Rent Control – AB 2406

We Now Have Statewide Rent Control and Just Cause for Tenancy

AB 2406 Will Require You to Register Your Units with the State in Order to Evict or Raise Rent

No residential property owner that “operates fewer than five rental dwelling units” will be able to increase rent or evict a tenant unless he or she submits detailed data regarding the rental housing that he or she owns if Assemblymember Wicks is successful getting her bill, AB 2406, signed into law this year.

So, let’s look at greater detail what the bill will propose to do.

First, the state, namely the Department of Housing and Community Development, would create a statewide registry of residential properties. The registry would require every owner of five or more units on one or more properties to annually report invasive information that the state would collect.

Failure to complete the report by an owner or manager would have severe consequences as previously noted.

The rental registry form would include the following information:

  • The legal address of each property.
  • The year the owner acquired the property (which may be very difficult should a change of ownership occur during a fiscal year).
  • The occupancy status of each tenant.
  • The reason for termination of tenancy for each tenant.
  • The legal name of the owner(s) for each property including all limited partners, general partners, LLC members and shareholders.
  • The number and size of each unit, including the number of bedrooms, bathrooms, and approximate square footage of each dwelling unit.
  • The month and year that most recent occupancy began.
  • The total number of days the unit was rented during the most recent 12 months.
  • The amount of payments collected for rent and utilities during the most recent 30-day period for each rental unit and the number of days the unit was vacant.
  • The month and year of the effective date of the last rent increase for each rental unit and the amount of the increase.
  • The number of tenants that have been evicted from the owner’s units in the last 12 months.
  • Property owners would submit the completed form for each property, under penalty of perjury, on or before April 1, 2022, and on or before March 31 of each following year.

The Department of Housing and Community Development estimates the start-up costs would be in excess of $20 million to procure an information technology system to, at a minimum, provide an owner portal to submit information electronically.

That same Department estimates the first-year costs to operate the system would be $8.7 million and ongoing costs of $7.9 million and need 53 staff to perform the required duties, management and maintenance of the program.

Are you ready to submit matters that will invade the privacy of owners and tenants by disclosing addresses, utility costs, the number and size of their bedrooms and bathrooms? Some argue that owners and managers cannot enter the rental unit while it is occupied to determine square footage, etc. So, if a tenant refuses to grant access into their home, owners will be forced to choose which law to obey.

Are you ready to make each tenant’s rent payment history public? This may include missed rent payments.

And interestingly, the bill would require owners to disclose information about evictions when that information is more likely than not currently “masked” by the courts. This eviction information is a matter that tenants successfully sought to hide from the public and now it will be opened for public review.

 

 

Ron Kingston is President of California Strategic Advisors. Jack Schwartz is an attorney based in San Francisco.