AB 1482

AB 1482 is California’s statewide eviction and rental price cap law, introduced by Assemblymember Chiu and signed into law by Governor Newsom. It is estimated to “extend tenant protections to roughly 4.9 million households that are not currently covered by local rent control policies”. It takes effect January 1, 2020 (although some of its provisions grandfather rental rates from 2019).

How is it different than existing law?
California cities have long been able to regulate rental housing prices (provided they allow landlords a fair rate of return). Likewise, they can impose substantive limitations on evictions (which reduce displacement and strengthen price protections).

Rent control ordinances proliferated in California through the early nineties – with some imposing strict vacancy controls that maintain registered rents even when the former tenant leaves. In 1995, California adopted the Costa-Hawkins Rental Housing Act, which regulates rent control ordinances at the state level.

Costa-Hawkins does this in two ways: (1) It deregulates certain kinds of dwelling units (like new construction and “separately alienable” single family homes and condominiums), and (2) it prevents strict vacancy control by allowing a landlord to set the initial rental rate for any new tenancy. Costa-Hawkins expressly does not affect local eviction controls, and it is a statement of what local governments cannot do with price controls, rather than a statement of what they may or must do.

California has also largely been silent on “just causes” for eviction until AB 1482. State law governs the timelines for evictions. The Civil Code details time periods for notices of termination, and the unlawful detainer statutes describes the requirements to use the summary eviction proceedings. The Ellis Act, effective 1986, was the only substantive grounds for eviction that the state required cities to include in any eviction control ordinance.

AB 1482 seeks to regulate both price levels and the substantive bases for eviction at the state level. It pays deference to existing rent and price controls at the local level, and it overlaps with Costa-Hawkins’ existing exemptions, adding certain qualifications for the “new construction” and “separately alienable” exemptions.

Eviction Controls:
Once a tenant has continuously occupied the dwelling for 12 months, the landlord needs “just cause” to terminate the tenancy. (Adding another adult tenant will “reset” the clock until at least one tenant has been there for 24 months.) ”Just causes” are either fault-based or non-fault.

(1) Fault Based:

  • (A) Default in the payment of rent.
  • (B) A breach of a material term of the lease (after written notice).
  • (C) Nuisance.
  • (D) Waste.
  • (E) Refusal to enter a lease for an additional term of similar duration.
  • (F) Criminal activity (committed at the premises, or committed anywhere if directed at the owner).
  • (G) Assigning or subletting the premises in violation of the tenant’s lease.
  • (H) Refusal to allow access.
  • (I) Using the premises for an unlawful purpose.
  • (J) Failure of an employee, agent, or licensee to vacate after termination.
  • (K) Failure to vacate after providing notice.

(2) Non-Fault:

  • (A) Occupancy for the owner or their spouse, domestic partner, children, grandchildren, parents, or grandparents.
  • (B) Withdrawal of the residential real property from the rental market.
  • (C) Compliance with an order issued by a court or administrative agency requiring the tenant to vacate.
  • (D) Intent to demolish or to substantially remodel the residential real property.

Relocation Payments:
For non-fault terminations, landlords must provide “relocation assistance” to tenants within 15 days of the service of the notice. The notice must inform tenants of their right to relocation assistance

The assistance is either a payment equal to one month’s rent, or a written waiver of the last month’s rent, and this applies regardless of the tenant’s income. However, if the tenant fails to vacate, the landlord can recover the amount of the payment as unlawful detainer damages.

Exemptions from Eviction Controls:

  • Hotels and other transient occupancy units.
  • Certain medical, religious or care facilities.
  • School-owned dormitories.
  • Certain owner-occupied housing, including:
    • Housing where the tenant shares bathroom or kitchen facilities with owner, who principally resides at the premises.
    • Single-family residences, provided the owner odes not rent more than two bedrooms/ADUs.
    • Duplexes, provided the owner resided there at the beginning of the tenancy and continues to do so.
  • “New construction” – defined as a tenancy with a certificate of occupancy issued within the last 15 years.
  • Separately alienable dwellings, provided that:
    • The owner is not a real estate trust, a corporation, or an LLC with a corporate member; and
    • The lease notifies the tenant of the exemption.
  • The housing is already regulated or deed-restricted as a below-market-rate unit.
  • The housing is already regulated by an existing, local “just cause for eviction” ordinance in effect prior to AB 1482, or one that is adopted afterward, but is more protective than AB 1482.

