AB 1482, Rent Increase, Just Cause Eviction

“If you own residential rental property, you should use the rental agreements provided by your apartment association…”

Q: I understand that AB 1482 does not cover all rental housing. Can you explain which properties are not covered by the new law?

A: The new law will not apply to residential real property that is alienable separate from the title to any other dwelling unit, i.e., single-family residences, townhomes and condominiums, provided both of the following apply: 1) The owner is not: (i) a real estate investment trust as defined by Section 856 of the Internal Revenue Code, (ii) a corporation, or (iii) a limited liability company in which a member is a corporation; and 2) The tenants have been provided written notice that the residential property is exempt using the methods and language included in the new law.

Further, the new law will not apply to owner occupied duplexes and owner-occupied singlefamily residences with ADUs, housing restricted by deed with respect to affordable housing for persons or families of very low, low, or moderate income as defined; transient and tourist hotels, school dormitories, housing accommodations in a nonprofit hospital, religious facility, extended care, elderly or adult residential facility as defined, Housing that has been issued a certificate of occupancy within the last 15 years. The new law does not apply to residential real property that is subject to a local ordinance requiring just cause for termination adopted on or before September 1, 2019, or to residential real property subject to a local ordinance requiring just cause for termination adopted or amended after September 1, 2019, that is more protective than these provisions.

Q: How will I know what the rent increase limitations will be with this new law?

A: Your Apartment Association will provide that information to you, making sense out of these crazy new laws is one of the many great values to your membership. Effective January 1, 2020, annual gross rent increases will be limited to five (5) percent plus the regional Consumer Price Index (CPI) where the residential real property is located or ten (10) percent whichever is less, of the lowest gross rental rate charged for that dwelling or unit at any time during the 12 months prior to the effective date of the increase. In determining the lowest gross rental amount, any rent discounts, incentives, concessions or credits offered by the owner and accepted by the tenant shall be excluded.

CPI means the percentage change from April 1 of the prior year to April 1 of the current year in the regional CPI Index as published by the U.S. Bureau of Labor Statistics (BLS.gov), or by the Department of Industrial Relations (DIR.ca.gov) if the regional index is unavailable on BLS.gov. [The current allowable rent increase is five percent plus the CPI of 3.3384 percent, a total of 8.3384 percent for the LA, Long Beach, Anaheim region; 7.7989 percent for the Riverside, San Bernardino, Ontario region; 7.2062 percent for the San Diego, Carlsbad region; or 8.3424 percent if your region is not listed on BLS.gov.] If gross rent was increased on or after March 15, 2019, but prior to January 1, 2020, the increase cannot exceed five (5) percent plus your regional CPI or 10 percent, whichever is less. If the gross rent increase exceeded the allowable amount, the gross rent effective January 1, 2020, will be calculated based on the lowest gross rental amount plus the allowable increase as of March 15, 2019. Although the rental rate may adjust downward on January 1, 2020, the owner is not required to return or credit the tenant for the excess that was due prior to January 1, 2020. If gross rent was increased between March 15, 2019, but prior to January 1, 2020, in an amount less than the allowable increase, rent may be increased within 12 months of March 15, 2019, up to the allowable amount.

Q: What is a Just Cause eviction? And what is the difference between At Fault Just Cause, and No Fault Just Cause?

A: After a tenant has resided in the rental unit for one year, or two years if any additional adults are added, unless exempt, terminations of tenancies require “Just Cause.” There are two types of Just Cause: 1) At Fault Just Cause, and 2) No Fault Just Cause.

At Fault Just Cause includes the following:

  • Default in the payment of rent, or a breach of a material term of the lease, after being issued a notice to correct the violation if the breach is curable. A three-day notice to terminate the tenancy may then be served;
  • Maintaining, committing or permitting a nuisance;
  • Committing waste;
  • Refusal to execute a written extension or renewal of a lease that terminated on or after January 1, 2020, for an additional term of similar duration with similar provisions;
  • Criminal activity on the rental property, including the common areas;
  • Criminal activity or threat on or off the property directed at the owner or the owner’s agent;
  • Assigning or subletting the premises in violation of the lease;
  • Tenant’s refusal to allow entry to the premises as authorized by law;
  • Using the premises for an unlawful purpose as described by law;
  • Employee, agent or licensee’s failure to vacate the premises following termination of employment;
  • Tenant’s failure to vacate the premises after tenant’s delivery of notice of the tenant’s intention to vacate the premises. Relocation Assistance:

When terminating based on At Fault Just Cause, the tenant is not entitled to receive relocation assistance.

No Fault Just Cause includes the following:

  • Intent to occupy the premises by the owner or certain defined relatives [provided lease entered on or after July 1, 2020, includes specific language];
  • Withdrawal of the property from the rental market;
  • Government Agency or Court Order, or local ordinance requiring the property to be vacated (relocation assistance not required if Order issued due to tenant fault);
  • Owner intends to demolish or “substantially remodel” (as defined) the rental property. Relocation Assistance: When terminating based on No Fault Just Cause, the tenant is entitled to receive the equivalent of one (1) month’s rent through either a direct payment or a waiver of the last month’s rent. Note: The tenant is not entitled to retain the relocation assistance if the tenant fails to timely move out. The owner can recover these damages in an unlawful detainer complaint.

Q: What should I be doing now to prepare for the new law?

A: If you have issued a notice of change of terms increasing the rent that resulted or will result in a new rental rate as of January 1, 2020, that exceeds the allowable percentage increase as stated above, then you should provide notice to your residents that effective January 1, 2020, the new rental rate will be reduced to the maximum allowable rental rate.

I.e. if your rent on March 15, 2019, was $1,000 and you increased it since to $1,250, your maximum allowable rental rate on January 1, 2020, would be $1,083.38 if your property is in the LA, Long Beach, Anaheim region. You should notify your resident that the rent due on January 1, 2020, will be $1,083.38.

If you own residential rental property, you should use the rental agreements provided by your apartment association or provide written notice, using your association’s revised forms, as required by the new law by July 1, 2020.

 

This article is presented in a general nature to address typical landlord tenant legal issues. Specific inquiries regarding a particular situation should be addressed to your attorney. Stephen C. Duringer is the founder of The Duringer Law Group, PLC, one of the largest and most experienced landlord tenant law firms in the country. The firm has successfully handled over 285,000 landlord tenant matters throughout California and has collected over $200,000,000 in debt since 1988. The firm may be reached at 714-279-1100 or 800-829-6994. Please visit www.DuringerLaw.com for more information.