The Tenant Protection Act of 2019, or AB 1482, is a complex new law affecting all of California.
It can be broken down into five major subject matters, and today we’re going to discuss age restricted exemptions and a few other exemptions that might apply.
We are early into this process with the new law, so best practices, policies, and patterns may not actually be solidified yet. But, this is the best information I have at this point. Also, every situation is unique. If you need legal assistance, be sure to contact your attorney.
AB 1482: An Overview
AB 1482 is a rent control law limiting the amount of rent increases 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. In some instances, you can request or require a tenant to vacate the premises because of this law. But, you may be required to provide the tenant with relocation losses.
Types of Exemptions
There is a list of exemptions within this law.
One of those exemptions applies to single-family homes and condominiums. In addition, 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.
Housing that is already subjected to a more restrictive form of rent control escapes this law as well. Duplexes may be exempt but only in those instances when the owner resides in one part of the property and maintains it as their primary residence.
Owner-occupied single family residences with no more than two Accessory Dwelling Units (ADUs) as well as the ever growing tiny homes are exempt. If you have one or two tiny homes, this law would not apply to you. If you are in a share rental situation and you are the owner and you live on the premises and you rent out one or two private spaces like a bedroom or bedroom/bathroom combination but you have shared kitchen and living spaces, rent control would not apply to you.
The big exemption that would apply 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 the law and has been the law since 1995. This act prevents the institution of rent control in single-family residences and condos but also prohibits the institution of rent control on properties built after 1995.
For example, if your property was built in 1996, no matter how big it is, it doesn’t fall under Costa-Hawkins. But, AB 1482 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.
So, the important question for you is: how old is your property?
AB 1482 Exemptions: Some Examples
For example, we have a duplex, and in the summer of 2019, we rented both sides of this unit. It got a certificate of occupancy in July of 2019, which basically means that it’s exempt for 15 years through July of 2034.
Another example is a larger apartment complex we manage on 14th Street. This building received its certificate of occupancy in August of 2017. It’s exempt through August of 2032.
Older properties such as Annadel Apartments, a complex with hundreds of units, was built in April 2014. This property would be exempt through April of 2029.
We have many single-family homes with in-law units. One of them is not owner-occupied and it was built in November of 2007. It’s exempt through November of 2023, which is only a few years from now.
One of the properties we manage in southwest Santa Rosa had a certificate of occupancy issued in May of 2004, meaning that 15-year exemption expired in May of 2019. Therefore, this property is no longer exempt.
Updating Your Lease Verbiage
Unlike those properties that are classified as exempt or non-exempt, age-exempt units seemingly have no statutory verbiage. This must be included in tenant rental contracts or revisions must be included until their exemption expires. Once the 15-year exemption date is imminent, begin adding the non-exempt verbiage.
For example, it should say the following using this 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.”
Understanding the AB 1482 “Sunset Date”
AB 1482 is written in a way to repeal the law on January 1, 2030. Therefore, theoretically, the two duplexes I mentioned earlier would never be under rent control because this law will expire before the 15 years comes up. That is, of course, as long as AB 1482 is allowed to sunset.
AB 1482 Enforcement
As long as AB 1482 is in effect, after age-specific exemption expires on a particular unit, that unit will thereafter need to comply with all applicable rent caps and just cause provisions. The provisions of AB 1482, including exemptions for new construction, single-family homes, condos, and other particulars are specific to AB 1482. Theoretically, if Costa-Hawkins Act is overturned, even these exemptions may be at risk.
It’s extremely important that you stay informed and when the opportunity arises, you vote. This whole thing is complicated, and will only get more so. If you have questions, contact us at DeDe’s Rentals.