AB -1842 potential new rental property ?

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AB -1842 potential new rental property ?

Guillermo Perea
Rental Property Investor · Los Angeles · Member since 2019 · 4 posts · 0 votes

Hey everyone,  I decided to buy a 3 unit building in Los Angeles not currently on Rent Control (was built in the 80s) Will AB-1482 affect me ? The existing tenants are paying way below market rents. 

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Mike Franco
Los Angeles, CA · Member since 2013 · 555 posts · 261 votes
7y

single family homes are not exempt for absentee owners.

And fixed term leases are not required to be renewed. 

Many people have the assumption that a fixed term lease automatically goes to month to month, but there is no law that requires that. Whatever you want to do at lease end, you spell it out in the contract.

For example, the C.A.R lease template states that tenants must vacate at the end of term, unless another agreement is made in writing. 

The only time a yearly lease would become a m2m automatically is when you keep accepting rent without writing up a new contract.

As the bill states, a lease term not specified, like a m2m agreement, would automatically renew every month. 

A fixed term lease, by definition, has a term specified, and all these rules do not apply.



Under California law neither the landlord nor the tenant is required to give notice at the end of a fixed-term lease, unless the lease says otherwise. In addition, the landlord has no obligation to negotiate a renewal with the tenant at the end of the tenancy.

With a fixed term lease, tenants are always under the assumption that they need to move at the end of the term. The benefit of the yearly or fixed term lease is that they have the comfort of knowing their rent won't get hiked up during the lease term.

m2m tenants are different. It used to be that they could get surprise rent hikes of any amount, and this bill aims to protect these people specifically.

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  • Mike Franco
    Los Angeles, CA · Member since 2013 · 555 posts · 261 votes
    7y

    it sounds like if it passes, it will affect you. 1482 affects all rental properties. There are exceptions though, proposed under section 1946.2 which may exempt SFR owners.

    What isn't clear to me is the distinction between eviction for just cause and just ending the tenancy for no reason. Under current law, you could give a month to month tenant a 30-60 day notice simply because they complain too much or  you just don't like them.

    If that is still allowed under 1482, you could give them a 60 day notice, then rerent at market rate.

    I hope 1482 does not mean we will be stuck with a problematic tenant.

    Worst case, you state your intent to move in, give tenant $800 for moving expenses as proposed by 1482, and then woops, rerent shortly after.



    (3) The amount of relocation assistance shall be equal to one month of the tenant’s rent that was in effect when the owner issued the notice to terminate the tenancy and shall be provided within five calendar days of service of the notice. The owner and tenant may also agree, in lieu of direct payment, to waive the payment of rent for the month after the notice is given.

    This stupid bill is another good reason to never let your lease lapse into month-to-month after the lease term ends, where it becomes a lease for "term not specified".

    I always have fixed term lease contracts with specific end dates. I renew leases by the year, and never do month to month. When the end of fixed term arrives, if I don't like the tenant, they're out, and I rerent at market rate.

    maybe it's time to consider fixed term leases instead of "term not specified".



    Existing law specifies that a hiring of residential real property, for a term not specified by the parties, is deemed to be renewed at the end of the term implied by law unless one of the parties gives written notice to the other of that party’s intention to terminate. Existing law requires an owner of a residential dwelling to give notice at least 60 days prior to the proposed date of termination, or at least 30 days prior to the proposed date of termination if any tenant or resident has resided in the dwelling for less than one year, as specified. Existing law requires any notice given by an owner to be given in a prescribed manner, to contain certain information, and to be formatted, as specified.

    This bill would, with certain exceptions, prohibit an owner, as defined, of residential property from terminating the lease of a tenant that has occupied the property for at least 12 months without just cause, as defined. The bill would require, for certain just cause terminations that are curable, that the owner give a notice of violation and an opportunity to cure the violation prior to issuing the notice of termination. The bill would require, for no-fault just cause terminations, as specified, that the owner assist certain tenants to relocate, regardless of the tenant’s income, by providing a direct payment of one month’s rent to the tenant, as specified. The bill would provide that if the owner does not provide relocation assistance, the notice of termination is void.

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  • Maya Roberts
    Rental Property Investor · Sunnyvale, CA · Member since 2019 · 60 posts · 40 votes
    7y

    Does anybody have a good link to learn more?  I'd prefer not to read the entire bill.  We have some rentals here in-state so it'd be advantageous to us to get educated.

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  • Mike Franco
    Los Angeles, CA · Member since 2013 · 555 posts · 261 votes
    7y

    california government website has a summary, but nothing has officially passed yet, so no sense worrying about it right now.

    there's nothing we can do.

