The Tenant Protection Act, AB 1482, is a new law affecting all of California, and it can be broken out into five major subject matters. Today, we are talking about “at fault” evictions. 

Please remember that we are early in the process with this law, so we’ll be working out the details for months. Processes, recommendations, and impacts are likely to change as this legislation is implemented and better understood. Every housing situation is unique. Please contact an attorney for specific legal advice.

AB 1482: An Overview

AB 1482 is a rent control law. It caps the amount of rent increases on most properties that are impacted to no more than 5 percent plus Consumer Price Index (CPI) on an annual basis. If CPI exceeds 5 percent, the cap is a maximum 10 percent gross. 

Additionally, just cause evictions apply to those properties that are impacted, which restricts a housing provider’s authority to remove residents to a limited list of reasons. And in some of those instances, relocation costs are required to be made payable by the owner to the resident.

AB 1482 and Updated Lease Verbiage

If you have a property that is not exempt, and we have spoken previously about the various exemptions, it is mandatory that you put in your rental contracts the following lease verbiage in 12 point font:

“EFFECTIVE AS OF JANUARY 1, 2023, California law limits the amount your rent can be increased. See Section 1947.12 of the Civil Code for more information. California law also provides that after all of the tenants have continuously and lawfully occupied the property for 12 months or more or at least one of the tenants has continuously and lawfully occupied the property for 24 months or more, a landlord must provide a statement of cause in any notice to terminate tenancy. See Section 1946.2 of the Civil Code for more information.”

For new and renewing contracts, this must be in place by July 1, 2020. For existing contracts, it must be in place by August 1, 2020. 

At Fault Reasons for Eviction

Let’s go through the list of tenant behavior issues whereby you as the landlord might be permitted to evict the tenant and take the property back:

• The tenant has a written lease that terminates on or after January 1, 2020, and after a written request or demand from the owner, the tenant has refused to execute a written extension or renewal of the lease for an additional term of similar duration with similar provisions. This is a justified at fault reason to terminate tenancy. 
• The employee, agent, or licensee’s failure to vacate after their termination as an employee, agent, or a licensee.
• When the tenant fails to deliver possession of the residential real property after providing the owner written notice. 
• Default in the payment of rent. 
• The tenant’s refusal to allow the owner to enter the residential property with proper advanced notice.
• Any criminal activity or criminal threat that is directed at any owner or agent of the owner of the residential real property.
• Committing waste. This is damage to the property that is serious and significant enough that it will diminish the value of the property.
• A breach of a material term of the lease. This could be something written in the lease that the tenant is not abiding by. 
• Criminal activity by the tenant on the residential real property, including any common areas.
• Using the premises for an unlawful purpose.
• Assigning or subletting the premises in violation of the tenant’s lease. You must have it written into your rental contract that the tenant cannot do this in order for this term to be in effect.
• Maintaining, committing or permitting the maintenance or commission of a nuisance. Parties every week will upset the neighbors and become a nuisance.

Notice Limitations

The last 5 points above are often very difficult to prove. 

This is why you must document everything. When you have indications that there are violations or possible at fault reasons why the tenant might be required to vacate, you must have the correct documentation. Often times the owner does not have firsthand information that any violation is occurring. They are hearing it from other sources. In order to prove situations like this, it will require the involvement up to and including court testimony of adjacent residents. 

Legal Notice Process

In order to remove a tenant properly with the at fault just cause process, you have to make sure that you properly serve a Three Day Notice to Cure or Quit. This is basically giving the tenant a chance to correct what they are doing wrong. If initial notice expires without correction, follow it with service of a Non-curable Three Day Notice to Quit. Thereafter, commence eviction proceedings. 

There are some instances and behaviors that do not require a notice period to cure. The subletting and criminal activity are two examples. In these instances, however, you do want to speak with your attorney. 

Delayed Just Cause

Just Cause applies if either of the following are true:

• All tenants on the original contract have continuously and lawfully occupied the property for 12 months or more.
• At least one original tenants has occupied the property for at least 24 months.

Just Cause vs. Lease

Continuous occupancy for 12 months means if a tenant moves in with a fixed term lease of one year or more, they are “protected” by just cause provisions as of day one. So it is entirely possible for properties that are under AB 1482 that fixed term leases will fall into disfavor. The first 12 months very well may be considered a probationary period for those tenants to make sure that as the housing provider you want to have a long term relationship with that resident. Once they have the protections the decision to vacate with very few exceptions is in their hands and not the housing providers. 

