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What exemptions apply to AB 1482, California’s rent-control law?

Legal compliance & taxes

On October 7, 2019, California governor Gavin Newsom signed Assembly Bill 1482 (AB 1482), the California Tenant Protection Act of 2019, to give Golden State residents some relief from soaring rents and home prices by instituting rent control. 

For the majority of California's multifamily housing stock, AB 1482 caps annual rent increases at 5 percent plus the rate of inflation, or 10 percent, whichever is lower. The rent control law also requires a property owner to have “just cause” to evict a tenant. But there are AB 1482 exemptions.

AB 1482 affects about 2.4 million homes and apartments and is in force until 2030.

When Newsom signed the Tenant Protection Act, the Covid-19 pandemic was still five months away from hitting in force. And in the last two and a half years, home prices and rents have continued to rise. 

As of March, Los Angeles's median home price was about $920,000; in San Francisco, that figure was $1.5 million. In a survey conducted by the Public Policy Institute of California, some 55 percent of Californians were concerned they would be unable to make their rent or mortgage payments this year. 

With the signing of AB 1482, California became the second state in the union, after Oregon, to establish statewide rent control. The California Apartment Association called it “the most significant policy change for California's rental housing owners and tenants in a quarter century.”

What types of housing are exempted from both the rent cap and just cause limitations?

Rentals state-wide are covered, but there are some AB 1482 exemptions. Some are exempt from both the rent cap and the just-cause limitations:

  • Units constructed in the last 15 years are exempt (on a rolling basis, i.e., a unit constructed on January 1, 2008 is not covered as of January, 1 2023, but is covered on and after January 1, 2023).
  • Units are exempt if they are restricted to be affordable for low- or moderate-income residents.
  • A single family home is exempt unless it's owned by a real estate investment trust (REIT), a corporation, or an LLC where one of the members is a corporation. The owner must inform the renter in writing that the tenancy is not subject to the rent cap and just cause limitations.
  • Duplexes and other two-unit properties are exempt if one unit is occupied by the owner.
  • Some dormitories are exempt.

The exemption for single family residences does not apply if there is more than one dwelling unit on the same lot, or if there is an additional dwelling unit in the building that cannot be sold separately (such as an in-law unit). 

What are some just causes to evict tenants?

All of the following would qualify as a just cause to evict a renter under the Tenant Protection Act: 

  • Nonpayment of rent. 
  • A breach of the material term of the lease.
  • Nuisance, waste, unlawful, or criminal activity.
  • Refusal to sign a written extension or renewal of the lease.
  • Assigning or subletting.
  • Refusal to allow the owner to enter the unit.
  • The owner moving themselves or a family member into a unit.
  • The owner substantially renovating.
  • The owner going out of business.

What rental property units are exempt from the just cause regulations?

  • Rental properties that are already subject to a local ordinance that requires just cause to terminate a tenancy and is more protective than state law.
  • Single family, owner-occupied residences where the owner rents no more than two bedrooms or units, including accessory dwelling units and junior accessory dwelling units.
  • Accommodations in which the tenant shares a bathroom or kitchen with the owner, if the owner uses the property as their principal residence.

What are the provisions for eviction under AB 1482?

  • Eviction provisions apply only after all tenants have lived in the unit for one year or more, or if at least one tenant has occupied the unit for two years.
  • A tenancy may not be terminated without just cause, which must be stated in the termination notice.
  • Some just cause reasons are categorized as at-fault, some as no-fault. In the case of no-fault evictions, relocation assistance is required.
  • The mere expiration of a lease or rental agreement is not a just cause.

What are the rent increase limits and exceptions?

  • For units covered by the Tenant Protection Act, annual rent increases are limited to no more than 5 percent plus the percentage change in the cost of living for the region in which the property is located, or 10 percent, whichever is lower.
  • For rent increases that take effect before August 1, the percentage change is calculated using the amount published for April (or March, if no amount is published for April) of the immediately preceding calendar year and April (or March) of the year before that.
  • For rent increases taking effect on or after August 1, the percentage change is calculated using the amount published for April (or March, if no amount is published for April) of that calendar year and April (or March) of the immediately preceding calendar year.
  • The percentage change must be rounded to the nearest one-tenth of one percent.
  • No more than two increases are allowed in any 12-month period, and the total increase cannot exceed the 5 percent plus CPI cap.
  • The total rent paid by subtenants to a master tenant cannot exceed the rent charged by the owner.
  • There is no limit on the initial rent charged for a vacant unit.

How must property owners communicate with tenants?

Property owners must inform residents in any unit covered by the state law of the rent control and just cause laws. Any resident moving in after July 1, 2020 must be informed in an addendum to the lease or rental agreement or in a written notice signed by the resident, and they must receive a copy. 

The notice language must read:

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.

An owner claiming an exemption because the property is a single family home or condominium must provide a written notice to the resident. 

For any tenancy commenced or renewed on or after July 1, 2020, this notice must be provided in the rental agreement. 

If the owner does not provide the required notice, then a single family home or condominium is not exempt from the just cause or rent cap regulations. 

The notice language must read:

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.

How are violations of AB 1482 enforced? 

AB 1482 can be enforced only in state court. While no penalties are listed in the law itself, residents can sue for damages for wrongful eviction or unlawful business practices based on violations of AB 1482.

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