As a residential landlord, there are already a plethora of laws you must know and abide by. On October 8, 2019, California added two more to be aware of. Assembly Bill 1482 (“AB 1482”) provides two new protections for residential tenants: first, landlords may no longer freely enforce “no fault” terminations of residential leases, and second, rent increases are now capped statewide. These laws were enacted to curb the statewide housing crisis which has seen an unprecedented number of Californians living on the streets partially due to unaffordable housing. In 2030, AB 1482 requires the Legislative Analysis Office to release a report on the efficacy of these new laws; this means that for at least ten years, landlords will need to abide by the new rules.
Restrictions on “No Fault” Terminations
AB 1482 provides protections against “no fault” terminations for those tenants who have lawfully occupied a residence for 12 months or more, with exceptions for certain types of property owners. Residents whose leases are terminated without “just cause” are now entitled to some benefit from the landlord. “Just cause” can be either “at fault” just cause, which revolves around the tenant’s use (or misuse) of the property, or “no fault” just cause. “At fault” just cause includes failure to pay rent, materially breaching the lease, committing waste, using the premises for an unlawful purpose, or perpetrating or allowing criminal activity on the premises. “No fault” just cause includes a landlord’s withdrawal of the property from the rental market (which requires certain conditions be fulfilled), or situations where the landlord’s family intends to or actually does begin occupying the property or the landlord intends to demolish the property.
For an at fault termination, the landlord must provide the tenant an opportunity to cure the wrongdoing. In other words, the tenant must be given time to stop whatever actions gave rise to the just cause. For a no fault termination, the landlord, after giving the tenant notice of termination, must provide either relocation assistance or waive rent in the final month of tenancy. The landlord may choose which of these to provide to the tenant.
Rent Increases Are Now Capped
Beginning January 1, 2020, residential rental rates may not be increased by more than five percent plus the percentage change in cost of living or ten percent total per year, whichever is less. Increases may only be enacted twice in any twelve-month period, and must remain equal to or lesser than the increase cap. This new cap, however, only applies to rent increases for the same tenant – they do not apply when a new lease is signed with a new tenant. At that point, the landlord may raise the rent as he or she so chooses.
For those landlords who foresaw the passage of AB 1482 and between March 15, 2019, and December 31, 2019, preemptively raised the rent more than the allowed amount, the tenant’s rent will be amended to the rent applicable as of March 15, 2019, plus the maximum permissible increase under AB 1482. Those landlords who attempted to get ahead of this rent increase cap will not be liable to their tenants for any rent overpayments.
This rental cap does not apply to low-income housing, dormitories for higher education students, housing subject to rent control which is more protective than AB 1482, housing that has been issued a certificate of occupancy within the previous fifteen years, and residential property alienable separate from the title to any other dwelling unit (with some additional requirements).
As is clear, owning and maintaining rental property is set to become trickier at the beginning of the New Year. Not only will landlords be restricted from freely terminating their leases without cause, they also may not raise the rent as they choose. Now, there are requirements and affirmative duties with which you must comply to avoid potential liability. If you own a residential rental property and have questions about how these new laws could affect you, contact the attorneys at Navigato & Battin.