NEW REAL ESTATE LAWS FOR 2020
By Sean Dinsmore
P
er usual, California has passed a multitude of new laws that take freedom away from invest-
ment property owners and put it in the hands of tenants. The State is also proposing a new
measure that would re-assess commercial properties (valued over $3m) on a yearly basis for
property tax reasons, as opposed to the current method of taxing the purchase value plus yearly
increases. I don’t want to open up a political debate, but seriously, how long is it before all small
business owners and property owners just vacate the state completely, taking their assets with them.
As much as 90 percent of my clients are small business owners, upper-level executive/management,
and investment property owners. More than 60 percent of them who sold in 2019 moved out of
state (and that percentage has been rising by 10 percent year over year). If California legislators don’t
wake up soon, they are going to end up with a state devoid of assets, stuck with only people with
their hands out. Ok, rant over, on to the new laws.
AB 1482 Imposes Statewide Rent Control And Just Cause Eviction
California landlords are now subject to statewide rent control with annual rent increases capped at 5
percent plus infl ation, up to a maximum of 10 percent per year. This cap applies retroactively to all
rent increases since March 15, 2019. Assembly Bill 1482 also includes a just cause provision, which
means that landlords can no longer terminate month-to-month tenancies at will. They now must
point to one of 15 specifi c reasons—some “at fault” and some “no fault”—to justify evicting a tenant.
An “at fault” termination generally involves a tenant having breached their lease (by not paying rent,
using the property illegally, etc.) and does not require the payment of relocation assistance. A “no
fault” termination takes place when the tenant has not breached the lease, but the owner’s decision
(to occupy the property, to take the property off the rental market, to undertake substantial remod-
eling, etc.) does require them to pay the vacating tenant in the form of relocation assistance. Note
that there are exemptions to this law. The just cause provisions only protect tenants who have been
in possession for a year or more, and certain types of housing are exempt (including single-family
homes and condos if tenants have received notice of the exemption and the owner is not an REIT or
corporation, homes built within the last 15 years, owner-occupied duplexes, and more).
What does this mean for you
you? If you own rental property, you will need to keep yearly rent increas-
es below the permissible maximum. You will also want to keep this law in mind when considering
selling a rental property, as you will need to have tenants vacate to do so.
Top Producing Team
Gilroy Intero, 2015-2018
Sean Dinsmore, Realtor
Intero Real Estate Services
www.TheDinsmoreTeam.com
408.710.2855
DRE #01966405
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AB 1110 Requires a 90-Day Notice for Rent Increases Above 10 Percent
Previously, a 60-day notice was required for rent increases above 10 percent; the new law ex-
tends that to 90 days. Note that a proposed rent increase must be combined with all other rent
increases in the 12 months prior to the rent increase date; that total must be less than 10 percent
to get around the 90-day notice. For increases of 10 percent or less, the notice period remains 30
days. Keep in mind that with the passage of AB 1482, an increase of more than 10 percent within
any 12-month period will only be permitted for housing that is exempt from the statewide rent
cap law.
What does this mean for you? If you own rental property that is exempt from AB 1482, you are
allowed to raise rent by more than 10 percent within 12 months, but you will need to give a 90-day
notice before doing so. But remember: A declared state of emergency may limit your ability to raise
rent by more than 10 percent.
SB 329 Prohibits Landlords from Refusing Section-8 Tenants Outright
Landlords may no longer refuse to rent to a tenant solely based on their participation in a housing
voucher program such as Section 8. Doing so constitutes illegal “source of income” discrimination.
However, landlords remain free to decline prospective tenants provided they do so on otherwise
lawful grounds that are not based on a tenant’s receipt of a housing subsidy. Landlords remain free
to charge rents as allowed under law and do not have to reduce rents to make units affordable to
voucher holders. Further, landlords can continue to use appropriate fi nancial and income standards
when making rental decisions, like verifying income levels or checking credit worthiness. But land-
lords no longer have the option to forgo participation in housing subsidy programs when presented
with a prospective tenant who is qualifi ed to rent from them in all other respects.
What does this mean for you? If you own property, you cannot refuse Section 8 vouchers outright.
Keep that in mind when fi lling vacancies.
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GILROY • MORGAN HILL • SAN MARTIN
SPRING 2020
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