Please contact us at DeDe’s Rentals for further clarification. This is a complicated law, and it’s likely to get more complex. As I said before, I am not an attorney and if you have questions please contact your attorney for legal advice. 

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The Tenant Protection Act, AB 1482, is a new law affecting all of California, and we have broken it out into five major subject matters. Our focus on today’s blog is no fault relocations. 

Please remember that we are early in the process with this law, so we’ll be working out the details for months. Processes, recommendations, and impacts are likely to change as this legislation is implemented and better understood. Every housing situation is unique. Please contact an attorney for specific legal advice. 

AB 1482: An Overview

AB 1482 is a rent control law. It caps the amount of rent increases on most properties that are impacted to no more than 5 percent plus Consumer Price Index (CPI) on an annual basis. If CPI exceeds 5 percent, the cap is a maximum 10 percent gross. 

Additionally, just cause evictions apply to those properties that are impacted, which restricts a housing provider’s authority to remove residents to a limited list of reasons. And in some of those instances, relocation costs are required to be made payable by the owner to the resident.

AB 1482 and Updated Lease Verbiage

If you have a property that is not exempt, and we have spoken previously about the various exemptions, it is mandatory that you put in your rental contracts the following lease verbiage in 12 point font:

“EFFECTIVE AS OF JANUARY 1, 2023, California law limits the amount your rent can be increased. See Section 1947.12 of the Civil Code for more information. California law also provides that after all of the tenants have continuously and lawfully occupied the property for 12 months or more or at least one of the tenants has continuously and lawfully occupied the property for 24 months or more, a landlord must provide a statement of cause in any notice to terminate tenancy. See Section 1946.2 of the Civil Code for more information.”

For new and renewing contracts, this must be in place by July 1, 2020. For existing contracts, it must be in place by August 1, 2020. 

Getting your Rental Property Back

If you have a property that falls under AB 1842, then you have two very limited categories that define how you get the property back. 

There is the concept of at fault, just cause eviction which is tenant behavior issues, and we will talk about that in a different blog segment. 

Then, there are no fault evictions which are the owner’s choice, and there are a limited number of reasons why an owner might choose to get the premises back. 

Any termination of tenancy that is generated based on the “no fault just cause” will require the owner to provide to the tenant an amount equal to the last monthly rent paid by the tenant for the property. 

Reasons for a No Fault Eviction

The reasons that owners might be permitted to regain possession of the property through a no fault eviction include:

• An intent to occupy the property by the owner or their spouse, domestic partner, parents, children, grandchildren or grandparents as their primary residence
• For any contract lease extension entered into after 7/1/20, this allowance applies only if the tenant agrees

So how does the tenant agree to this? Remember the part about adding that specific verbiage to the lease? What if you add the following:

“This lease may be terminated if the owner, their spouse, domestic partner, parents, children, grandchildren or grandparents unilaterally decide to occupy the referenced property.” 

Adding this clause in with it, in 12 point font to each and every contract, allows family to move in. This is considered to be proper notice and accepted by the tenant. 

Furthermore, adding this clause into the lease extension/revision is considered to be “similar provisions” in defining “at fault” evictions.

• Withdrawal of the property from the rental market. You can decide you no longer want to be a landlord and give notice to the tenant and pay relocation costs
• Intent to demolish or substantially remodel the property. This does not include cosmetic improvements. It would include structural, electrical, plumbing or mechanical systems that require a permit from a government agency. It also includes abatement of hazardous materials including lead, mold or asbestos. It has to be something that cannot be accomplished in a safe manner with the tenants in place and that would require the tenant to vacate the property for at least 30 days.
• Owner’s mandatory compliance with a government agency or court order. This could relate to habitability that necessitates vacating the unit or a court order or local ordinance to vacate the unit. 

Meeting the Obligation of Relocation Costs

If it’s determined by a governmental agency or by court that the tenant is at fault for the conditions triggering the order to vacate the unit, the tenant is not entitled to relocation assistance. If an owner issues a termination noticed based on a permissible “no fault” cause, the owner shall do one of the following:

• Provide to tenant a direct payment equal to the last full month rent paid by the tenant to the owner
• Waive in writing the payment of rent for the final month of tenancy, prior to rent coming due

If the owner chooses to waive the rent, the owner shall provide a notice stating the dollar amount of rent waived and that no rent is due for the final month. If the owner chooses to make a direct payment, the payment must be made to the tenant within 15 calendar days of service of the vacate notice. If the tenant fails to vacate after the expiration of the notice to vacate, the actual amount of assistance paid or rent waived “shall be recoverable as damages in an action to recover possession.”

