Just when you thought that you might be able to make a return on your income property investment as a landlord, then boom … Governor Newsom signs into law Assembly Bill AB 1482 imposing statewide caps on annual rent increases and “protecting tenants from unfair eviction practices.”
How Does This Bill Affect All Property Owners?
AB 1482 will affect any property owner who has two or more units where the property was built more than 15 years ago. You are exempt if your property is a single family residence as long as title is not held by a corporation or a real estate investment trust. It will also not affect a duplex as long as the owner occupies one of the units. However, the exempt properties are still required to post certain notices and add an addendum to the lease specifying it is an exempt property.
If your property is already subject to a “Just Cause” eviction ordinance, such as Los Angeles, Los Angeles County, Santa Monica, West Hollywood, Inglewood, or Culver City, then that rent control ordinance controls and you are not subject to AB 1482. However, be advised that in Los Angeles, previously any property built after 1978 was exempt from rent control. Now the properties in the city of Los Angeles that were built between 1978 and 2005 will be subject to AB 1482.
A very important distinction to note about AB 1482 is that the law only applies to a tenant who has lived there for more than one year. What does this mean to you as a landlord? Clearly, any tenant that has lived there for a long time you are stuck with; however, any new tenant you might want to consider giving them an eleven month lease. This should give you enough time to be able to figure out whether this new tenant is a good tenant or not, and you would still be able to serve them a 30 day notice to vacate, 30 days prior to the lease expiration date, if you choose to not renew their lease.
Some of the critical changes as to the rent caps and just-cause evictions are:
AB 1482 places a limit on how much rent can be increased in a year and places certain restrictions on tenant evictions. Annual rent increases are limited to a 5% annual increase plus CPI index increase for the county where the property is located with the combined total not exceeding 10% per year. The CPI can vary from region to region – in Los Angeles and Orange counties the CPI increase is 3.3, whereas in San Bernardino County it is 2.8.
One of the requirements of AB 1482 beginning January 1, 2020 is if you raised the rent more than the allowed amount between March 15, 2019 and December 31, 2019; you will be required to roll-back the rent to the rental amount as of March 15, 2019 plus the allowable CPI and 5 percent increase. The good news is the owner is not required to reimburse the tenant for any overpayment. If you increased the rent less than the maximum allowable increase of 5% plus CPI between March 15, 2019 and January 1, 2020 then you may increase the rent a second time between January 1, 2020 and March 15, 2020 but no more than the allowable increase of 5 % plus CPI.
Just Cause Evictions
Under AB 1482 you cannot evict any tenant who has continuously resided in the property for more than 12 months without just cause. What are the reasons for just cause to be able to initiate an Unlawful Detainer?
- non-payment of rent
- breach of the rental agreement
- waste, nuisance, criminal activity
- refusing to sign a written lease renewal for same terms and conditions
- assigning or subletting
- refusal to allow the owner access as authorized by Civil Code Section 1954,
- termination of manager or
- failure to vacate after tenant gives a written notice to vacate.
There are also certain “No Fault” evictions that are allowed if you give the tenant written notice and pay them either relocation of one month’s rent fifteen days after serving a notice to vacate or waiving the tenant’s last month’s rent. Some of the no-fault reasons to evict are:
- landlord’s intention to occupy the property by the owner, their children, parents, or grandparents,
- withdrawal of the unit from the rental market,
- complying with a governmental order, or lastly
- to demolish or substantially remodel the property. (This reason has certain restrictions among them such as you are required to pull a permit and the work must require the tenant to vacate the unit more than 30 days.)
There are many provisions and requirements that come along with AB 1482 such as disclosures in your rental agreements regarding exempt or non-exempt. Please feel free to call my office if you have any questions as this new law covers the entire State of California!
Attorney Helen Grayce Long is an attorney at Fast Eviction Service. She attended UC Berkeley and graduated with a bachelor of arts. She then attended the University of San Francisco School of Law. Grayce has been an attorney for 25 years and specializes in Real Estate Law. She’s done landlord/tenant work throughout the state of California with an emphasis on Rent Control law. For more information, call (800) 686-8686, email [email protected] or visit www.fastevictionservice.com.