Surreal Estate Q&A #3: Effective Date of Costa-Hawkins; Decontrol of Newly Constructed Units


I have seen varying statements regarding the date before which a building must have been built in order to be subject to rent control laws under Costa-Hawkins. Some writing states that no unit in a building built in 1979 or later can be subject to rent control. However, other sources state (and as far as I can tell the law reads) that any unit in a building built before in 1995 or before could be subject to rent control.

Can you please resolve this confusion for me?

Thank you,

Jacob – Berkeley, CA


Thank you for your question. First, the year 1979 does not appear in Costa Hawkins. I’m assuming you got this date from the Berkeley Rent Stabilization and Eviction for Good Cause Ordinance. (Keep in mind that rent control is a local matter – Costa Hawkins is a state-wide law that decontrols rental rates under certain circumstances.)

The Berkeley Ordinance exempts “Newly constructed rental units which are completed and offered for rent for the first time after the effective date” of the Ordinance. (See, Section 13.76.050.) So, any new construction will not be subject to rent (or eviction) control of the Ordinance. This kind of language is common in rent ordinances, because the city legislatures want to protect existing tenancies but do not want to impair incentives for new construction. (After all, most of these ordinances were enacted in the late 70s/ early 80s to address shortages in “affordable, safe and sanitary housing”.

Costa-Hawkins became effective in 1996 (with some holdover dates from 1995 while its provisions phased in), and it made a similar distinction between existing property (with existing tenancies) and new construction, regulating the former and deregulating the latter (among other reasons, to avoid discouraging new construction). In fact, the California Court of Appeals just recently confirmed that the boundaries of the “certificate of occupancy” requirement from §1954.52(a)(1) of Costa-Hawkins in the case Burien, LLC v. Wiley: A landlord tried to take a structure with existing residential tenancies and deregulate it based on obtaining a new certificate of occupancy for change in use… the court held that this exception refers to the first certificate of occupancy for residential use, not any subsequently acquired one.)

As a practical matter… rental units are generally not regulated by local ordinances, like Berkeley’s, if they are certified for residential occupancy, for the first time, after the effective date of the rent control ordinance. This provision of Costa-Hawkins wouldn’t need to come into play, because the units are already free from rent increase limitations, so there’s nothing to deregulate.