The relocation assistance required by AB 1482 shall be credited against any other relocation assistance required by any other law. The owner’s failure to strictly comply with this procedure shall render the notice of termination void. This basically says there is no room for error. 

Please contact us at DeDe’s Rentals if you need help applying this to your investment property. We know that it’s complicated, and it will probably only get more complex. Please remember – I am not an attorney and if you have questions please contact your attorney for legal advice.

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The Tenant Protection Act, AB 1482, is a new law affecting all of California, and it can be broken out into five major subject matters. Today, we are going to talk about exemption for single-family residences. 

Please remember that we are early in the process with this law, so we’ll be working out the details for months. Processes, recommendations, and impacts are likely to change as this legislation is implemented and better understood. Every housing situation is unique. Please contact an attorney for specific legal advice. 

AB 1482: An Overview

AB 1482 is a rent control law. It caps the amount of rent increases on most properties that are impacted to no more than 5 percent plus Consumer Price Index (CPI) on an annual basis. If CPI exceeds 5 percent, the cap is a maximum 10 percent gross. 

Additionally, just cause evictions apply to those properties that are impacted, which restricts a housing provider’s authority to remove residents to a limited list of reasons. And in some of those instances, relocation costs are required to be made payable by the owner to the resident.

AB 1482 Exemptions

AB 1482 states that this law shall not apply to the following:

• Residential real property that is alienable separate from the title to any other unit. Alienable separate means you are able to sell one part of the unit without having to sell the other parts of the unit.  This applies to single-family residences and condominium units. If you have a duplex, you can’t sell one half of the duplex. However, in a condo, although it is in a community of maybe hundreds of other properties, you own one specific space. That is why a condominium is considered alienable separate and a duplex is not. 

This clause in AB 1482 states that is shall not apply to the following:

• Residential real property that is alienable separate from the title to any other unit provided that both of the following apply. The owner is not:

1. A real estate investment trust (REIT), a corporation or a limited liability company (LLC) in which at least one member is a corporation
2. The tenants have been provided written notice that the residential real estate is exempt from this section using the following statement:

“This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12 (d)(5) and 1946.2 (e)(8) of the Civil Code and the owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation.”

Both must apply. It is conceivably possible to LOSE exemption on a condo or single family home by failing to provide the necessary notice to tenants. 

To protect exemption, that statement must be included in any tenancy initiated or renewed on or after July 1, 2020. For tenancies existing prior to July 1, 2020, a written addendum must be added no later than August 1, 2020. Notification must be given in 12 point font.

The provisions of AB 1482, including exemptions for new construction, single-family homes, condos, and other particulars are specific to AB 1482. Theoretically, if Costa-Hawkins is overturned, even these exemptions may be at risk. It is very important that you remain informed and very important that when the opportunity comes, you vote. 

Please contact us at DeDe’s Rentals if you have any questions or need any guidance or assistance with your investment properties. I am not an attorney and if you have questions please contact your attorney for legal advice. 

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The Tenant Protection Act, AB 1482, is a new law affecting all of California. It can be broken out into five major subject areas, and today we are focused on rent caps and vacancy decontrol. 

First off, we are so early in the process that we’ll be working out the details for months. Processes, recommendations, and impacts are likely to change as this legislation is implemented and better understood. Every housing situation is unique. Please contact an attorney for specific legal advice. 

AB 1482: An Overview

AB 1482 is a rent control law. It caps rent increases to no more than 5 percent plus the amount of the Consumer Price Index (CPI). If CPI exceeds 5 percent, the cap is a maximum 10 percent. Additionally, there is just cause required for those properties that are impacted, which restricts a housing provider’s authority to remove residents to a limited list of reasons. And in some of those instances, relocation costs are required to be made payable by the owner to the resident. 

AB 1482: Updating Lease Agreement Verbiage

If you have a property that is not exempt, and we have spoken previously about the various exemptions, it is mandatory that you put in your rental contracts the following lease verbiage in 12 point font:

“EFFECTIVE AS OF JANUARY 1, 2023, California law limits the amount your rent can be increased. See Section 1947.12 of the Civil Code for more information. California law also provides that after all of the tenants have continuously and lawfully occupied the property for 12 months or more or at least one of the tenants has continuously and lawfully occupied the property for 24 months or more, a landlord must provide a statement of cause in any notice to terminate tenancy. See Section 1946.2 of the Civil Code for more information.”

