Learn how this new act will affect landlords of residential properties.
The Tenant Protection Act of 2019 (AB 1482) went into effect on January 1, 2020. However, what does this act mean for California’s residential landlords? Your commercial realty advisors report on the act and the consequences that it has for the state’s property owners.
AB 1482 brings two major changes for California’s residential landlords. First, it imposes a cap on annual rent increases. Under the act, landlords must limit rent increases at 5% of the gross rental rate plus the change in cost of living, capped at 10%. While landlords are allowed to set a new rental rate after a unit becomes vacant, subsequent rental increases are still subject to the cap. Because this rental cap is imposed to respond to California’s current housing crisis, it is set to expire in ten years on January 1, 2030.
The other major change introduced by AB 1482 is a just cause requirement for terminating the leases of tenants who have lived on a property for 12 months or more. To fulfill this requirement, landlords must provide written notice explaining the just cause for the termination of certain tenancies. Just cause can be categorized as “at-fault” or “no-fault.”
At-fault just cause- Refers to lease termination based on the actions of the tenant, including failure to pay rent, breach of lease terms, criminal actions, improper subletting of the space, and so on.
No-fault just cause- Refers to lease terminations unrelated to the tenants’ actions. This can include intent by the owner to have family occupy the unit (assuming that the lease included a provision for such termination), the property being removed from the rental market, compliance with government or local ordinances, and so on.
Should a landlord terminate a lease on a no-fault just cause, then they must pay for tenant relocation assistance (equal to one month of rent) or waive rent for the tenant’s final month of residency. If the landlord fails to do either, then the termination will be void. Landlords must also inform tenants about their right to receive relocation assistance or the rent waiver.
These are some of the major changes introduced by the Tenant Protection Act of 2019, or AB 1482. Interested in staying up to date with the latest commercial real estate news? If so, then contact the experts at California Commercial Realty Advisors, Inc. Your commercial realty advisors are eager to assist you with all your real estate needs today.
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