Key provisions of the Tenant Protection Act of 2019 (AB-1482)
- For some residential properties, annual rent increases will be capped at 5% plus the rate of inflation, or 10 percent, whichever is lower.
- Landlords must show a “just cause” to evict tenants implanted for 12 months or more.
- Protections will be extended to housing stock previously exempted from rent control because of Costa-Hawkins.
- If the tenant is displaced because of a no-fault just cause eviction, relocation assistance in the form of a direct payment or rent waiver is normally required.
Are you prepped for statewide rent and eviction controls set to take effect January 2020?
Rental housing providers will be exposed to a new regulatory regime, to varying degrees, depending on whether the property is located and when the first Certificate of Occupany was issued.
The newly minted state law calls for annual rent caps of 5 percent plus the local rate of inflation with an expiration date of 2030. Another highlight of the bill is the imposition of “just cause” eviction requirements that apply after tenants have resided in the unit for 12 months, or 24 months if a roommate moves in.
If it doesn’t apply, let it fly
The first algebraic equation to solve is whether your building is hamstrung by local rules more favorable to tenants when viewed in light of statewide protections.
For many of you who own rental properties in locales throughout Los Angeles County that are governed by pre-existing rules that are more “protective” than state law, there will be little impact because you are already handcuffed in your ability to raise rents and are bound by more restrictive regulations regarding evictions. In other words,if your rental business is subject to more confining ordinance, state law may be moot.
Here’s where it gets interesting
Although new state law does not override the local rent control measures that already have ensconced tenant protections on the books, AB 1482 does extend protections to homes and units previously exempt from current rent control laws.
Take, for instance, Redondo Beach, a locale that does not have its own rent control ordinance. Assuming the current rent is $1,550 per month, and the inflation rate is 3.8 percent, rent can only be raised to the tune of 8.8 percent, which translates to an extra $136.40 per month.
It doesn’t end there - a rolling 15-year rolling window applies
There are many properties located in rent-controlled jurisdictions that nonetheless escaped local protections because these buildings were exempt as “new construction” under Costa-Hawkins. For instance, rental properties in the city of Los Angeles built on or after October 1, 1978 were off-limits to the Rent Stabilization Ordinance (RSO).
As of January 2020, however, all such properties built between 1978 and 2005 will now be covered. When we say it is a rolling 15-year window, this means each year, new buildings will come out of the exemption window as they age past the 15-year threshold.
The law will not apply to most single-family homes and condominiums, unless owned by a corporation, real estate trust, or an LLC when at least one member is a corporation.
AB 1482 has a built-in mistrust of these ownership structures because it screams "greed-fueled speculators." The reasoning is, landlords who are sophisticated enough to have these ownership structures are most likely to exploit loopholes.
No-fault terminations will come with a price.
When a tenant is displaced through no fault of their own, the landlord must provide relocation assistance in one of two ways. The landlord can make a direct payment to the tune of one month's rent, or forgive the payment for the final month of the tenancy.
That according to the state of California, but this farewell gesture is not generous enough for several municipalities. Local ordinances tend to be much more favorable than state law, requiring more hefty payouts to uprooted tenants. Certain vulnerable groups may be entitled to still more money.
When it comes to relocation payments, there’s some time frame issues in terms of notice requirements and how the payments are dispersed, so please consult MT Evictions to make sure you can make a transition compliant with the rules surrounding a proper transition.
We note that unpaid rent cannot be subtracted from the relocation payments due - we have to pay those relocation payments.
MT Evictions is committed to educating rental housing providers how the new law will affect their business and bring you up to compliance.