For new and renewing lease agreements, this must be in place by July 1, 2020. For existing contracts, it must be in place by August 1, 2020. 

Consumer Price Index

The CPI is a measure of inflation. It is established and measured by the Bureau of Labor Statistics. In order to get the information, you can actually go online and search for “Bureau of Labor Statistics CPI Western Cities Summaries.” That will bring you the CPI Statistics page which you are looking for. 

It’s an archive page going back months and years, and you want the report for April of whatever year is in question. While rates are measured and reported throughout the year, the only statistic that matters is the annualized CPI rate reported for April. There are certain metro areas in California that measure for their specific metro area:

• San Francisco-Oakland-Hayward
• Los Angeles-Long Beach-Anaheim
• Riverside-San Bernadino-Ontario
• San Diego-Carlsbad

What happens if you’re not in one of these areas? 

In that instance, you are going to be measured by West. West A or West B/C is determined by the population of the county. 

Understanding Permissible Rent Increases

Rent can be increased in no more than two increments during any 12-month period, and the cumulative total is not to exceed the allowable annual cap. For example, let’s say as of January 1, you increase the rent 5 percent because you know you are allowed to increase it by five percent. Then, on July 1, and I say July 1 because April’s report is released in May, and you need to provide a 30-day notice before raising rent. So, your next rental increase wouldn’t go into effect until July 1.  

Vacancy Decontrol and the Law

When a property is vacant, rent caps do not apply. 

If you have a property that is vacated, you can adjust it to whatever the “fair” market rate is, even if the increase is more than 5 percent plus CPI. Once the unit is re-occupied, rent caps once again apply. 

Rent Cap “Look Back”

The writers of this law did not want evil landlords to increase the rent more than the allowable amount. 

AB 1482 establishes rent caps based on actual rent charged as of March 15, 2019. If, prior to AB 1482 but after March 15, 2019, a housing provider increased rent on a qualified unit by more than 5 percent plus CPI, rent must be adjusted down as of January 1, 2020 to no more than the allowable 5 percent plus the CPI increase. Owners do not need to remit to residents any excess payments (above 5 percent plus CPI) received in 2019. 

These are the links for AB 1482 and the Bureau of Labor Statistics. You can type these in and get right to the information yourself. 

AB 1482 Text:

http://legalinfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB1482

Bureau of Labor Statistics, Western Region Summaries

https://www.bls.gov/regions/west/cpi-summary/home.htm

Please contact us at DeDe’s Rentals for more information on this complicated law, which will likely only grow more complex. As I said before, I am not an attorney, so please contact your lawyer for legal advice.  

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The Tenant Protection Act of 2019, or AB 1482, is a complex new law affecting all of California. 

It can be broken down into five major subject matters, and today we’re going to discuss age restricted exemptions and a few other exemptions that might apply. 

We are early into this process with the new law, so best practices, policies, and patterns may not actually be solidified yet. But, this is the best information I have at this point. Also, every situation is unique. If you need legal assistance, be sure to contact your attorney. 

AB 1482: An Overview

AB 1482 is a rent control law limiting the amount of rent increases to no more than 5 percent plus whatever the Consumer Price Index (CPI) dictates. If the CPI exceeds five percent on its own, there is a hard cap on how much you can increase rents, which is no more than 10 percent annually. In some instances, you can request or require a tenant to vacate the premises because of this law. But, you may be required to provide the tenant with relocation losses. 

Types of Exemptions

There is a list of exemptions within this law. 

One of those exemptions applies to single-family homes and condominiums. In addition, dorms, universities, boarding schools, etc., are not subject to rent control. Hospitals, elder care facilities, religious facilities, hotels, and deed restricted low-income communities do not have to comply with this law, either. 

Housing that is already subjected to a more restrictive form of rent control escapes this law as well. Duplexes may be exempt but only in those instances when the owner resides in one part of the property and maintains it as their primary residence. 

Owner-occupied single family residences with no more than two Accessory Dwelling Units (ADUs) as well as the ever growing tiny homes are exempt. If you have one or two tiny homes, this law would not apply to you. If you are in a share rental situation and you are the owner and you live on the premises and you rent out one or two private spaces like a bedroom or bedroom/bathroom combination but you have shared kitchen and living spaces, rent control would not apply to you. 