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  • Kam T.
    San Francisco, CA · Member since 2008 · 59 posts · 50 votes
    7y
    It passed the assembly today. Governor Newsom just needs to sign it (which he already said he would do).The text of the bill isn't super long. I'd encourage you all to read it to get the specifics.I am not a lawyer but the language is fairly easy to understand. One thing to note is that the bill is in fact retroactive to March 2019, so any rent increases given over and above the limits specified between March and now will be null and void come Jan 1, 2020 (though you won't have to return any excess rent if you did give an increase above the specified amounts).

    @Mike Franco

    I personally wouldn't attempt what you're suggesting around owner move in. Potentially opens you up to some liability if real intent to move in couldn't be established. Also the previous mention about ending a lease after the initial term ends does not appear to matter in this case, i.e. it doesn't appear you can evict a tenant at the end of an initial lease term; instead, their term would just go to month to month, or you would have them sign another similar length term. If they refused to sign a similar length lease renewal that (if the lease terms were largely the same) that might be a just cause for eviction, per the bill. Again, definitely worth reading through if you own rental property in CA.

    Single family homes and condos are largely exempt (save some some specific instances that likely don't affect most of us.

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  • Mike Franco
    Los Angeles, CA · Member since 2013 · 555 posts · 261 votes
    7y

    single family homes are not exempt for absentee owners.

    And fixed term leases are not required to be renewed. 

    Many people have the assumption that a fixed term lease automatically goes to month to month, but there is no law that requires that. Whatever you want to do at lease end, you spell it out in the contract.

    For example, the C.A.R lease template states that tenants must vacate at the end of term, unless another agreement is made in writing. 

    The only time a yearly lease would become a m2m automatically is when you keep accepting rent without writing up a new contract.

    As the bill states, a lease term not specified, like a m2m agreement, would automatically renew every month. 

    A fixed term lease, by definition, has a term specified, and all these rules do not apply.



    Under California law neither the landlord nor the tenant is required to give notice at the end of a fixed-term lease, unless the lease says otherwise. In addition, the landlord has no obligation to negotiate a renewal with the tenant at the end of the tenancy.

    With a fixed term lease, tenants are always under the assumption that they need to move at the end of the term. The benefit of the yearly or fixed term lease is that they have the comfort of knowing their rent won't get hiked up during the lease term.

    m2m tenants are different. It used to be that they could get surprise rent hikes of any amount, and this bill aims to protect these people specifically.

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  • Kyle J.
    Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    7y
    Originally posted by @Mike Franco:

    single family homes are not exempt for absentee owners.

    Are you sure about this? Everything I’ve read on the proposed new law says single family properties are exempt unless they’re owned by corporations or REITs.

    Here’s a couple articles from today that mention it and there’s language in the bill about it as well:

    https://www.latimes.com/california/story/2019-09-11/california-renters-relief-legislation-gavin-newsom-rent-cap?_amp=true

     https://la.curbed.com/platform/amp/2019/9/10/20857225/california-rent-control-bill-1482-approved

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  • Mike Franco
    Los Angeles, CA · Member since 2013 · 555 posts · 261 votes
    7y

    looks pretty clear to me...

    The only SFRs that are exempt are owner occupied ones, and houses newer than 15 years old.

    Owner must live in the house.

    that would exclude absentee owners of homes built prior to 2004-2005.



    (e) This section shall not apply to the following types of residential real properties or residential circumstances:

    ((5) Single-family owner-occupied residences, including a residence in which the owner-occupant rents or leases no more than two units or bedrooms, including, but not limited to, an accessory dwelling unit or a junior accessory dwelling unit.

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  • Kyle J.
    Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    7y

    @Mike Franco  I believe the applicable excerpts in the bill are the following:

    (e) This section shall not apply to the following types of residential real properties or residential circumstances:

    (8) Residential real property that is alienable separate from the title to any other dwelling unit, provided that both of the following apply:

    (A) The owner is not any of the following:

    (i) A real estate investment trust, as defined in Section 856 of the Internal Revenue Code.

    (ii) A corporation.

    (iii) A limited liability company in which at least one member is a corporation.

    Even this article in Realtor Magazine quotes the President of the California Association of Realtors as saying that single family homes are exempt: https://magazine.realtor/daily-news/2019/09/12/california-s-new-rent-control-law-alarms-industry

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  • Mike Franco
    Los Angeles, CA · Member since 2013 · 555 posts · 261 votes
    7y

    yeah that makes sense. Alienable separate from other units- describes SFRs and individual apartments.

    Looks like this doesn't affect lots of investors then.

    All those landlords on zillow can rest easy here in LA county.

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