The California legislature passed a variety of new laws that went into effect on January 1, 2020, one of which is AB1482, also known as the Tenant Protection Act of 2019 (“Act”). The Act applies only to residential properties but imposes restrictions on rent increases, the ability to terminate a lease, and other such matters. This article provides a general overview of the new rent increase limits.
Pursuant to the Act, a property owner can now only do one rent increase in any 12 month period, which increase is limited to the lower of (i) 5% plus the regional percentage change in the cost of living, or, (ii) 10%. If a tenant is in the property for more than 12 months, then the owner can do two rent increases in any 12-month period, but again subject to the same overall rent limitation. However, this rent restriction does not apply to any new tenant moving into a unit. If a tenant moves out (so that the unit is now totally vacant), the landlord can then set the rent at any amount for a new tenant.
Another new rent restriction is that a tenant cannot enter into a sublease that results in the total rent for the premises exceeding the allowable rental rate detailed above. It is unclear if or to what extent a landlord may be liable for a tenant’s violation of this rent restriction if the landlord does not know that the tenant is subleasing the premises. The effect is that it imposes an additional obligation on the landlord to make sure that there are no illegal or unpermitted subleases of the premises.
The Act requires that the landlord provide written notice to all tenants of the new limits on rent increases. The Act provides specific language that must be in the written notice to the tenant. The landlord must provide this notice for all new and renewed tenants (in the lease or separately) starting July 1, 2020. For all existing tenants, the landlord must provide this notice by no later than August 1, 2020.
The new rent increase limits do not apply to:
- Housing restricted by deed;
- Regulatory restrictions contained in an agreement with a governmental agency;
- Affordable housing for very low, low, or moderate income individuals or families;
- An owner-occupied duplex;
- Any housing that is subject to existing local rent control ordinances (so long as those ordinances are more restrictive than those imposed by the Act); or
- Any housing that has been built within the last 15 years.
In addition, the rent increase limits do not apply to single-family residences or condominiums so long as certain requirements are met.
The Act is very complicated, and it needs to be carefully analyzed and understood by all residential landlords. Anyone that may be subject to the Act should talk with a real estate attorney or professional to understand their obligations under the Act.
This article is written by Patrick Casey, who is a business attorney with JRG Attorneys At Law in Monterey. You may reach the author at (831) 269-7114 or at firstname.lastname@example.org.
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