Price Controls:
AB 1482 provides for limitation on rent increases. This has been described as “anti-price-gouging” rather than “rent control” (perhaps because it allows for larger increases than the constitutional minimum). Labels aside, the price controls operate in a similar way.

During any 12-month period, the landlord may not increase the “gross rental rate” by any more than the lower of:

  • 10 percent; or
  • 5 percent plus the percentage change in the cost of living (where “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 Consumer Price Index for the region where the residential real property is located, as published by the United States Bureau of Labor Statistics).

These price controls apply to tenants in existing contracts, but do not apply when those tenants vacate. And, while tenants may continue to sublet if their leases allow it, they may not charge more to subtenants than they pay to the landlord.

The price controls in AB 1482 apply retroactively to the gross rental rate in effect on March 15, 2019, and in the event the rent has been increased in excess of these limitations by the effective date of AB 1482 (January 1, 2020), the rents will be reset to the maximum allowable rent as if it had been in effect in March 15, 2019 (however, the landlord would not be liable for any “rent overpayment” during that period).

Exemptions from Price Controls:

  • The housing is already regulated or deed-restricted as a below-market-rate unit.
  • Dormitories for use by students of an institution of higher education.
  • Housing subject to price controls through a local ordinance that is consistent with Costa-Hawkins
  • “New construction” – defined as a tenancy with a certificate of occupancy issued within the last 15 years.
  • Separately alienable dwellings, provided that,
    • The owner is not a real estate trust, a corporation, or an LLC with a corporate member; and
    • The lease notifies the tenant of the exemption.
  • Duplexes, provided the owner resided there at the beginning of the tenancy and continues to do so.

Lease Terms and Notification Requirements:
AB 1482 requires landlords to provide several notifications to the tenant as a condition of exercising their rights.

  • Landlords of newly regulated tenancies, and landlords entering or renewing any tenancies after July of 2020 must provide this disclosure: “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 a tenancy. See Section 1946.2 of the Civil Code for more information.
  • For owners who wish to occupy their property or allow family to occupy, the lease must “allow the owner to terminate the lease if the owner, or their spouse, domestic partner, children, grandchildren, parents, or grandparents, unilaterally decides to occupy the residential real property“. Leases entered after July 1, 2020 must include the language, but a landlord can add the language to any lease as one of the “similar terms” in a lease renewal.
  • For owners of single family homes who are qualified for exemption, they must include the following disclosure: “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.” This term may either be included in a new lease or added in a renewal.
  • Landlords must provide notice of the tenant’s right to relocation assistance along with any notice of termination of tenancy.

Problem Areas:
It is common for uncertainty to follow new laws until people start applying them in real life and courts have the opportunity to interpret them. AB 1482 appears to be “self-contained”, where it clearly identifies those units and tenancies it applies to.

However, it is situated within the context of decades of tension between state and local landlord-tenant law, which took for granted that state law was procedural, not substantive. Analysis of AB 1482 evictions may want to borrow from the law governing local eviction controls. However, in the case of owner/relative move-in evictions, AB 1482 does not define the required duration or state that they must be performed in “good faith”, which would seem to invite subjective interpretations and wrongful eviction lawsuits.

Likewise, “withdrawal from the rental market” is another just cause under AB 1482, but unlike with the Ellis Act, with its clearly defined scope, timelines and intent requirements, AB 1482 provides no guidance on how to withdraw or what portions of a property must be withdrawn.

Residential Rent and Eviction Control Resources