We are planning on finding long-term renters for our single-family home for the first time. How have the laws changed for these types of rentals since AB 1482 passed?
In the midst of the pandemic and all of the ensuing chaos, many of us have forgotten that as of January 1, 2020, California now has statewide rent control. Indeed, this was the hot topic pre-pandemic, and now with life returning to normal, everyone should take some time to understand this almost 2-year-old law.
Firstly, note that AB 1482 does not apply to properties that come under the jurisdiction of a local rent control ordinance. This generally means that rentals in places like San Francisco, Oakland, Berkeley, and Los Angeles fall outside of the legislation’s purview because a more restrictive local ordinance already governs rent hikes. In San Francisco, that would include most housing built before June 13, 1979.
For properties subject to AB 1482, in any 12-month period, the property owner may only increase the rent in no more than two increments by up to 5 percent plus the regional percentage change in the cost of living (CPI), or 10 percent, whichever is lower. “Percentage change in the cost of living” means the percentage change from April 1 of the prior year to April 1 of the current year in the regional CPI for the region where the property is located, as published by the US Bureau of Labor Statistics.
New construction is exempted, meaning all housing that is issued an initial certificate of occupancy during the past 15 years will fall outside of AB 1482. Consequently, the date of exemption is rolling and changes every calendar year.
Also exempt are single family homes and condominiums no matter when constructed unless the owner is one or more of the following: (i) a real estate investment trust, also knows as a REIT; (ii) a corporation; or (iii) a limited liability company where at least one member is a corporation. In addition, a duplex is also exempt where the owner occupies one of the units as the owner’s principal place of residence at the beginning of the tenancy, and provided that the owner continues to live there. However, in San Francisco, the duplex exception only applies if the property was built post-June 13, 1979; otherwise, for pre- June 13, 1979 construction, the SF Rent Ordinance limits rent adjustments.
In order to receive the exemption, an exempt owner as defined above must provide the following written disclosure to the residents in the lease agreement:
“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)() 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.”
So in all likelihood, the home here will not be governed by AB 1482 provided it is not owned by a REIT, corporation, or LLC where one member is a corporation. Remember, though, that all rental units in the City now fall under the “just cause” for eviction requirements of the rent law regardless of when the building was built, so the tenancy will be subject to the Rent Ordinance for those purposes. Finally, some tenant attorneys are arguing that AB 1482 will apply to any San Francisco home and condominiums over 15 years of age that is owned by a REIT, corporation, or LLC with a corporate member because the Rent Ordinance generally excludes this housing from price restrictions, so you may want to consult an attorney to guide you with a final determination as to whether or not your tenants will receive AB 1482’s restrictions or exemptions.