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This September (2019), the California legislature approved a statewide rent-cap and relocation assistance bill (A.B. 1482) known as the Tenant Protections and Relief Act, and Governor Gavin Newsom has said he will sign it The new law in effect caps annual rental increases for all multi-unit dwellings built before 2005 at 5% plus the rate of inflation and prohibits California landlords from evicting a tenant without “just cause” absent the payment of relocation expenses.
The bill's limits on rent increases and required relocation assistance payments does NOT apply to residential properties subject to a local rent stabilization ordinance requiring just cause termination adopted on or before September 1, 2019 that is more protective than the provisions below such as West Hollywood’s Rent Stabilization Ordinance or Santa Monica’s Rent Stabilization Ordinance. The provisions of this bill will apply and/or amend the less stringent rules in effect for multi-unit dwellings in Beverly Hills, Glendale, Long Beach, Los Angeles, Inglewood, and Pasadena .
California Annual Rent Increase Limited to 8% for 2019 on all California multi-unit dwellings built before 2005.
Effective as of March 15, 2019 (yes March 15, 2019), the owners of multi-unit residential dwellings built prior to 2005 that are NOT subject to a local rent control ordinance are prohibited from increasing a California tenant’s rent more than 5% plus the percentage change in the cost of living (CPI) in your city (presently 2.7% for 2019 in the City of Los Angeles), or 10%, whichever is lower, subject to specified conditions. The bill further prohibits an owner of residential multi-unit dwellings from increasing the rent more than 2 times in any 12-month period.
ANNUAL CAP ON RENT INCREASES FOR MULTI UNIT DWELLINGS IN LOS ANGELES COUNTY EXPLAINED
The California Tenant Protection Act (AB 1482) provides an annual rent cap of 5% plus the cost of consumer price inflation for the city in which the rental unit is located. In Los Angeles, the Consumer Price Inflation Index in March of 2019 was 2.7%.
Effective Jan. 1, 2020, the allowable rent increase depends not only on where the rental property is located, but also when it was built. Lets now look at the city of Los Angeles which has a rent control ordinance in effect. The Los Angeles Rent Stabilization Ordinance only applies to multi-unit dwellings that were built prior to October of 1978. So what is the allowable increase on a multi unit rental property built pre-1978 versus 1995 versus 2017 in the City of Los Angeles?
Now the question becomes is your building subject to the California Tenant Protection Act? AB 1482 applies to all properties that are: (1) not under a local rent stabilization ordinance, (2) were built 15 or more years ago, and (3) have two (2) or more units on a parcel, with one exception... a duplex is excluded if the owner continuously occupies as the owner's primary residence one of the two sides of the duplex. AB 1482 also applies to single family homes and condominiums if they ae owned by a corporation, real estate investment trust, or limited liability corporation in which at least one member is a corporation.
The bill is retroactive. What does this mean? It means that this newly enacted law which did not pass until September of 2019 applies to all prior rent increases that went into effect after March 15, 2019. Thus, if a landlord increased a tenant’s rent by say 10% on April 1, 2019, the 10% rent increase will remain in effect through December 31, 2019, but will revert back to the maximum permissible increase (8%) on January 1, 2020. In effect, the Landlord will not be liable to the tenant for any corresponding rent over-payment through December 31, 2019, but the tenant will be receiving a rent decrease on January 1, 2020.
AB 1482 Prohibits No Fault Evictions in California.
With limited exceptions (discussed below), AB 1482 prohibits a California landlord from evicting a tenant who has resided in a multi-unit residential dwelling for 12 or more months from being evicted without “Just Cause.” What does this mean? It means that the current 60 Day Notice to terminate a tenancy is now null and void. It means that if an exception does exist, the California landlord will need to state a valid reason in a 60 day notice of termination of tenancy, or non-renewal of lease.
What is Just Cause?
Under the newly enacted legislation a landlord has just cause to evict a tenant for any of the following reasons:
In any of the above incidences, the Landlord will be required to provide the Tenant with a properly drafter Three Day Notice to Cure or Quit and if there is a subsequent violation, or non-compliance, a Three Day Notice to Quit.
Just Cause is NOT required for the following types of California residential properties:
"This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12 (d)(5) and 1946.2 (e)(8) of the Civil Code and the owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation."
For a tenancy that began before July 1, 2020, the notice above may, but is not required to, be provided in the rental agreement, and if not in the rental agreement must be provided by written notice to the tenant no later than August 1, 2020, or as an addendum to the lease or rental agreement. For any tenancy that begins or renews on or after July 1, 2020, the notice must be provided in the rental agreement, or as an addendum to the rental agreement.
New Notice Required to Be Given to All California Tenants by August 1, 2020
If the California landlord has a rental property that is subject to this Ordinance, then the Owner must provide the following notice to new tenant in 12 point type in the Lease, and for existing tenants by a formal written notice signed by both the landlord and tenant, or as an addendum to the Lease, as follows:
"California law limits the amount your rent can be increased. See Section 1947.12 of the Civil Code for more information. California law also provides that after all of the tenants have continuously and lawfully occupied the property for 12 months or more or at least one of the tenants has continuously and lawfully occupied the property for 24 months or more, a landlord must provide a statement of cause in any notice to terminate a tenancy. See Section 1946.2 of the Civil Code for more information."
California Now Requires Relocation Assistance Payment to Tenants for Allowable No-Fault Evictions.
Although the new law essentially prohibits a California residential landlord from terminating a tenancy without just cause, as set forth above, there are some exceptions.
A Landlord may initiate a no-fault termination of tenancy with the payment of Relocation Assistance for any one of the following reasons:
The amount of relocation assistance, or rent waiver, required is one month's rent as in effect when the owner issued the notice to terminate the tenancy and must be paid to the Tenant within 15 calendar days of service of the Notice Terminating the Tenancy.
The newly enacted California Tenant Protections and Relief Act Also Changes the Requirements for Almost ALL 3 Day Notices to Cure or Quit, which now must be followed by a Three Day Notice to Quit as well as for all 30 and 60 Day Notices to Terminate Tenancy. In addition, the new law requires many landlords to either add additional language to their leases, and to provide existing tenants with a specific notice in 12 point type. California Landlords should immediately update their leases (especially for all buildings that are not subject to local rent control rules)!
If you would like to have Melissa Marsh, a Los Angeles, California Landlord and Tenant attorney with over 20 years experience, explain how these new state wide rental laws may impact you, please schedule a low cost 30 minute Telephone Consultation.
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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.