15-Year Exemptions

The big exemption that would apply to many of the owners we work with is housing that has been issued a certificate of occupancy within the previous 15 years.  As a reminder, the Costa-Hawkins Act is the law and has been the law since 1995. This act prevents the institution of rent control in single-family residences and condos but also prohibits the institution of rent control on properties built after 1995. 

For example, if your property was built in 1996, no matter how big it is, it doesn’t fall under Costa-Hawkins. But, AB 1482 changes that because of the reference to housing that has been issued a certificate of occupancy within the previous 15 years. Unlike Costa-Hawkins, AB 1482 does not set a definite date after which you are exempt. Costa-Hawkins says December 31, 1995, and everything after that is exempt.

So, the important question for you is: how old is your property? 

AB 1482 Exemptions: Some Examples

For example, we have a duplex, and in the summer of 2019, we rented both sides of this unit. It got a certificate of occupancy in July of 2019, which basically means that it’s exempt for 15 years through July of 2034. 

Another example is a larger apartment complex we manage on 14th Street. This building received its certificate of occupancy in August of 2017. It’s exempt through August of 2032. 

Older properties such as Annadel Apartments, a complex with hundreds of units, was built in April 2014. This property would be exempt through April of 2029. 

We have many single-family homes with in-law units. One of them is not owner-occupied and it was built in November of 2007. It’s exempt through November of 2023, which is only a few years from now. 

One of the properties we manage in southwest Santa Rosa had a certificate of occupancy issued in May of 2004, meaning that 15-year exemption expired in May of 2019. Therefore, this property is no longer exempt. 

Updating Your Lease Verbiage

Unlike those properties that are classified as exempt or non-exempt, age-exempt units seemingly have no statutory verbiage. This must be included in tenant rental contracts or revisions must be included until their exemption expires. Once the 15-year exemption date is imminent, begin adding the non-exempt verbiage. 

For example, it should say the following using this verbiage in 12 point font:

“EFFECTIVE AS OF JANUARY 1, 2023, California law limits the amount your rent can be increased. See Section 1947.12 of the Civil Code for more information. California law also provides that after all of the tenants have continuously and lawfully occupied the property for 12 months or more or at least one of the tenants has continuously and lawfully occupied the property for 24 months or more, a landlord must provide a statement of cause in any notice to terminate tenancy. See Section 1946.2 of the Civil Code for more information.”

Understanding the AB 1482 “Sunset Date”

AB 1482 is written in a way to repeal the law on January 1, 2030. Therefore, theoretically, the two duplexes I mentioned earlier would never be under rent control because this law will expire before the 15 years comes up. That is, of course, as long as AB 1482 is allowed to sunset. 

AB 1482 Enforcement

As long as AB 1482 is in effect, after age-specific exemption expires on a particular unit, that unit will thereafter need to comply with all applicable rent caps and just cause provisions. The provisions of AB 1482, including exemptions for new construction, single-family homes, condos, and other particulars are specific to AB 1482. Theoretically, if Costa-Hawkins Act is overturned, even these exemptions may be at risk. 

It’s extremely important that you stay informed and when the opportunity arises, you vote. This whole thing is complicated, and will only get more so. If you have questions, contact us at DeDe’s Rentals.

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The pressing question is: what on earth is happening with rent control in Santa Rosa? I can tell you, because I was there. In my previous blog I gave you a quick overview about rent control, and now I will share a more in depth analysis.

Santa Rosa Rent Control and the City Council

There was a city council meeting on August 16, at which time an ordinance which had been created by an independent consultancy was submitted to and reviewed by city council members. It was brought up for discussion and debated at great length. In some ways, it was amended on the fly to make it even more stringent for landlords. It was passed that evening. The ordinance will come up for a second reading during the city council meeting on August 30. If the second reading is approved, it will go into effect as of September 29, 2016, and will impact a number of properties in Santa Rosa.

Property Management Santa Rosa: Who is Impacted?

There is not necessarily any wiggle room to do much before September 29. There are already temporary rent control and just-cause moratoriums in place. Those were instituted previously as a “place holder” to create tenant protections until a permanent ordinance could itself go into effect. There is a small silver lining. This ordinance will only impact the properties that are also impacted by The Costa Hawkins Act. That means multi-unit buildings built before February 1, 1995. Furthermore, this ordinance will only affect units within Santa Rosa city limits. The city has additionally clarified that they will be applying this ordinance only to fourplexes and above, and also triplexes if the owner is not one of the residents of those three units. So, single family residences, condos, duplexes and owner-occupied triplexes are all excluded from this ordinance at present. That’s not to say it can’t be tightened up by an additional measure at some point in the future. I am seriously concerned that this is a possibility. I’m also seriously concerned because the county of Sonoma and other surrounding locations are keeping a close eye on Santa Rosa. The success of the rent stabilization ordinance in Santa Rosa may impact what other cities and the county may consider.

