By Ellen Gregory
You may have heard of it: the Tenant Protection Act of 2019, California now has rent control throughout the state. The law has two basic goals: (1) to control rent increases and (2) to reduce evictions that are not “for cause.” Although commonly referred to as “rent control,” the bill actually is a “rent stabilization” law; that is, it puts a cap on rent increases. “Rent control,” on the other hand, typically means there is an actual maximum base rent. But, definitions aside, the law will no doubt affect millions of California landlords and tenants. The law is complex with numerous exemptions, different effective dates, and lengthy definitions. Here are the key points:
- Limited Rent Increases
The law prohibits an owner of residential real property from increasing the gross rental rate for a dwelling or unit more than 5% plus the percentage change in the cost of living or 10%, whichever is lower, of the lowest gross rental rate charged for the immediately preceding 12 months. For any tenant that has remained in occupancy of the unit over a 12-month period, an owner may not increase the gross rental rate for the unit in more than 2 increments over a 12-month period. To address the situation of landlords who, realizing that this law was on its way to being adopted, pre-emptively increased their rents, the law looks back to rent as of March 15, 2019
The following residential real properties are exempt from these restrictions:
- Certain low-income housing
- School dormitories
- Housing subject to lower rental rate increases under other statutory frameworks
- Housing that has been issued a certificate of occupancy within the previous 15 years
- A duplex in which the owner occupies one of the units as his/her principal place of residence
- Limitations on Evictions
Two basic types of evictions are allowed: (1) evictions for at fault “just cause”; and (2) “no-fault” evictions.
Just Cause Evictions: Once a tenant has continuously and lawfully occupied a rental unit for 12 months or more, the landlord cannot evict the tenant without just cause. The landlord must provide a written notice of violation, describing the violation constituting “just cause,” and offering the tenant the opportunity to cure the violation. If the tenant does not cure the violation, the landlord may then issue a 3-day notice to quit, without the opportunity to cure, to terminate the tenancy. This protection does not apply to tenants who have been in the unit for less than 12 months.
Just cause includes eleven enumerated situations, including:
- Default in payment of rent
- Breach of a material term of the lease
- Maintaining or committing a nuisance
- Committing waste
- Tenant refuses to execute a written renewal of a lease that terminates on or after January 1, 2020
- Criminal activity
- Assigning or subletting in violation of the lease terms
- Improper refusal to allow landlord entry
- Using property for unlawful purpose
- Failure to deliver possession
No-Fault Evictions: Under certain circumstances where the tenant is not at fault as defined above, a landlord may still terminate an on-going lease. Those situations include:
- The landlord intends to occupy the unit, or have a spouse, domestic partner, children, grandchildren, parents, or grandparents occupy the unit (for leases entered into on or after July 1, 2020, this provision may only be used if the tenant has agreed in writing)
- Withdrawal of the residential real property from the rental market
- A government order requires the tenant to vacate the unit
- Intent to demolish or substantially remodel the unit
If the landlord issues a notice to terminate for any of these no-fault reasons, the landlord must either (1) provide relocation assistance equal to or greater than the amount of one month’s rent, or (2) waive in writing the payment of rent for the final month of the tenancy, prior to the rent coming due. If the tenant fails to vacate the unit after a valid notice to terminate, the actual amount of the rent waiver or relocation assistance provided is recoverable as damages in an action by the landlord to recover possession.
The following types of residences are exempt from these eviction provisions:
- Transient or tourist hotel occupancy
- Residential care facilities, hospitals
- School dormitories
- Tenants living in owner’s home and sharing a kitchen or bathroom
- Single-family owner-occupied residences
- Duplex in which owner occupies on of the units
- Housing that has been issued a certificate of occupancy within the previous 15 years
Required Notice
Except for those situations that are exempt from the law, the following notice must be provided to the tenant in writing in no less than 12-point type:
“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.”
If the tenancy begins before July 1, 2020, the required written notice must be provided to the tenant no later than August 1, 2020, or as an addendum to the lease or rental agreement.
If the tenancy begins or is renewed on or after July 1, 2020, the notice may be provided through an addendum to the lease or rental agreement, or as a written notice signed by the tenant, with a copy provided to the tenant.
Local rent control and eviction ordinances will remain in effect to the extent they are consistent and as protective as the state law.
Conclusion
If you are a landlord in California, you must analyze this law before the effective date of January 1, 2020 and determine its impact on your lease agreements and your operations. Contact one of our experienced attorneys to help you with this analysis.
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