At a signing ceremony in Oakland on October 8, Governor Gavin Newsom signed AB 1482 – Rent Caps and Just Cause. If you are confused about how this new law may affect rental property that you own, please contact us at Pasas Property Management. 

Here are some basics you need to know:

• Rent increases in any 12-month period will be limited to 5% plus the change in inflation from April 1 of the prior year to April 1 of the current year, as measured by the Consumer Price Index (CPI) for the area in which the property is located.
  • For the San Diego Region, for example, we believe this will be 2.2%. (We are working to clarify this figure with the State as San Diego & Riverside region reports are provided every other month for odd months by the Bureau of Labor Statistics. Imperial County will use the California Index as provided by the Department of Industrial Relations. It is our hope that the Department of Housing & Community Development will become responsible for providing the appropriate figures.)
• You will be able to increase rent up to two times a year, but you are still limited to the annual cap.
• If you increased rent between March 15, 2019 and January 1, 2020, and the amount is over the allowable increase, you will have to adjust your rent back. The applicable rent on January 1, 2020, shall be the rent as of March 15, 2019, plus the maximum permissible increase. Note: You are not liable to a tenant for any corresponding over-payment.
• Vacancy Decontrol remains intact. You will be able to reset your rents to market rate upon all original tenants vacating.
• The bill is set to sunset in 10 years.
• Just Cause termination will be implemented statewide and kick in at 12 months of tenancy if all tenants have occupied the unit for 12 months or more.
  • If there has been changes in occupancy, then Just Cause takes effect at 24 months.
• Just Cause applies to month-to-month tenancies and fixed-term lease renewals.
  At-Fault terminations include, but are not limited to, non-payment of rent, lease violations, criminal activity.
• No-Fault terminations are defined as owner move-in, withdrawal from rental market, a habitability order from a government agency, and intent to demolish or substantially remodel.
  • Substantially remodel is defined as: the replacement or substantial modification of any structural, electrical, plumbing, or mechanical system that requires a permit from a governmental agency, or the abatement of hazardous materials, including lead-based paint, mold, or asbestos, in accordance with applicable federal, state, and local laws, that cannot be reasonably accomplished in a safe manner with the tenant in place and that requires the tenant to vacate the residential real property for at least 30 days. Cosmetic improvements alone, including painting, decorating, and minor repairs, or other work that can be performed safely without having the residential real property vacated, do not qualify as substantial rehabilitation.
• No-Fault terminations will trigger a relocation payment of one-month’s rent, regardless of the tenant’s income. The last month’s rent may also be waived.
• Specific language and disclosures are required for exempt properties and when terminating tenancy. SCRHA will be updating its forms accordingly.

Exemptions

• Single-Family Homes and Condos
  • This does not apply if they are owned by a Real Estate Investment Trust (REIT), Corporation or LLC where one of the owners is a Corporation.
• Owner-occupied duplexes
• Deed Restricted Housing
• Housing built within the last 15 years (determined by Certificate of Occupancy date)
• Housing subject to a local Rent Control ordinance (Local Ordinance & Costa-Hawkins apply. I.e. Palm Springs)
• Dormitories
• *Owner-occupied properties where no more than 2 bedrooms are rented are excluded from the Just Cause provisions. This includes Granny Flats (Accessory/Junior units).
• *Jurisdictions like the City of San Diego, who already had an ordinance in place before Sept. 1, 2019, are not subject to the Just Cause provisions. (Please note that there are efforts starting at the City to make its ordinance more restrictive.)

These are the highlights of the new law. If you are confused about how this new law may affect rental property that you own, please contact us at Pasas Property Management.