The Tenant Protection Act, AB 1482, is a new law affecting all of California, and we have broken it out into five major subject matters. Our focus on today’s blog is no fault relocations.
Please remember that we are early in the process with this law, so we’ll be working out the details for months. Processes, recommendations, and impacts are likely to change as this legislation is implemented and better understood. Every housing situation is unique. Please contact an attorney for specific legal advice.
AB 1482: An Overview
AB 1482 is a rent control law. It caps the amount of rent increases on most properties that are impacted to no more than 5 percent plus Consumer Price Index (CPI) on an annual basis. If CPI exceeds 5 percent, the cap is a maximum 10 percent gross.
Additionally, just cause evictions apply to those properties that are impacted, which restricts a housing provider’s authority to remove residents to a limited list of reasons. And in some of those instances, relocation costs are required to be made payable by the owner to the resident.
AB 1482 and Updated Lease Verbiage
If you have a property that is not exempt, and we have spoken previously about the various exemptions, it is mandatory that you put in your rental contracts the following lease verbiage in 12 point font:
“EFFECTIVE AS OF JANUARY 1, 2023, 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 tenancy. See Section 1946.2 of the Civil Code for more information.”
For new and renewing contracts, this must be in place by July 1, 2020. For existing contracts, it must be in place by August 1, 2020.
Getting your Rental Property Back
If you have a property that falls under AB 1842, then you have two very limited categories that define how you get the property back.
There is the concept of at fault, just cause eviction which is tenant behavior issues, and we will talk about that in a different blog segment.
Then, there are no fault evictions which are the owner’s choice, and there are a limited number of reasons why an owner might choose to get the premises back.
Any termination of tenancy that is generated based on the “no fault just cause” will require the owner to provide to the tenant an amount equal to the last monthly rent paid by the tenant for the property.
Reasons for a No Fault Eviction
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
- For any contract lease extension entered into after 7/1/20, this allowance applies only if the tenant agrees
So how does the tenant agree to this? Remember the part about adding that specific verbiage to the lease? What if you add the following:
“This lease may be terminated if the owner, their spouse, domestic partner, parents, children, grandchildren or grandparents unilaterally decide to occupy the referenced property.”
Adding this clause in with it, in 12 point font to each and every contract, allows family to move in. This is considered to be proper notice and accepted by the tenant.
Furthermore, adding this clause into the lease extension/revision is considered to be “similar provisions” in defining “at fault” evictions.
- 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.
- Owner’s mandatory compliance with a government agency or court order. This could relate to habitability that necessitates vacating the unit or a court order or local ordinance to vacate the unit.
Meeting the Obligation of Relocation Costs
If it’s determined by a governmental agency or by court that the tenant is at fault for the conditions triggering the order to vacate the unit, the tenant is not entitled to relocation assistance. If an owner issues a termination noticed based on a permissible “no fault” cause, the owner shall do one of the following:
- 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 the owner chooses to waive the rent, the owner shall provide a notice stating the dollar amount of rent waived and that no rent is due for the final month. If the owner chooses 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.”
The relocation assistance required by AB 1482 shall be credited against any other relocation assistance required by any other law. The owner’s failure to strictly comply with this procedure shall render the notice of termination void. This basically says there is no room for error.
Please contact us at DeDe’s Rentals if you need help applying this to your investment property. We know that it’s complicated, and it will probably only get more complex. Please remember – I am not an attorney and if you have questions please contact your attorney for legal advice.