California, as of Jan. 1, is a rent control state as a result of the passage of AB 1482 (the Tenant Protection Act of 2019).
What this means is that annual increases in rent are maxed at 5 percent (10 percent including inflation).
In terms of inflation, the rate is correlated with the Consumer Price Index in each city. If the city already has rent control in place locally the new law, generally, doesn’t override what those regulations require.
In addition to the cap on rent increases, the law requires that tenants prove “just cause” when terminating a lease agreement. This means no more at-will terminations on a month-to-month basis.
California landlords also are required to use one of 15 reasons why the tenant is being evicted. Some of these are “no fault” and some of them are “at fault.” An at-fault reason for terminating the lease typically is a result of using the property illegally or failing to pay. An example of no-fault terminations is when the person living in the property didn’t breach the lease agreement, but the landlord has made a decision to remodel. Under the new law, the landlord is required to pay relocation assistance to the tenant.
It should be noted that some types of properties are exempt from the new law, including homes constructed within the previous 15 years, duplexes that are occupied by an owner, single-family homes/condos if the owner isn’t an REIT/corporation or the tenants got a notice of exemption.
If you are a landlord and have any questions about how this law may impact you, don’t hesitate to contact us. We would be happy to provide you with a free consultation.