The Tenant Protection Act, AB 1482, is a new law affecting all of California, and it can be broken out into five major subject matters. Today, we are going to talk about exemption for single-family residences.
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 Exemptions
AB 1482 states that this law shall not apply to the following:
- Residential real property that is alienable separate from the title to any other unit. Alienable separate means you are able to sell one part of the unit without having to sell the other parts of the unit. This applies to single-family residences and condominium units. If you have a duplex, you can’t sell one half of the duplex. However, in a condo, although it is in a community of maybe hundreds of other properties, you own one specific space. That is why a condominium is considered alienable separate and a duplex is not.
This clause in AB 1482 states that is shall not apply to the following:
- Residential real property that is alienable separate from the title to any other unit provided that both of the following apply. The owner is not:
- A real estate investment trust (REIT), a corporation or a limited liability company (LLC) in which at least one member is a corporation
- The tenants have been provided written notice that the residential real estate is exempt from this section using the following statement:
“This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12 (d)(5) and 1946.2 (e)(8) of the Civil Code and the owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation.”
Both must apply. It is conceivably possible to LOSE exemption on a condo or single family home by failing to provide the necessary notice to tenants.
To protect exemption, that statement must be included in any tenancy initiated or renewed on or after July 1, 2020. For tenancies existing prior to July 1, 2020, a written addendum must be added no later than August 1, 2020. Notification must be given in 12 point font.
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 is overturned, even these exemptions may be at risk. It is very important that you remain informed and very important that when the opportunity comes, you vote.
Please contact us at DeDe’s Rentals if you have any questions or need any guidance or assistance with your investment properties. I am not an attorney and if you have questions please contact your attorney for legal advice.