Last Tuesday, Gov. Newsom signed a dozen real estate related bills into law to address the state’s rising housing crisis.
Most notable is AB 1482, which caps rent increases at 5% a year for nonexempt tenancies and bans no-cause evictions. Along with the “rent cap” bill, the Governor also passed SB 329 (where landlords can only refuse Section 8 tenants on lawful grounds), SB 1110 (requiring 90-Day Notice for any rent increases above 10%) and several bills eliminating barriers to building Accessory Dwelling Units (“ADUs”).
Statewide Rent Control and Just Cause Eviction
The major provisions of AB 1482 include:
- Rent Cap – The annual rent increase is capped at 5% plus inflation. In no event can the total increase with inflation exceed 10% per year. The rent cap would retroactively apply to all rent increases occurring on or after March 15, 2019, but it will include a safe harbor for landlords who charge and collect rent outside these limitations prior to January 1, 2020.
- Just Cause Eviction – The bill would prohibit an owner of non-exempt property from terminating a tenancy without “just cause” after the tenant has continuously and lawfully occupied the property for 12 months. Essentially, a “just cause” eviction would stem from a scenario where the tenant breached the rental agreement, or became a nuisance, giving cause for removal. The law would leave open the opportunity for a landlord to evict a tenant in the limited case where the landlord 1) planned to move into the property, 2) sell the property to someone who intends to live there, or 3) substantially remodels the property so that tenancy during construction is impossible. These “No fault” terminations will require the landlord to pay one month’s rent in relocation assistance.
- Exemptions – Certain types of housing are exempt including:
- Single family homes and condos where the owner is not a real estate trust, corporation, or LLC owned wholly or in part by a corporation;
- Homes built within the last 15 years;
- Owner-occupied duplexes; or
- Owner-occupied single-family homes where two or fewer rooms are rented out (these properties are exempt from the “just cause” eviction provision but not rent cap)
Please see our Consigliere: Statewide Rent Control Passed by California Legislature for more details.
Landlords Cannot Refuse Tenants Based on Tenant’s Participation in Section 8 Program
Under SB 329, it would be illegal to deny tenancy based on a tenant’s participation in the federal housing choice voucher program. Under previous law, it was illegal to discriminate against tenants based on source of income. The new bill expands the definition of source of income to include housing subsidies paid by the government. Note that landlords remain free to reject prospective tenants, provided they do so on lawful grounds unrelated to the tenant’s receipt of a government subsidy.
For more information, please refer to SB 329.
90-Day Notice Required for Rent Increase Above 10%
Under AB 1110, the notice period for raising rent above 10% in any 12-month period for month-to-month tenancies is extended from 60 days to 90 days. However, if the property is a non-exempt property under AB 1482, the rent increase cannot be more than 5% and the total cost after inflation cannot exceed 10%.
For more information, please refer to AB 1110.
Statewide Accessory Dwelling Unit allowance to Single Family Dwelling
Under AB 68 & 69, the ministerial approval for constructing ADUs are simplified and the timeline is shortened to 60 days. Also, homeowners who apply to build ADUs can also apply to build a second junior ADU to their property.
Under AB 881, the owner-occupancy restriction for ADUs is eliminated.
Lastly under SB 13, ADU development impact fees from local agencies are exempted for ADUs smaller than 750 square feet and are limited for other larger ADUs. The bill also prohibits local agencies from requiring replacement of parking spaces if a garage or carport is converted into an ADU.