What San Jose Property Managers and Landlords Need to Know about New Rental Policy

Stacy Winship
April 22, 2017

For more than a year, San Jose property managers, landlords and homeowners have been embroiled in a debate with housing advocates about whether to expand renter protection laws in one of the nation’s hottest rental markets. At the heart of the matter was whether rental property owners should be allowed to evict tenants without cause, otherwise known as “no fault” evictions.

The dispute came to a head in March, when the Mercury News wrote a story about Paul Mayer, a 92-year-old World War II veteran who was being evicted from his apartment after 44 years. Mayer has been paying only $525 per month for his rent-controlled studio apartment. The apartment was heavily subsidized by the previous property owner because Mayer offered to serve as the building superintendent for many years. When the new owner purchased the San Jose rental property, they kept the same discount in place even though Mayer was no longer acting in that regard.

But as the new San Jose landlord explains, she isn’t evicting Mayer because he’s paying a fraction of market rents. Instead, his landlord explains that Mayer has been a “model tenant” but the family is taking the property off the market to make substantial improvements. All residents in the 16-unit building are being evicted so the renovations can be made at once.

Mayer’s story proved to be the tipping point for a divided San Jose City Council. City Councilors acknowledged that in most other Bay Area cities, Mayer’s landlord would not be able to evict him without “just cause”. In most other cities, she’d have to provide Mayer with relocation payments to help him get settled elsewhere while the renovations took place, and then she’d have to allow him to re-rent the unit at the previous rent level once the capital improvements are complete. Until this past week, the City of San Jose had no such renter protections in place.

After a heated debate that lasted more than four hours and included emotional testimony from renters’ rights activists, the City Council voted by a narrow, 6-5 margin to add a new “Tenant Protection Ordinance” to the San Jose Municipal Code.

Here’s what San Jose property managers and landlords need to know about the sweeping new measures:

  • No-fault evictions have been banned. Landlords and property managers must now have “good cause” for evicting tenants.
  • No-fault evictions have been banned. Landlords and property managers must now have “good cause” for evicting tenants.
    • Nonpayment of rent;
    • Material or habitual violation of the tenancy;
    • Substantial damage to the rental unit;
    • Refusal to agree to a like or new rental agreement;
    • Nuisance behavior;
    • Refusing access to the unit;
    • Unapproved holdover subtenant;
    • Substantial rehabilitation of the unit;
    • Ellis Act removal;
    • Owner move-in;
    • Order to vacate; and
    • Vacation of an unpermitted unit.
  • These new renter protections apply to all San Jose renters, not just those living in rent-controlled units. The policy is estimated to impact 450,000 renters citywide.
  • The new renter protections take effect immediately. Some city councilors suggested the policy require tenants to live in a unit for 6 months to one year before being covered by these protections, but the version of the ordinance passed grants these protections from the first day of tenancy.
  • The city also implemented Ellis Act protections. As noted above, the Ellis Act requires landlords of rent-controlled units to provide 120 days to a year notice before they demolish, remodel or convert their buildings. They must provide renters with relocation assistance and give them the right to return once renovations or repairs are complete.

The City has not yet tied San Jose’s 43,000 rent-controlled units’ rental increases to inflation, as is the case in many other Bay Area cities. Currently, San Jose property managers and landlords can increase rents up to five percent annually. During the City Council meeting earlier this week, councilors asked the city’s housing officials to investigate such a policy. Councilors also asked staff to look at putting duplexes under the purview of rent control, which are currently exempt. Doing so would add another 11,000 units to the rent-control roster.

While the full breadth of San Jose’s rent control restrictions remains to be seen, it’s clear that there’s growing momentum for renter protections. As always, we’ll continue to monitor new policies as they come to fruition and will share updates with our San Jose property managers, landlords and other readers accordingly.

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