required. If below 10%, only a 30-day notice is required.

It must be noted that increases that are above FRV can be considered by the tenant to be a ‘backdoor’ attempt to drive the tenant out, when the owner does not have a legitimate ‘just cause’ ground to terminate the tenancy. Thus, the absence of ‘rent’ control does not mean the rent can be increased to any amount.

Question Three:  Our tenant is considering buying an electric vehicle and has asked if they can use a 110V outlet (vs. installing an EV charging station) in the garage which the owners pay for as part of the common area bill. This would be a passthrough expense, but it would be difficult to track their electric usage and it would probably take overnight to fully charge their vehicle. We considered giving them the option of having a 220V outlet installed in the garage which would originate from their unit’s electric panel so they would pay for the actual cost for charging their vehicle. Are owners required to provide an electrical outlet for EV vehicles for their tenants and who would pay for its installation/costs? Also, what’s the best way to charge a tenant for electricity usage?

Answer Three:  That question justifies an extensive review of the applicable state law. Under California Civil Code § 1947.6, tenants leasing a dwelling with a parking space allotted to them as part of their lease agreement may submit a written request to install an EV charging station. Landlords are required to approve the request if all statutory requirements are met.

Key provisions of § 1947.6 include:

• Tenant’s Right to Install EV Charging Stations:
  A landlord must approve a tenant’s written request to install an EV charging station at the tenant’s allotted parking space, provided the tenant meets specific conditions. (§ 1947.6(a))
• Applicability:
  The statute does not apply to residential properties meeting any of the following conditions:
  1. The property already provides EV charging stations at a ratio of at least 10% of designated parking spaces.
  2. Parking is not provided as part of the lease agreement.
  3. The property has fewer than five parking spaces.
  4. The property is subject to rent control and the lease was executed, extended, or renewed before January 1, 2019.
     (§ 1947.6(b))
• Installation and Cost Responsibility:
  The tenant is responsible for all costs associated with the installation, maintenance, operation, removal, and infrastructure improvements of the EV charging station. This includes permits, construction, and any required performance bonds. (§ 1947.6(g)(4))
• Liability Insurance:
  The tenant must maintain liability insurance in an amount not exceeding 10 times the annual rent, unless the charging station is certified by a Nationally Recognized Testing Laboratory and installed by a licensed electrician. (§ 1947.6(h)-(i))
• No Obligation to Provide Additional Parking:
  The landlord is not required to provide an additional parking space to accommodate the charging station. (§ 1947.6(d))

Options for Addressing the Tenant’s Request:

Option 1: Use of the Existing 110V Outlet

• If the landlord permits the use of the existing 110V outlet, the tenant may connect to the common-area electrical system.
• Under § 1947.6(g)(5), the landlord may charge the tenant for the cost of electrical usage, as well as any associated damage, maintenance, or repair costs.
• A submeter can be installed to track usage accurately, or the landlord may charge a flat monthly fee based on estimated usage.

Option 2: Require Installation of a 220V Outlet

• The landlord may require the tenant to install a dedicated 220V outlet originating from the tenant’s electric panel.
• The tenant would bear all costs of installation, operation, and removal as outlined in § 1947.6(g)(4).
• This approach ensures the tenant pays directly for their electricity usage, simplifying cost recovery and avoiding disputes.

Recommendations

1. Installation of a 220V Outlet:
   • Require the tenant to install a 220V outlet connected to their electric panel at their expense, as permitted under § 1947.6(g)(4).
   • Ensure the installation complies with all local, state, and federal building codes, as required by § 1947.6(f).
   • Require the tenant to provide liability insurance unless the statutory exceptions under § 1947.6(i) are met.
2. If Allowing Use of the Existing 110V Outlet:
   • Charge the tenant for electricity usage either via a submeter or a flat fee, as allowed under § 1947.6(g)(5).
   • Document the agreement in writing to avoid disputes regarding costs and usage limitations.
3. Draft an EV Charging Agreement:
   • Document all terms of the installation, usage, cost allocation, and liability in a written agreement.

AOA forms include an EV Charging Station Addendum should you decide to have one installed.

Question Four:  Two years ago, we rented our four-bedroom house to four adults. Two months ago, when we went there to inspect the property, we found out that two of the original tenants had moved out and two new people had moved in. We informed them the two new persons are not included in the current lease, and they are living there illegally. We asked the new persons to complete the rental applications for creating a new lease. One of the new persons does not have a driver license, social security number, or pay check stubs. What should we do?
Answer Four:  Generally speaking, it sounds like the tenants are in breach of the typical lease provision prohibiting subletting without the owner’s prior approval, so a three day notice to cure or quit would be permitted. However, if the existing tenants have been good tenants, working with them to maintain the tenancy would likely be in all parties’ interest. If the new occupant without proper credentials is unacceptable for those reasons, perhaps you do not add them to the lease, although you do have their identification information, should you need it for some reason. But the remaining tenants are individually responsible for the rent, and so you would likely still be covered in case someone is unable to pay.

 It is also possible, as you do not indicate where the house is, that a local ordinance permits the tenants to replace departing ‘roommates,’ regardless of any restriction in the lease. However, in such cases, the tenants still have to make the formal request, to give the owner a chance to review the prospective new tenants. However, the reasons for denying the prospective tenants are very limited, and so in nearly all such cases, the applicants will be permitted to become tenants, or subtenants.

Question Five:  Under Civil Code section 1950.6, if landlords do/did not charge the applicants a fee of any sort to check their credit, to process their applications, etc., are landlords still required to provide a copy of the applicant’s credit report to the applicant(s) within seven days after the credit report is received under the new law? And can landlords require their tenants to obtain renters’ insurance? The rental property is located in Oakland.

Answer Five:  As for the credit report questions, the section of the new law states only applicants who have paid the screening fee are entitled to the report.

(f) If an application screening fee has been paid by the applicant, the landlord or their agent shall provide a copy of the consumer credit report to the applicant who is the subject of that report by personal delivery, mail, or email within seven days of the landlord or their agent receiving the report.

As for renter’s insurance, the lease may require the tenant to get renter’s insurance, but a court ruled that failing to do so is not a material breach of the lease that can be enforced. A bit odd, but that was the ruling. The case was Boston LLC v. Juarez (2016) 245 Cal.App.4th 75 [199 Cal.Rptr.3d 452].

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.