While we’re all trying to keep up and understand the complexity of local, municipal, state and federal changes in rental property laws, we can’t forget to worry about being AB 1482 ready on top of it all. The bill has two major pieces, but in case you don’t know what this bill is or how it would affect landlords and property managers, here are some quick facts:
- The new law will require landlords to have a “just cause” when trying to terminate a tenancy.
- AB 1482 caps annual rent increases to a maximum 5% plus local CPI (inflation rate) OR 10% which ever of the two is lower.
- AB 1482 goes into full effect on January 1st, 2020 and will be in effect for 10 years.
- If a rental unit is already under a more specific local ordinance, this new bill will not replace it but would instead extend the local ordinance (in other words, cover any gaps the local ordinance does not cover.)
Time left before AB 1482 goes into full effect
Will all rental property be covered under AB 1482?
Unless your rental property falls under the list of exemptions below, all rental units in California will be covered by AB 1482.
Exemptions from both “just cause” and “rent cap” limitations
- All rental units constructed within the previous 15 years of the current date.
- A duplex where the second unit is occupied by the owner of the property.
- Single family dwellings are exempt only if:
- The property is NOT owned by a real estate investment trust (REIT) , a corporation or an LLC with at least one corporate member.
- The tenant was notified in writing by the landlord that the rental unit is exempt from both “just cause” and rent increase limitations.
- Any rental unit restricted by a deed, regulatory restrictions or other documents that limit the affordability to low or moderate income dwellings.
“Rent Cap” only limitation exemptions
- Any unit that is already under some sort of local rent control ordinance that limits annual rent increases to an amount below 5% plus CPI.
“Just Cause” only limitation exemptions
- Rental properties that are currently subject to local ordinance that require “just cause” to end a tenancy and is stricter than AB 1482.
- Situations in where the owner of the dwelling shares bathroom and kitchen areas with their tenant if the home is the owners principal address.
- If an owner occupied, single family home has no more than two rooms or units being rented.
- Housing provided to a tenant by a nonprofit organization such as a church, hospital, licensed extended care facility for adults, or an adult residential facility.
Are all tenants protected under AB 1482?
No. Not all tenants are protected under AB 1482. To be eligible for AB 1482 protections, one of the following two conditions must be met:
- All tenants must have lived in the same rental property for more than 12 months consecutively.
- If the first condition does not apply, then at least 1 tenant must have occupied the housing unit for more than 24 consecutive months.
Additional important info
“Just cause” reasons are considered either at-fault or no-fault. At-fault reasons are when the tenant violates part of the rental agreement such as failure to pay rent. No-fault reasons are when the tenant has no control for when the landlord wants to terminate a lease. Keep in mind, landlords must provide relocation assistance under no-fault reasons for eviction.
If the tenants are under AB 1482 protection, the simple reason for an expired lease is not considered “just cause” to terminate tenancy.
The landlord cannot have more than two rent increased within a 12 month period and the total rent increase amount within the 12 months cannot exceed the 5% plus CPI or 10% limit.
There is not rent increase amount limit on a vacant rental unit.
Are you AB 1482 ready?
Have you made any rent increases to your rental properties on or after March 15, 2019?
- Per AB 1482, the legal amount of annual rent increases cannot exceed 5% plus CPI (or inflation) annually.
- If any rent increases made on or after March 15th, 2019 AND the new increase violates AB 1482’s legal limit, THEN rent must be reverted back to March 15th, 2019 amount THEN recalculated to be the legal amount of 5% plus CPI going forward.
- Tenants are not entitled to overpaid rent refunds upon readjustment.
Do you have any AB 1482 exempt rental units?
If any of your rental units are exempt, you must provide written notice to your tenants.
For tenancies which have existed before July 1st, 2020, you must provide notice in writing to your tenant no later than July 1st, 2020 or can also be added as an addendum to your rental agreement.
For a tenancy which will have commenced after July 1st, 2020, the notice must be included as an addendum in your rental agreement or as a separate notice signed by the tenant at the time of move in. In both cases, a signed copy of this notice must be provided to your tenant.
CPI is calculated based off the “percentage change in the cost of living” which is calculated from April 1st of the prior year to April 1st of the current year and it is published in the United States Bureau of Labor Statistics. If this index is unavailable, then the California Consumer Price Index shall be used.
If you are not sure about how to calculate CPI, Widget’s Way members have access to a CPI Calculator based off your rental property’s ZIP code.
This reminder is VERY important because failing to be AB 1482 ready will lead to ANY notice you serve your tenant as of July 1st, 2020 being invalid. IF the court deems your notice invalid, then you may not proceed with legal eviction procedures.
I understand that this may come as another blow ontop of everything we’re already dealing with, but it is important to stay on top of it.
I am here to help!
I can help get you AB 1482 ready. If you have any questions regarding whether your rental unit is exempt or not, or where to find AB 1482 specific forms and notices, or additional questions on how this could affect you, please call me or write me!
- visit my contact page