What the Ordinance Includes

Rent Rollback

This ordinance includes a rollback, which means there is now a benchmark. The rent you were charging on January 1, 2016, is the measurement of what the allowable rent is. If you raised it more than 3 percent since January, it is considered unenforceable by the verbiage of this ordinance. How that is going to be reversed has yet to be determined. We don’t know if you’ll have to refund rent to your tenants or what, but January 1, 2016, is the rent at which you need to base any rent increase calculations.

3 Percent Rent Increase Cap

There is a 3 percent cap on rent increases, except for those instances where you have instituted major capital improvements. Those improvements must be submitted to a program administrator for approval before you pass the cost onto your tenant. The formula for figuring out whether you can pass the costs of those improvements on to your tenant is itself complicated. The cost has to be 8 times the monthly rent for all units impacted. So, if you have a fourplex and all of those units rent for $1,000 per month, the major capital improvement must exceed $32,000 even to be considered for a “pass through”.

Notice to Vacate Restrictions

There are extensive tenant protections against notices to vacate, including details that could conceivably mean that tenants would have a life estate. As the ordinance is written, the tenancy may conceivably even pass from generation to generation. Approved notices to vacate would require the landlord to pay relocation costs, in an amount equal to three times the monthly rent plus $1,500. And this isn’t 3 times the monthly rent that you are charging. For example, if you were being generous and conservative as a landlord and only charging tenants $1,000 for a three-bedroom unit, but then you need to ask them to leave, you won’t be paying 3 times $1,000. You would need to pay 3 times what they will have to pay in the present market, which could be more than $2,000 per month. So, do the math. That becomes $7,500 or more. And, in addition to the other powers granted to the program administrator, THEY determine what the average present rent value is for any particular unit.

Pro-Tenant Protections

The ordinance establishes a new bureaucracy, including a program administrator and staff to oversee both the rent stabilization program and the capital improvement component. The initially calculated budget is already anticipated to exceed $1 million annually. That budget does not reflect additional program administrator duties that have been added during the 8/19 review, so the cost is likely to INCREASE. In many ways, intentionally or unintentionally, this ordinance was constructed in a way that if you, as the landlord, do not abide by it exactly and precisely, it could blow up in your face.

An official from the North Bay Organizing Project, a pro-tenant advocacy group, has called the August 16 vote “the most significant tenant protections passed in California in the last 30 years.” If you are familiar with the various rent controls that have been passed in California over the past three decades, you’ll realize that this is an onerous statement. Seemingly, in each instance, when the city council could have chosen a measure that would have helped landlords and property owners or tenants, the default choice was always to provide greater protection for tenants at the expense of the landlord.

Previously, in my last blog I said that Santa Rosa property management can be a challenging business. This ordinance, with its choices and impact, makes the business even more challenging. There are numerous, smart professionals who are committed to protecting your interests, even in the midst of this chaos. If you are a property owner in Santa Rosa, there are ways you can help influence the dialog at city council. If you are a property owner, DeDe’s Rentals can help you succeed, even in this difficult market. Please contact us at DeDe’s Rentals. We’re here to help simplify your life.

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If you’re wondering what’s happening with rent control in Santa Rosa, a rent stabilization ordinance is working its way through the city council. The proposed regulation has been approved on its first reading, which happened during a city council meeting on August 19, 2016. The second reading will be on August 30, 2016, and if passed, this ordinance will go into effect on September 29, 2016. Most importantly, the ordinance will only affect properties within Santa Rosa city limits. So if you have investment properties that are NOT in Santa Rosa, this will not affect you.

Santa Rosa Rent Control and Costa Hawkins

California has a state-wide law – The Costa Hawkins Act – which limits those properties that would be “protected” by the implementation for rent control. The only properties subject to rent control under Costa Hawkins are multi-family properties that were constructed before February 1, 1995. Our city council used that law as the guideline for our local ordinance, but they included certain allowances. For example, as written, Santa Rosa’s ordinance will not apply to single family residences, condominiums, duplexes, or triplexes when the owner is living in one of the three triplex units. Otherwise, triplexes, fourplexes and larger apartment complexes built before 1995 are affected.

