Governor Newsom signed the controversial AB 1482 into law October 8, 2019. If you own an investment property OR you are a renter in California, this law will affect you. We wanted to provide a quick summary of what you need to know!
You must take action to exempt your property! A single family home or condo (there are other exemptions, but this is the primary one!) can be exempt from both the Rent Cap AND the Just Cause Eviction components of this new law as long as the property owner is not a REIT or a corporation AND notice of the exemption is provided to the tenant. So, if you are the owner of a single family property that you rent out, you need to give your tenants notice of your exemption. If the tenant is a month to month tenant, then the addendum should be incorporated into the rental agreement by changing the terms of tenancy (a modification to the rental agreement). Your property manager should be able to provide this notice. If you self-manage your property NVPOA is an EXCELLENT resource to keep up with changes to laws and can provide you the forms. The California Association of Realtors also just released forms that meet the requirements, so feel free to call us for help!
Let’s talk about the rent cap. Rents can only be increased by the lower of 10% or 5% plus CPI. While the rent cap takes effect January 1, 2020 it has a provision to ‘look-back’ to March 15,2019. This means that if rent increases going back to March 2019 are over the cap, the rent must be decreased (to the max allowable increase) effective January 2020. There are some exceptions.
Next, there is the Just Cause Eviction component of AB1482. Landlords may only evict for “just cause,” which is divided into 2 categories- “At fault” termination of tenancy is generally based upon a tenant’s breach of the lease, and does not require the payment of relocation assistance. A “No fault” termination of tenancy is allowed when the tenant has not breached the lease, but will require the landlord to pay one month’s rent in relocation assistance. “No fault” reasons include owner occupancy, owner’s family occupancy, or selling the property. The Just cause eviction provision applies to tenants who have been in the property, and in compliance with the lease for at least 12 months.
For all new tenants or lease renewals, the exemption addendum should be incorporated into the lease. For existing tenants, the notice does not need to be signed by the tenant, but it should be personally delivered or posted and mailed (not emailed).
If you have any questions, feel free to reach out to us! And if you own residential income property and aren’t part of our investor group (we email this group periodically with updates in code/law, hot new properties, market data, etc), please reach out to one of us to be added to the group!
