On a recent episode of our Property Management Brainstorm podcast, Bob discussed legislative updates in 2019 and 2020 that impact California landlords with Tracey Merrell, Managing Attorney of Education, at Kimball, Tirey & St. John (KTS).
Along with other updates, Tracey provided a thorough review of the Tenant Protection Act of 2019. This act imposes Rent Caps and Just Cause eviction restrictions for residential rental property throughout California, alongside a number of other new laws.
Below, you'll find an in-depth overview of these new updates and the implications these California lease laws have for property owners.
New California Tenant Laws
It's always important to stay fully up-to-date on legislative changes that impact landlord-tenant laws. This is very true in the state of California, where there are many new laws from the 2019 legislative session.
Tracey Merrell is Managing Attorney of a full-service real estate and business law firm. One of their areas of practice is residential landlord-tenant law. Tracy used to legal expertise to give us an overview of the state of California landlord-tenant rights and laws specific to the COVID-19 pandemic.
It's important to keep in mind that the content of this post is within the context of the laws and the state of California. While it'll be informative to those outside of California, be sure to study and clarify the laws specific to your own state and local jurisdiction.
Also, remember that information on this blog is for general information purposes and is not personal legal advice. For advice on specific issues, please contact an attorney. Legislative updates discussed are not exhaustive and the interpretation of the laws may change.
With that said, let's take a look at the most important new tenant laws in California.
Tenant Protection Act of 2019
It's best to focus on laws that a landlord might need to add to their lease agreement and explain to a tenant. The new law that perhaps has received the most attention is the Tenant Protection Act of 2019. It's also known as AB 1482, and it pertains to what's known as Rent Caps and Just Cause.
As Merrell explains, the act is essentially statewide rent control, and statewide eviction control. Landlords are subject to this law unless they meet one of the expressed exemptions. If you do not meet an expressed exemption, then you and your property will be subject to these new terms.
Under the Tenant Protection Act, landlords need to ensure that:
they're providing permitted rent increases.
if they decide to terminate a tenancy, they have a specific reason and state these specific reasons under 1482.
Rent Cap
Under the new Rent Cap, landlords cannot raise the rent by more than 5%, plus the local CPI (Consumer Price Index).
Rent increases are capped at 10% under the Tenant Protection Act. What that means is that if the CPI is more than 5%, you'll still be limited to no more than a 10% overall increase.
Additionally, landlords are limited to two rent increases per year. There used to be no cap on how many times a landlord increase the rent in a year, as long as you gave the proper notice. Now, landlords are not allowed to raise the rent more than two times in a year, regardless of the amount of the increases.
It's always important to carefully consider how much and how often you are allowed to increase the rent, but this is particularly true now when there are multiple rigid limits to keep in mind.
There are also a number of exemptions that apply to the new Rent Cap that you should be sure to familiarize yourself with.
Just Cause
Just Cause means that you cannot serve a 30-day notice or 60-day notice to a month-to-month tenant without justification. You can't serve a non-renewal to a tenant unless you have a legitimate business reason for doing so.
The Tenant Protection Act provides numerous conditions under just which cause apply. Landlords have to cite one of those reasons. Some of the legitimate reasons for non-renewal are related to tenant fault, while others are non-tenant fault. As is the case with the new Rent Cap, there are numerous exemptions you should be aware of.
Necessary Disclosures
An important aspect of the new Tenant Protection Act comes in the form of mandatory disclosures. Is your property subject to the Tenant Protect Act, either in the form of Rent Caps or Just Cause? If so, this must be disclosed in the lease. Other necessary disclosures were required to be present in new leases by last July.
As Tracey Merrell explains, Kimball, Tirey & St. John have updated their leases to adhere to these new requirements. She says all landlords should ensure these terms and disclosures are in all new leases, as of last summer.
Persons at Risk of Homelessness
It's no secret that certain areas of California find themselves with serious homeless issues, particularly in the metropolitan areas. One new law, AB 1188, is aimed at helping solve or relieve the homeless issue.
As Merrell explains, Bill 1188 gives the tenant rights to temporarily add somebody who is at the risk of homelessness to a tenancy. If a person is in a precarious housing situation, a tenant may be permitted to temporarily add them to the lease, to help them get back on their feet before finding new housing.
Merrell says the way she looks at this law is to consider a person who just fell on hard times. Rather than drag their landlord through the process and potentially ruin their credit, they might as their cousin or their friend for an opportunity to be in the unit for maybe a month or two while they get back on their feet, so they can get their security deposit ready to go and move on into another unit.
This law does not require landlords to offer this solution. Rather, it offers flexible landlords an opportunity to help tenants who are experiencing tough times. Keep in mind that this situation is not applicable to those who already live in affordable housing units.
Family Daycare Homes
It's fairly common for tenants to run daycare centers out of their living spaces. When tenants apply to rent a property, they may be applying with the notion that they'd like to run a daycare center out of a given home.
A new law—SB 234—allows large daycare centers to be also considered a residential use of a property. Before this law, small daycare centers were already considered a residential use of the property. So this just added an additional protection for large daycare centers.
The implications of this new law are that you cannot turn away a rental applicant solely on the basis that they wish to use your property as a daycare. While it would typically be prohibited for an applicant to rent the residential property for business purposes, under the relevant codes a daycare center is not considered a business.
Merrell recommends that if your rental property includes a daycare center, it's best to reach out for expert assistance because the housing classification can be complicated, not to mention the liability concerns associated with having a daycare on your property.
Final Thoughts On California Tenant Rights
This detailed overview is a great starting point, but there's a large number of additional new laws that affect California landlords. These new laws also address matters concerning military members, security deposits, and more.
That's why Tracey Merrell recommends educating yourself as much as possible with California's landlord-tenant laws. She says there are many laws that even attorneys find complicated or have a hard time staying up to date with. One way to make sure you have as much information as possible is on the KTS website.
If you're looking for help with any aspect of managing your rental property in the San Diego area, get in touch with the team at North County Property Group. We'd be glad to walk you through the essential services we can provide to help your rental property thrive.
