Roommates and California's 2019 Tenant Protection Act

Roommates and California's 2019 Tenant Protection Act

Real Estate Professional · Escondido, CA · Member since 2016 · 10 posts · 0 votes
Hello all. Currently, I only have rental income from renting individual rooms to roommates. Does the statewide rent control apply to the two room renters in my manufactured home?
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Investor · San Jose, CA · Member since 2012 · 61 posts · 40 votes
6y

Exemptions include "Housing accommodations in which the tenant shares bathroom or kitchen facilities with the owner who maintains their principal residence at the residential real property.(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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  • Member since 2019 · 13 posts · 8 votes
    6y

    Isn't single family exempted?

  • Investor · San Jose, CA · Member since 2012 · 61 posts · 40 votes
    6y

    Exemptions include "Housing accommodations in which the tenant shares bathroom or kitchen facilities with the owner who maintains their principal residence at the residential real property.(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."

  • Real Estate Professional · Escondido, CA · Member since 2016 · 10 posts · 0 votes
    6y
    Originally posted by @Eric Yao:

    Isn't single family exempted?

     In SEC. 3 of the bill (Section 1947.12 that was added to the Civil Code), it exempts "Residential real property that is alienable separate from the title to any other dwelling unit". My manufactured home is alienable (can be bought or sold because I own title), but what I'm actually renting to roommates (just a room and shared use of common areas) cannot be bought or sold. Technically, reading the law literally, it sounds like my rooms are not exempt and so they would be subject to rent control.

    I'm pretty sure that's not what the lawmakers intended, though. They were targeting real estate businesses that rent out lots of dwellings. So the spirit of the law conflicts with the letter of the law.

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    6y

    @Erik K. I see two possible exemptions in the new law that could apply to your situation.

    The new law has a list of "properties and circumstances" that are excluded from coverage under this law.  Among them is the following one that @Account Closed pointed out:

    "Housing accommodations in which the tenant shares bathroom or kitchen facilities with the owner who maintains their principal residence at the residential real property."

    Assuming your roommates share your bathroom or kitchen facilities, it sounds like this would apply.

    Secondly, most people use the terms "manufactured home" and "mobile home" interchangeably.  I noticed you referred to your home as a manufactured home.  However, if your home could be considered a mobile home, then it is specifically excluded from coverage under this new law.

    Here's a few links with some more information on that:

    https://mhphoa.com/news/2019/07

    https://a17.asmdc.org/issue/ab-1482-frequently-asked-questions

    http://www.gazettes.com/news/business/mobile-home-park-tenants-face-rate-increase/article_8f614df4-eb96-11e9-a606-3b2d3e17c4db.html

  • Real Estate Professional · Escondido, CA · Member since 2016 · 10 posts · 0 votes
    6y

    Thank you for your thoughtful reply.

    Weirdly, that bathroom/kitchen-sharing exemption exists in the code governing cause for ending tenancy. I searched and didn't find similar language for the section governing the maximum rent increase. So roommates are protected from no-cause termination, but not protected from huge rent increases?

    But that first link you gave, about mobile homes being exempt from the definition of "owner", sounds convincing. So I'm safe, but a regular homeowner renting out a room might not be. I suspect the lawmakers did not intend to protect roommates at all, but I could be wrong.

  • San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    6y
    Originally posted by @Erik K.:
    Hello all. Currently, I only have rental income from renting individual rooms to roommates. Does the statewide rent control apply to the two room renters in my manufactured home?

    No. Unless you're a real estate trust, LLC or corporation:

    The entire code is here:  https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB1482

    The section regarding rent control is under section 1947.12 paragraph (d): (the exceptions)

    (d) This section shall not apply to the following residential real properties:

    (1) Housing restricted by deed, regulatory restriction contained in an agreement with a government agency, or other recorded document as affordable housing for persons and families of very low, low, or moderate income, as defined in Section 50093 of the Health and Safety Code, or subject to an agreement that provides housing subsidies for affordable housing for persons and families of very low, low, or moderate income, as defined in Section 50093 of the Health and Safety Code or comparable federal statutes.

    (2) Dormitories constructed and maintained in connection with any higher education institution within the state for use and occupancy by students in attendance at the institution.

    (3) Housing subject to rent or price control through a public entity’s valid exercise of its police power consistent with Chapter 2.7 (commencing with Section 1954.50) that restricts annual increases in the rental rate to an amount less than that provided in subdivision (a).

    (4) Housing that has been issued a certificate of occupancy within the previous 15 years.

    (5) 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.

    ==========

    Alienable separate from title, etc., just means it can be sold as a separate unit - such as it's a condo or a single family dwelling, etc.

  • San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    6y
    Originally posted by @Erik K.:
    Originally posted by @Eric Yao:

    Isn't single family exempted?

     In SEC. 3 of the bill (Section 1947.12 that was added to the Civil Code), it exempts "Residential real property that is alienable separate from the title to any other dwelling unit". My manufactured home is alienable (can be bought or sold because I own title), but what I'm actually renting to roommates (just a room and shared use of common areas) cannot be bought or sold. Technically, reading the law literally, it sounds like my rooms are not exempt and so they would be subject to rent control.

    I'm pretty sure that's not what the lawmakers intended, though. They were targeting real estate businesses that rent out lots of dwellings. So the spirit of the law conflicts with the letter of the law.

    There are two different codes regarding two different things here.  

    First, if you share a living space, then you're exempt from evicting without just cause.

    Second, if the owner is not a real estate trust, LLC or corporation, then you're exempt from rent control. This is about ownership of the property that's being rented out.

    For what it's worth, there is nothing whatsoever in this new law that has any penalty in it.  So, you really need to think more in terms of are you likely to get sued?  And then what would happen in that case?  There are no fines or penalties listed in this code at all.  I triple checked.

    So, a tenant would have to sue you and a judge would have to figure out what to do in the face of nothing whatsoever in any statute determining any kind of penalty.  

    So, I really wouldn't worry about it.

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