Managing Rental Housing

The Tenant Protection Act of 2019 is more commonly known, and will be referred to in this book, as AB 1482 (the bill number that enacted the law). Properties that are not subject to local rent control may still be subject to caps on the rent that can be charged under AB 1482. That law took effect on January 1, 2020 and imposes rent increase limits (of 5% plus inflation, as defined in the law) on many residential rental properties in California that are not regulated by a local rent control ordinance with a lower rent cap. (Civil Code § 1947.12.) AB 1482 also limits the reasons for which a tenancy may be terminated. (See Termination of the Tenancy by the Landlord – Cause Required: AB 1482 Just Cause in Chapter 7.) Unlike local rent control ordinances, which cannot apply to single-family homes and other separately alienable units (like condominiums) under Costa-Hawkins, AB 1482 does apply to some of those units. More specifically, unless another exemption applies, AB 1482 applies to separately alienable units if they are owned by any of the following: • A real estate investment trust. • A corporation. • A limited liability company in which at least one member is a corporation. If a separately alienable unit (like a single-family home) does not fall into one of the above-listed categories, it is exempt from AB 1482 only if the landlord provides a specific notice to the residents (or it qualifies for one of the other exemptions listed below). CAA offers the Exemption from AB 1482 Addendum (Form CA-96) that can be used to provide this notice when you sign the rental agreement. The rent cap provisions of AB 1482 also do not apply to the following: • Housing built within the last 15 years. To determine the age of a property for the purpose of this exemption, the landlord must look at the date of the certificate of occupancy that was issued prior to residential use of the unit. Landlords who suspect their property may qualify for this exemption but who do not have a copy of their certificate of occupancy should contact their local housing or building department to obtain a copy. It is important to remember that this exemption is a “rolling” exemption: this means that a property becomes subject to AB 1482 on the day its certificate of occupancy becomes 15 years old unless another exemption applies. • Owner-occupied duplexes. A duplex is exempt only if one of the units is owner-occupied at the inception of the tenancy and only for as long as the owner continues in occupancy. Any natural person listed on the title is likely to be considered an owner for purposes of this exemption. CAA recommends consulting an attorney regarding other types of ownership (e.g., if the property is held in a family trust). • Certain types of subsidized affordable housing. Specifically, AB 1482 does not apply to “housing restricted by deed, regulatory restriction contained in an agreement with a government agency, or other recorded document as affordable housing for persons and families of very low, low, or moderate income, as defined in Section 50093 of the Health and Safety Code, or subject to an agreement that provides housing subsidies for affordable housing for persons and families of very low, low, or moderate income, as defined in Section 50093 of the Health and Safety Code or comparable federal statutes.” While units rented to Housing Choice Voucher (Section 8) recipients appear to be exempt from AB 1482, they are still subject to federal program regulations and special requirements under other California laws. To understand how AB 1482 interacts with local rent control ordinances, consider a 10-unit building in San Francisco built in 1940 that is regulated by the local rent ordinance. San Francisco’s law allows an increase of 60% of inflation per year, which is lower than AB 1482’s rent cap of 5% + inflation. This property remains subject to the local ordinance because of the age of the building. By contrast, a single-family home owned by a corporation built in 1940 and a 100-unit multifamily property built in 2002 are both exempt from San Francisco’s ordinance, but both of these properties are subject to the rent cap under AB 1482 unless they qualify for a different exemption. ʬ WORD TO THE WISE ʬ AB 1482 does not apply to a unit that is separately alienable from any other units, such as a single-family home or condominium unless the owner is a real estate investment trust, a corporation, or a limited liability company in which at least one member is a corporation. Remember that to get the benefit of this exemption, the landlord must provide written notice of the exemption to their residents using a particular statement. For tenancies that start or renew on or after July 1, 2020, that statement must be included in the rental/lease agreement. FORM • Exemption from AB 1482 Addendum (Form CA-96)