Ordinance Details

This ordinance has many details, so I’ll give you a high level overview of the most significant impact.

• For affected properties, you can only raise rents by 3 percent per year.
• If you perform significant capital improvements, you may be able to pass those expenses on to the tenants, but there is a complicated formula for the pass-through, and your plan to pass costs on to tenants (as an additional rent increase) has to be approved by a program administrator.
• There are new restrictions covering when you can and cannot give notice to a tenant, asking them to vacate the unit. In some cases, if you ask them to vacate, you could be required to pay moving costs in the thousands of dollars.
• There will be an annual “administration cost” for this rent stabilization program; one half of the cost borne by property owners, the other half passed through to tenants as a nominal monthly fee.

There’s much more to tell you about this ordinance since, as they say: “the devil is in the details.” In this case, there are a lot of details.

I created another property management Santa Rosa blog with additional information. Please feel free to check that out, or you can contact me at DeDe’s Rentals. Santa Rosa property management is a complicated business, and never so much so as the present. We are here to make your life simpler.

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The topic of rent control in Santa Rosa is a rapidly progressing and ever-changing issue. The developments in May of 2016 have put us right into the middle of negotiations over what rent control will actually look like in Santa Rosa. So, let’s review what type of properties it’s likely to affect. Remember that the devil is in the details, and most of those have not yet been established.

Buildings Affected by Rent Control

Rent control throughout California is governed and limited by the Costa-Hawkins Act, which states that municipalities can only institute rent control on multi-unit buildings that were constructed prior to Feb 1, 1995. Therefore, single family residences are not restricted by rent control. Buildings – even multi-unit buildings – constructed after 1995 do not fall under rent control. At present (as reflected in the recently-enacted rent control moratorium), the Santa Rosa city council has also carved out an exclusion for all duplexes and for certain triplexes, those where one of the three units is occupied by the building owner. Lastly, these regulations will presently only affect properties within Santa Rosa city limits. So, if you have an investment property in Sonoma County and you’re worried about the impact of rent control, first verify whether your property actually falls within these parameters: if your property is not in the city of Santa Rosa, this issue does not affect you – yet. If you are in Santa Rosa and you have a single family residence, rent control will not directly affect you. Same if you own a duplex. But if, for example, you have an eight unit building built in 1956, this will substantially impact your future operation and finances.

Moratorium and Just Cause Eviction

That’s the primary issue – which properties are affected and which are not. There are more details to review, in terms of what latitude will be permitted re rent increases year over year, and there is also the thorny issue of “just cause eviction.” In many ways, Just Cause Eviction is even more problematic than rent control itself. You also have to be familiar with the Moratorium that is already in effect, implemented as a temporary measure while the city of Santa Rosa creates and executes their final rent control ordinance. The moratorium is designed to provide emergency a rent freeze – but once again, only to certain tenants.

I’ve said it previously: property management can be complicated. It’s our goal to help simplify your life. On this particular topic, there are many interlocking pieces adding up to a very complex picture, so we’ll continue to follow it closely. Check out our other blogs on rent control or any of the various subjects we’ve addressed. Alternately, feel free to contact us directly at DeDe’s Rentals.

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Over the course of the last year, Santa Rosa’s city council has been intentionally attempting to craft a rent control ordinance, due to the disparity between supply and demand. The lack of housing throughout Santa Rosa and Sonoma County has caused a dramatic increase in rents, particularly over the last four years. Many analyses show that over this period of time, average rents have gone 40 percent or more. Santa Rosa’s city council is in the midst of creating an ordinance that’s intended to be a permanent rent control structure, designed to protect a certain percentage of tenants in the city. In the meantime, they have instituted what is identified as a Moratorium.

Rent Control Moratorium status, as of May 2016

This is a rapidly changing and developing situation. You may be wondering what this moratorium means for landlords. It’s effectively a temporary freeze on rent increases that stays in place while the city of Santa Rosa creates a permanent ordinance. An ordinance simply cannot be instituted immediately; it will take considerable time and effort to craft, review and approve. The council is concerned that if they take three or five months that might be necessary to create and vote on a permanent ordinance, some landlords might take advantage during that period, and raise rents excessively. Santa Rosa’s rent control moratorium is intended to prevent that from happening.

