Also known as The Tenant Protection Act of 2019, AB1482 has been a pivotal law in the state of California. This touches some key parts of your rental experience, including how much you charge in rent and how you remove tenants from your property.
There’s a lot to cover, and protocols require your attention whether your rental property is covered by this law or exempt from it.
Let’s get started so you know how to structure your lease, your marketing, your screening, and your entire rental management plan in a way that keeps you in compliance.
AB1482: An Overview
AB1482 is primarily a rent control law; at least, that’s what it’s best known for. This law limits the amount by which you increase your rent to no more than 5 percent plus whatever the Consumer Price Index (CPI) dictates. If the CPI exceeds five percent on its own, there is a hard cap on how much you can increase rents, which is no more than 10 percent annually.
The law also touches on eviction. When a tenant is at fault, for example they don’t pay rent, you can move forward with an eviction the way you normally would. If the tenant is not at fault, however, and you’re asking or requiring your tenant to vacate the premises for some reason outside of their control, you may be required to provide the tenant with relocation damages, which are typically the equivalent of one month’s rent.
Is Your Rental Property Included in or Exempt from AB1482?
As you approach this legislation, you first need to understand if your property is covered by this law or exempt from it. The rent control laws and just cause evictions apply to most rental properties in the state of California.
Unless:
- You’re renting out a single-family home or a condominium and you are not part of a corporation or a REIT. Additionally, dorms, universities, boarding schools, etc., are not subject to rent control. Hospitals, elder care facilities, religious facilities, hotels, and deed restricted low-income communities do not have to comply with this law, either.
- Any city that has its own rent control laws that are more restrictive than the California law will also be exempt.
- Duplexes are likely exempt but only if the owner lives in one of the units and maintains it as their primary residence while renting out the other unit.
- Tiny homes are a huge trend lately, and those are exempt on the property of a single-family home. Other Accessory Dwelling Units (ADUs) are also exempt when they’re on the property of a single-family home, as long as there are no more than two of them.
There are also age exemptions.
The big exemption that applies to many of the owners we work with is housing that has been issued a certificate of occupancy within the previous 15 years. As a reminder, the Costa-Hawkins Act is still enforced as law throughout California. It’s impacted rent control in California since 1995.
For example, if your property was built in 1996, no matter how big it is, it doesn’t fall under Costa-Hawkins. But, AB1482 changes that because of the reference to housing that has been issued a certificate of occupancy within the previous 15 years. Unlike Costa-Hawkins, AB 1482 does not set a definite date after which you are exempt. Costa-Hawkins says December 31, 1995, and everything after that is exempt. But, AB1482 says that your property is subject to rent control once it has been occupied for more than 15 years.
So, the important question for you is: how old is your property?
AB1482 is written in a way that the law is repealed on January 1, 2030. It will either sunset or the law will be made permanent. Time will tell.
Whether your property is exempt or non-exempt, you need to reflect its status in your lease agreement. Make sure you’ve updated your language to state whether the property is limited by rent control or exempt from those laws.
Rent Control under AB1482
As we mentioned, when your property is included in the rent control laws, it means you cannot raise the rent annually any more than 5 percent plus the CPI, which is a measure of inflation. Lately, we’ve had some pretty high inflation, which means rents have been able to rise right up against that 10 percent hard stop.
The CPI is established and measured by the Bureau of Labor Statistics. In order to get the information, you can actually go online and search for the CPI in your specific market. You’ll find a page full of statistics that will give you the number that you’re looking for.
What is a permissible rent increase under this law?
Rent can be increased in no more than two increments during any 12-month period, and the cumulative total is not to exceed the allowable annual cap. You also need to provide a 30-day notice before raising rent.
When a property is vacant, rent caps do not apply.
If you have a property that is vacated, you can adjust it to whatever the “fair” market rate is, even if the increase is more than 5 percent plus CPI. Once the unit is re-occupied, rent caps once again apply.
Eviction Laws and AB1482
If you have a property that falls under AB 1842, you have two very limited categories that define how you get the property back: at fault or no fault eviction.
- At Fault Reasons for Eviction
Let’s go through the list of tenant behavior issues whereby you as the landlord might be permitted to evict the tenant and take the property back. These are some of the most popular just causes for eviction:
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- The tenant does not vacate after a lease has ended and not renewed.
- Default in the payment of rent.
- The tenant’s refusal to allow the owner to enter the residential property with proper advanced notice.
- Any criminal activity or criminal threat that is directed at any owner or agent of the owner of the residential real property.
- Committing damage to the property to the point that it diminishes the value of the property.
- A breach of a material term of the lease.
- Criminal activity by the tenant on the residential real property, including any common areas.
- Using the premises for an unlawful purpose.
- Assigning or subletting the premises in violation of the tenant’s lease.
- Maintaining, committing or permitting the maintenance or commission of a nuisance.
Document everything, because as you can imagine, some of these points can be very difficult to prove.
Reasons for a No Fault Eviction
If you have to terminate a tenancy and not renew a lease agreement, but it’s not due to any cause, this will be considered a no fault eviction. This type of eviction requires you to provide to the tenant an amount equal to the last monthly rent paid by the tenant for the property.
The reasons that owners might be permitted to regain possession of the property through a no fault eviction include:
- An intent to occupy the property by the owner or their spouse, domestic partner, parents, children, grandchildren or grandparents as their primary residence.
- Withdrawal of the property from the rental market. You can decide you no longer want to be a landlord and give notice to the tenant and pay relocation costs.
- Intent to demolish or substantially remodel the property. This does not include cosmetic improvements. It would include structural, electrical, plumbing or mechanical systems that require a permit from a government agency. It also includes abatement of hazardous materials including lead, mold or asbestos. It has to be something that cannot be accomplished in a safe manner with the tenants in place and that would require the tenant to vacate the property for at least 30 days.
If you, as the property owner, issue a termination noticed based on a permissible “no fault” cause, you will have to do one of the following things:
- Provide to tenant a direct payment equal to the last full month rent paid by the tenant to the owner
- Waive in writing the payment of rent for the final month of tenancy, prior to rent coming due
If you decide it’s better to waive the rent, you’ll need to provide a notice stating the dollar amount of rent waived and that no rent is due for the final month. If you, instead, choose to make a direct payment, the payment must be made to the tenant within 15 calendar days of service of the vacate notice. If the tenant fails to vacate after the expiration of the notice to vacate, the actual amount of assistance paid or rent waived “shall be recoverable as damages in an action to recover possession.”
A close read of the law, such as the one we’ve just done, should reveal to you that there is basically no room for error. It’s complex and detailed, and if you’re working with a property that’s covered by AB1482, the assistance of a property manager can be essential.
We’d be happy to work with you. Please contact us at Real Property Management Choice.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
