Key provisions of the Tenant Protection Act of 2019 (AB-1482)

Going into effect January 2020.  Many rental housing providers will be exposed to a new regulatory regime after The Tenant Protection Act of 2019 (AB-1482) was recently inked into law.

  • For some residential properties, annual rent increases will be capped at 5% plus the rate of inflation, or 10 percent, whichever is lower.
  • Landlords must show a “just cause” to evict tenants implanted for 12 months or more.
  • Protections will be extended to housing stock previously exempted from rent control because of Costa-Hawkins.
  • If the tenant is displaced because of a no-fault just cause eviction, relocation assistance in the form of a direct payment or rent waiver is normally required.

The newly minted state law calls for annual rent caps of 5 percent plus the annual increase in the cost of living, or 10%, whichever amount is lower. This raises the question of what the spike in living costs might pencil out to be. To put this fluctuating metric in perspective, the Bay Area’s Consumer Price Index (CPI) has never exceeded 5% and only once hovered north of 4%, and so barring an epidemic of inflation, permissible rent increases will be well below 10%.

Another highlight of the bill is the imposition of “just cause” eviction requirements that apply throughout the state after tenants have resided in the unit for 12 months, or 24 months if a roommate moves in.

The first algebraic equation to solve is whether your building is hamstrung by local rules relating to rent increases or eviction rules that are more favorable to tenants when viewed in light of statewide protections.

For the vast majority of you who own rental properties in San Francisco, Oakland, Berkeley, and other locales in rent-controlled jurisdictions that have pre-existing ordinances more “protective” to tenants , your rental business will not affected.

Put differently, you are already handcuffed by local rules that limit rent increases to amounts less than what is allowed by state law, and you are bound by a shorter list of reasons to evict a tenant, so the state law doesn’t matter – it’s moot.

Here’s where it gets interesting, though. If you have an exemption to local rent and/or eviction controls, it may be stripped.

The statewide protections will not apply to housing built within the past 15 years, though it will apply to property previously exempt as “new construction” under Costa-Hawkins, a state law passed in 1995 banning cities from expanding rent control to units built after 1995. Yet, some municipalities limit controls to units built well before 1995. Let’s take a sampling of SF, for instance:

Built on or before June 13, 1979

As of January 2020, properties built between 1979 and 2015 will be covered by the Ordinance.

Although there are other exemptions, in terms of timeframe, only buildings with a certificate of occupancy issued in the last 15 years will be exempt from new controls. This is a rolling 15-year window, meaning that each year, new buildings will come out of the exemption window as they age past the 15-year threshold. Units built in 2006 will become covered in 2021, units built in 2007 will become covered in 2022, and so on.

The law will not apply to most single-family homes and condominiums, unless owned by a corporation, real estate trust, or an LLC when at least one member is a corporation.

Lawmakers had the foresight that some landlords might go on a rent hiking binge in anticipation of AB 1482 passing. Accordingly, the law will be retroactive to March 15, 2019. Whatever amount the tenant paid as of that date is the amount upon which the increase will be based.

-Article provided courtesy of Daniel Bornstein – Bornstein Law

Tel: 415-409-7611

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