California Passes AB 1482 – Statewide Rent Control

In 2019, California passed Assembly Bill 1482 (AB 1482), introducing statewide rent control to address rising housing costs and protect tenants from exorbitant rent hikes. This legislation has had a significant impact on landlords and tenants across the state, providing guidelines on how much rent can be increased annually and outlining tenant protections against unjust evictions. For landlords, especially those unfamiliar with these new regulations, understanding AB 1482 is critical to maintaining compliance and navigating the evolving rental landscape in California.

AB 1482 marks a pivotal shift in the state’s approach to rent control, impacting millions of rental units and creating new standards for the rental market. It’s crucial to break down what this law entails, who it affects, and what it means for landlords managing properties in California.

What is AB 1482?

AB 1482, also known as the California Tenant Protection Act of 2019, establishes two primary protections for tenants: a rent cap and “just cause” eviction standards. The rent control portion of the bill limits how much a landlord can raise the rent each year, while the eviction protections limit when a landlord can terminate a tenancy. These protections are aimed at creating a more stable rental market and safeguarding tenants from displacement due to rising costs.

Key Provisions of AB 1482:

1. Annual Rent Increase Cap: The law limits annual rent increases to 5% plus the local rate of inflation, or 10%, whichever is lower. This cap applies to most rental properties in California and is intended to prevent the kind of rent spikes that have made it difficult for tenants to afford housing in many parts of the state.
2. Just Cause Evictions: AB 1482 outlines specific reasons for evicting tenants, known as “just cause” standards. Landlords can only evict tenants for reasons such as nonpayment of rent, violating the terms of the lease, or if the landlord plans to occupy the unit or remove it from the rental market. Without a just cause, landlords cannot simply evict tenants, offering stronger protections to renters across the state.
3. Exemptions to AB 1482: While AB 1482 applies to a large portion of California’s rental housing, some properties are exempt. These exemptions include:

• Properties built in the last 15 years
• Single-family homes or condos, as long as the owner is not a corporation or real estate investment trust (REIT) and the owner has informed the tenants of this exemption in writing
• Certain affordable housing units

For landlords, this means that not every rental property falls under the law’s jurisdiction, and it is important to know whether or not your property is subject to AB 1482’s rules.

Understanding the Rent Cap

One of the most significant aspects of AB 1482 is the annual rent increase cap. For landlords, this means that rent hikes must be carefully calculated to ensure they stay within the limits of the law. The cap on rent increases is set at 5% plus the local Consumer Price Index (CPI), which varies by region, but never exceeds a total increase of 10%.

For example, if the local CPI is 2%, landlords can increase the rent by a maximum of 7% (5% + 2%). If the CPI is higher, say 6%, the landlord would still be limited to a 10% rent increase since that is the maximum allowed under AB 1482.

This cap resets every 12 months, so landlords need to be mindful of when they last raised the rent to avoid violating the law. Failure to comply with the rent cap could result in penalties and, potentially, legal action from tenants.

Just Cause Eviction Protections

In addition to the rent cap, AB 1482 imposes “just cause” eviction rules, meaning landlords must have a legitimate reason for evicting a tenant. This is a significant change from the prior norm, where landlords could issue a 30- or 60-day notice to terminate a tenancy without providing a reason, as long as they followed the required notice period.

Under AB 1482, there are two categories of just cause:

• At-Fault Just Cause: Includes reasons like nonpayment of rent, violation of the lease, criminal activity, or causing substantial damage to the property.
• No-Fault Just Cause: Covers situations like the owner deciding to sell the property, move into the unit, or withdraw it from the rental market.

For no-fault evictions, landlords are required to provide relocation assistance, typically equal to one month’s rent, to help the tenant with moving costs. Landlords need to be aware of these protections to ensure they handle evictions lawfully and avoid costly legal disputes.

Exemptions to the Law

While AB 1482 impacts a vast number of rental units, there are exemptions to the law. For instance, newly constructed properties—those built within the last 15 years—are exempt from both the rent cap and just cause eviction rules. This rolling exemption means that properties will eventually fall under the law, but only after 15 years have passed since construction.

Single-family homes and condos are also exempt, provided the owner is an individual, not a corporation or a real estate investment trust. However, to qualify for this exemption, landlords must inform their tenants in writing of the exemption at the beginning of the tenancy. If this step is skipped, the property may fall under AB 1482’s protections by default.

The Impact on Landlords

For landlords, especially those managing multiple properties, staying compliant with AB 1482 is essential. The law places new responsibilities on landlords in terms of how much they can raise rent and under what conditions they can evict tenants. Landlords must keep detailed records of rent increases and ensure that any eviction notices are issued in line with the just cause requirements.

However, AB 1482 also provides some stability for landlords by preventing sudden tenant turnover due to exorbitant rent hikes. By ensuring more predictable rental increases, landlords may experience fewer vacancies and more long-term tenants, which can benefit their overall rental operations.

Preparing for Compliance

To ensure compliance with AB 1482, landlords should take the following steps:

1. Understand whether your property is subject to the law by reviewing the exemptions.
2. Monitor local CPI rates to calculate rent increases accurately.
3. Document rent increases and eviction notices meticulously to avoid legal disputes.
4. Communicate clearly with tenants about any planned rent increases or just cause evictions to maintain transparency.

California’s passing of AB 1482 is a landmark move in the state’s housing policy, aiming to provide greater protections for tenants while maintaining a fair environment for landlords. For landlords, understanding AB 1482 is critical to navigating the rental market and staying compliant with the new regulations. By implementing the required rent caps and adhering to just cause eviction standards, landlords can ensure they are contributing to a stable and equitable rental market in California.

AB 1482 represents a significant change for landlords, but with proper planning and attention to detail, landlords can continue to thrive while adapting to this new regulatory landscape.