Moratorium Begins June 18, 2016

A first vote and reading of the moratorium took place on May 10, 2016. A second reading occurred on May 17th. This procedure was sufficient to allow the moratorium to begin thirty days hence – on June 18. In a limited sense, it mirrors what the actual ordinance is likely to include. The verbiage says that if you own a property that falls under the auspices of rent control (multi-unit properties, larger than a duplex, built before 1995), you cannot institute a rent increase of more than three percent over the course of a 12-month period. The moratorium also specifies that, if you instituted a rent increase on March 1 of 2016 (for example), and the moratorium goes into effect June 18th, you do not get the benefit of an additional three percent allowance starting that date. If your previous increase already exceeds three percent, you will not be allowed an additional increase for at least 12 months.

The moratorium was initially passed for a 45-day period, but it is able – and likely – to be extended by as much as six months, until the city manager completes the creation of the ordinance, submits it to the council for approval and the council votes it into law. Given the dynamic of the city council, there is no reason to believe that, when submitted, it won’t be approved.

I’ve said it previously: property management can be complicated. It’s our goal to help simplify your life. On this particular topic, there are many interlocking pieces adding up to a very complex picture, so we’ll continue to follow it closely. Check out our other blogs on rent control or any of the various subjects we’ve addressed. Alternately, feel free to contact us directly at DeDe’s Rentals.

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Due to a disparity in the supply and demand for housing in Santa Rosa over the course of many years, we have come to a crisis. There are more people looking for rental properties than there are properties available. Rents are increasing, and they have been increasing dramatically. The city council is presently crafting an ordinance which will effectively institute Rent Control in Santa Rosa. The city manager’s office is working on the details. Early reports seem to indicate that they may be looking at an ordinance already in effect in the city of Alameda as their template. If you review Alameda’s existing rent control law, you will be able to evaluate the individual “ingredients” already in place. In Santa Rosa, nothing is yet set in stone. However, if our ordinance is anything like Alameda’s, this is what will likely be established:

Maximum Rental Increase

If your property falls under the governance of rent control, the amount you can increase your rent each year will likely be capped at 3 percent. An immediate consideration, important solely at the time the ordinance is instituted, is the concept of “clawback.” Clawback relates to rent money already collected by the landlord prior to the institution of rent control. For example, you might have raised rent by 10 percent in February 2016. Imagine that a rent control ordinance goes into effect on September 1, 2016 and it says that you can only increase rent up to 3 percent STARTING JANUARY 1, 2016. That means that you EXCEEDED the allowable amount by 7% each month starting in February, so that overage must be returned to the tenant. This concept has been included – and frequently removed thereafter – from a number of the ordinances instituted in cities throughout California.

Rent Control Oversight

The governing body in each city – ie city council – must determine how rent control oversight will be implemented. In Santa Rosa, that has not yet been established. We don’t know if it will be regulated by an agency within the city or through the court systems. If through the city, will it be an expansion of an existing agency, or a new agency? In Sonoma County, this proposed ordinance will only pertain to multi-unit buildings, meaning triplexes and above, built before 1995, and located within Santa Rosa city limits. So far, this ordinance not affect other cities or unincorporated areas of Sonoma County. However, if an ordinance is passed in Santa Rosa, it’s more likely that such a policy will be seriously considered by other communities in the future.

Just Cause Eviction

In order to prevent landlords removing tenants simply to re-rent a rent-controlled property for higher rent, the ordinance will undoubtedly include a limited list of reasons why a landlord could insist that an established tenant leave the rental property. Given the complexity of that particular issues – and its far-reaching implications, we will address that subject in more detail, with a separate video and blog.

In the Alameda template, there’s an interesting consideration, wherein if you ask a tenant to leave, even for a justifiable reason, there might be a cap on the new market rent you’d be able to command – in other words, it’s possible that you’d be prevented from increasing the advertised rent on a vacant property by more than a set percentage.

This is detailed, complicated, and messy. I am personally convinced that it’s counter-intuitive, but passing a Rent Control ordinance is the political will of a majority of the Santa Rosa city council and, as a result, it is almost certain to be the law of the land before the end of 2016.

I’ve said it previously: property management can be complicated. It’s our goal to help simplify your life. On this particular topic, there are many interlocking pieces adding up to a very complex picture, so we’ll continue to follow it closely. Check out our other blogs on rent control or any of the various subjects we’ve addressed. Alternately, feel free to contact us directly at DeDe’s Rentals.

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