Rent Cap and Just Cause Eviction : Landlord/Tenant

Urgency legislation that took effect immediately on August 31, 2020.  Clarifies permissible rent increases under statewide rent cap law.  Clarifies the exemptions for a duplex.

Eliminates ambiguities under the Tenant Protection Act of 2019 as to exactly how to calculate the consumer price index for the applicable area -- giving the owner greater assurance that a given rent increase is legally permissible.  Clarifies that the exemption for a duplex applies to a single structure containing two separate dwelling units.

Under the Tenant Protection Act of 2019 (commonly referred to as the statewide rent cap and just cause eviction law or "AB 1482"), a landlord is permitted to raise rent by 5% plus inflation as indicated by the applicable Consumer Price Index.  But AB 1482 is ambiguous in describing precisely which Consumer Price Index ("CPI") measurement can be used.  These ambiguities are as follows:

1)  As passed AB 1482 did not specify which CPI measure is applicable such as the CPI-U for all Urban Consumers or some other measure such as the CPI-E or CPI-W.

2)  AB 1482 required that the CPI numbers for specified metropolitan areas rely on the CPI from April.

However, the US Bureau of Labor Statistics ("USBLS") does not include April numbers for San Diego, Riverside and San Bernardino counties.

3)  AB 1482 prescribed the use of the CPI for the "region" where the property is located as published by the USBLS.

However, the only "regional" number it publishes is for the "West Region" which covers the 13 westernmost states.

4)  AB 1482 is ambigous as to whether the CPI for a given metropolitan area covers every property within the county described.

5)  AB 1482 was silent on rounding up or down the CPI

6)  Any rent increase would be delayed since the USBLS lags in publishing its indexes.

These issues have been clarified as follows:

  • Each USBLS metropolitan area CPI indes is refered to specifically by name.
  • The applicable CPI index clearly applies to every property within the country of the metropolitan area
  • The word "region" is no longer used to refer to the metropolitan areas.
  • The CPI to be used for these areas i specifically the Consumer Price Index for All Urban Consumer for All Items.
  • If there is not an amount published in April for the applicable geographic area, the percentage change in the cPI is the percentage change in the amount published for March of the immediately preceding calendar year and March of the year before than.  This will be the case for the counties of San Diego, Riverside and San Bernardino.
  • Rent increases are divided into two categories:  Increases that take effect before August 1 of any calendar year, and increases that take effect on or after Ausut 1.  If the former, then the CPI percentage will be calculated using the percentage change in the amount published for April of the immediately preceing calendar year and April of the year before that.  If the latter, then CPI percentage be the percentage change in the amount published for April of that calendar year and April of the immediately preceding calendar year.
  • The percentage change in the CPI is to be calculated by rounding to the nearest one-tenth of 1 percent.
  • Finally, if the USBLS adds a new metropolitan area after January 1, 2021, the CPI-U for that area will apply.

Additionally, The exemption from the Tenant Protection Act of 2019 (commonly referred to as the statewide rent cap and just cause eviction law) for an owner-occupied "duplex" has been eliminated and replaced with the following exemptions: "A property containing two separate dwelling units within a single structure in which the owner occupied one of the units as the owner’s principal place of residence at the beginning of the tenancy, so long as the owner continues in occupancy, and neither unit is an accessory dwelling unit or a junior accessory dwelling unit."

These provisions were part of a larger bill Assembly Bill 3088 and are codified as Civil Code Sections 1946. 2, 1947.12 and 1946.13.  Effective immediately on August 31, 2020, as urgency legislation.

More laws affecting realtors and consumers here.

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