Currently, millions of California renters are struggling to pay their rent due to the high cost of living in California. Enacted to combat this issue, The Tenant Protect Act of 2019, more commonly known as “AB 1482”, is a new rent control law that places a cap on how much a tenant’s rent can increase annually. The new bill does not repeal or replace any existing laws, which currently exist throughout the state. If you are a landlord or property manager it is important to know the local locals that may effect your property in addition to AB 1483.
Given this other new landlord/ tenant laws, it has become more difficult and risky to try to manage rental properties in California and especially in Los Angeles and Orange County. Many of these laws are complicated and difficult to understand and although tenants have government agencies to help them navigate these laws and protect them, landlords and investors don’t have any agencies helping them understand the laws and how to protect themselves from abusive tenants. For this reason and other, it is ever more important to have an experienced Southern California property manager and advocate on your side.
What is AB 1482?
Rent Increase Cap. Commencing January 1, 2020, AB-1482 limits rent increases for buildings built over 15 years ago, to just 5 percent per year plus the local rate of inflation. The local rate of inflation is tied to the Consumer Price Index in each area. Currently, Los Angeles and Orange Counties’ CPI is 3.3%.
Just Cause Provision. In addition to placing a cap on annual rent increases, AB-1482 requires landlords and property managers to have “just cause” before they can legally evict any tenant who has continuously resided in their apartment for 12 months. Overall, the “just cause” provision was enacted to prevent tenants from being evicted without any reason.
The “just cause” provision of AB 1482 is not applicable until a tenant has lived in the apartment continuously for 12 months. Additionally, if during the first 24 months of his or her tenancy, the tenant adds a “new” adult to the lease agreement, the “just cause” provision does not apply until:
- either one of the tenants has lived in the apartment for 24 months; or
- All the tenants have been in the unit for at least 12 months.
In any event, as with the rest of the law, this provision only applies to cities that do not currently have local just cause laws. As such, this provision will not apply to Los Angeles, Santa Monica, and Glendale.
Can Tenants Still be Evicted “For Cause”?
AB-1482 does not prevent landlords from evicting tenants “for cause,” which include but are not limited to the following reasons:
- A breach of a material or substantial term of the lease
- Nonpayment of rent
- Nuisance Violations
- Committing waste
- Unlawful or criminal activity
- Refusal to sign a written extension or renewal of the lease
- Assigning or subletting without the owner’s consent
- Refusal to allow the Landlord to enter the unit
Despite the foregoing, if the tenant has lived at the property for at least 12 months, landlords are required under AB 1482 to give the renters the opportunity to “cure” the lease violation(s).
Additionally, Landlords still have authority to evict tenants for the following reasons:
- The landlord wants to move into the apartment, or they want to move their family in
- The landlord is getting out of the real estate business.
- The landlord plans to “substantially” renovate or covert the apartments to condos.
If a landlord decides to covert his or her apartments to condos and/or make substantial renovations, the landlord is required to pay the tenant’s relocation fees, which is equal to one month’s rent.
Are there any exemptions to AB 1482?
AB 1482 will exempt buildings that were built within the last 15 years (i.e., building that received its certificate of occupancy, on or after January 1, 2005. Additionally, most condos and single-family homes are exempt from AB 1482. However, if the condo or home is owned by a corporation or a real estate investment trust (REIT), it is not exempt. Specifically, this provision of AB 1482 is critical for landlords who may have formed LLCs or other corporate entities to rent out their first or second homes. Duplexes are also exempt from AB 1482 if the owner occupies one of the units.
Additional Facts About AB 1482
An apartment can return to market rent once the apartment is vacated by the tenant.
AB 1482 establishes a rolling date for compliance. As such, buildings that were built in 2008 will be subjected to AB 1482 starting in 2023, and so forth.
AB 1482 has an automatic 10-year sunset in 2030. As such, if the legislature wants to extend the provision of AB 1482 beyond 2030, or they want to make AB 1482 permanent, they will have to vote to do that.
Special Provisions for rent increases, which occurred between March 15, 2019, and January 1, 2020
If a landlord increased their tenant’s rent by more than 5% plus the applicable CPI, between March 15, 2019, and January 1, 2020, the rent on January 1, 2020, must go back to what it was on March 15, 2019, plus 5% together with the applicable CPI.
However, if a landlord increased their tenant’s rent between March 15, 2019, and January 1, 2020, and the increase was less than 5% plus CPI, the landlord may increase the rent up to the statutorily permitted amount.
Notice Requirements for AB 1482
As of July 1, 2020, landlords, who own properties that are exempt from AB 1482, must provide their tenants with written notice regarding the exemption.
If the tenancy existed prior to July 1, 2020, the notice could be included in the rental agreement, or it can be an addendum to the rental agreement, whatever form the landlord chooses, notice must be given by August 1, 2020.
For tenancies which commence on or after July 1, 2020, this notice must be provided either as an addendum to the lease or rental agreement or as a written notice signed by the tenant, with a copy provided to the tenant.
What if a tenant believes that his or her landlord has violated AB 1482?
Currently, AB 1482 does not have formal reporting procedures or enforcement mechanisms. As such, tenants are urged to contact an attorney if they have reason to believe that their landlord has violated the law. Because of this it is important that landlords work with experiences Orange County and Los Angeles property manager to make sure that these laws are followed and the landlord is protected from any predatory actions.
Hire An Experienced Team
Even if you decide to be in control of your property management services, you still need to hire an experienced real estate team in your area. This team may include but is not limited to real estate agents and brokers, attorneys, accountants, general contractors, cleaning services, and a professional property management company. A good team will save you time and money and will make the process much more manageable and stress free.
We are here to help!
AllView Real Estate Management is Orange County’s premier property management and investment firm. We offer not only exceptional property management, but also real estate investment consulting and management. Call us at (949) 400-4275 or send us an email at info@allviewrealestate.com for real estate investment expertise.