The Tenant Protection Act of 2019 Extends Rent Caps and Just Eviction Causes to Renters State-Wide!

California is the third state to pass a state-wide rent control and just cause eviction law after Oregon and New York. I applaud California and Assemblyman David Chui for initiating the new legislation, AB 1482, which was signed into law by Governor Newsom and became effective on January 1, 2020. The law will be in effect for 10 years at which time the new law "sunsets."

Until this law became effective, tenants in non-rent-controlled cities had little protection under state law. Month-to-month tenants in these areas could be served with a notice to increase their rent by any percent, requiring 60-days’ notice if the rent increase was greater than 10% or 30-days’ notice for rent increases less than 10%.

Questions to Ask to Determine Coverage under AB 1482:

1. What type of residence do I lease (e.g. single-family home, condo, duplex, multi-unit home, etc.)?

2. What year was my residence built?

3. How is my residence owned?

4. Is my residence partially or fully covered by a City rent control program? 

Some buildings may be covered by just eviction protection under a municipal code but be exempt from rent increase regulations. In this example, there would be partial coverage in that the landlord would be required to have a just cause to terminate tenancy under municipal law but the rental increases would be regulated by AB 1482.

Discussion Concerning AB 1482:

Rent Caps:

Under the new Tenant Protection Act of 2019 (or AB 1482), the following rent caps are extended to renters who lease apartments in buildings issued a certificate of occupancy before January 1, 2005 with certain exemptions and for those who live in rent controlled units built before 1995 (or earlier) under Costa Hawkins (other exemptions may apply):

An owner shall not increase rent more than twice every 12-months but the maximum rent increase for any 12-month period cannot exceed a) either 5% plus the Consumer Price Index (CPI) or b) 10% whichever is lower.

The rent in effect on March 15, 2019 will be the rent used as the base rent if a rent increase is imposed.

Unlike many rent-controlled jurisdictions, capital improvements[1] cannot be passed along to the tenants; the cost of these improvements would need to be covered by the rent-cap.

This new law does not apply to privately owned single-family homes or condominiums [2], a duplex where an owner occupies one of the units, mobile homes, certain dormitories, and affordable housing units for low income households that are regulated by a deed or by a regulatory agency or housing built within the last 15 years, including accessory dwelling units (ADUs). For a complete list of exemptions, see: https://a17.asmdc.org/issue/ab-1482-frequently-asked-questions

The CPI increase under the TPA of 2019 uses a percent change in the Consumer Price Index dating from April 2018 to April 2019 for the state of California but breaks out different state localities such as the San Francisco Bay area, Los Angeles, etc. 

See: https://www.dir.ca.gov/OPRL/CPI/PresentCCPI.PDF

To calculate the percent increase, use this formula:

((CPI for April 2019 minus the CPI for April 2018) divided by the CPI for April 2018) multiplied by 100.

Just Eviction Cause:

Also under the Tenant Protection Act of 2019, just cause eviction protections have now been extended to renters with certain exceptions. Just cause eviction protections only cover tenants who have been residing in their rental unit continuously for 12-months under either a fixed-term or month-to-month lease agreement. The termination of a fixed-term lease is not a just cause to evict but the Owner may ask the tenant to enter into a new fixed-term lease agreement that is materially the same as the existing lease.

Just causes to evict a tenant are divided into “no fault” and “fault evictions” which are discussed below.

No Fault Evictions:

• An owner-move-in eviction;
• An Ellis Act eviction;[3] or
• If the Owner intends to demolish the building or make substantial repairs that will take at least 30-days, and which relate to habitability issues.

As it relates to no-fault evictions, the Owner is required to provide the tenant with relocation assistance which equates to one-month’s rent.

At Fault Evictions:

• Non-payment of rent;
• Breach of a material clause of the lease agreement:
• Committing a nuisance on the property;
• Illegally subletting the property;
• Refusing to let the Owner or property manager enter the unit as required by law (see Cal. Civ. Code section 1954);
• Committing a criminal act on the property; or
• An employee of the Owner who lives in the building and who refuses to vacate after their employment has been terminated.

Exemptions from the TPA of 2019 just cause eviction law follows: 

• Tourist or transient hotel accommodations;
• Housing accommodations in non-profit agencies such as residential housing for the elderly;
• Single-family, owner-occupied homes where the owner rents up to two bedrooms or units, including ADUs and junior accessory dwelling units (JADUs);
• Privately owned condominiums or single family homes;
• Housing accommodations in which the tenant shares bathroom or kitchen facilities with the owner, if the owner lives at the property as their principal residence; and
• Buildings issued a certificate of occupancy within the past 15-years.

Required Notices:

All tenants covered by either or both the rent cap and just cause protections must receive a notice stating that they are covered and not exempt. Notice requirements are covered here.

Rent-controlled Cities and AB 1482:

In cities such as San Francisco, Oakland, Berkeley, Richmond, and others in the Bay area that have rent-control, if the tenant’s leased unit is not covered by rent-control it now may be afforded new protections under AB 1482.

Remedies:

What remedies does the Tenant have if the Owner has raised rent over the 10% limit under AB 1482 and the tenant is not in a rent-controlled property?

• The tenant should consult an attorney; or
• The tenant can call a hotline number 1-888-428-7615.

What remedies does the Tenant have if the Owner has terminated their tenancy without just cause and the tenant is not in a rent-controller property? 

• The tenant should immediately consult an attorney; or
• The tenant can call a hotline number 1-888-428-7615.

The only actual remedy is a civil court action. Tenants can affirmatively sue a landlord as well as defend themselves in eviction proceedings.

The hotline number is run by ACCE, the Alliance of Californians for Community Empowerment (ACCE), a statewide advocacy organization that was also instrumental in the development of AB 1482.

To the right of this blog article is a list of tenant resources and non-profit organizations that can be consulted in the event of either an unlawful rent increase or a termination of tenancy without just cause. 

Tenants' Together, another leading state-wide tenancy rights advocacy group, has developed an AB 1482 "Toolkit" which provides exceedingly helpful information to navigate this new law.

 AB 1482 is an act to add and repeal Cal. Civ. Code Sections 

Just Cause Protections CCC 1946.2

Rent Regulations CCC 1947.12

Rental Rates for Affordable Housing CCC 1947.13

[1] In some rent-controlled jurisdictions, if a landlord “improves” the building by painting it or installing new plumbing or by making other improvements, the cost plus the interest on the loan value that may be required to invest in these improvements can be passed along to the tenants as a shared cost over a period of years.

[2] If the single-family home or condominium is privately owned, the Owner must timely and properly notify the tenant about the exemption from the TPA of 2019.

[3] The Owner intends to remove the building from the rental market.

A Housing Solution Success Story for San Francisco Tenants

Tenants in North Berkeley who are fighting an Ellis Act eviction (see blog post below) are hoping that the Small Sites program and the Bay Area Community Land Trust will purchase their building and guarantee them affordable housing for 99 years.

Tenants in San Francisco partnered with MEDA (Community Real Estate for the Mission Economic Development Agency). MEDA connected these tenants to the Small Sites Program which used public money to help nonprofits like MEDA buy buildings off the private market so tenants can stay.

"MEDA owns the largest number of buildings associated with the Small Sites Program. San Francisco provided $75 million to help MEDA purchase 26 buildings and help more than 400 tenants keep their affordable housing. All told, the Mayor’s Office of Housing and Community Development helped nonprofits buy 35 buildings and keep more than 500 residents in place."

"In June [2019, San Francisco] enacted the Community Opportunity to Purchase Act, or COPA, that law now ensures nonprofits get a five day heads up to purchase eligible properties on the market."

Berkeley is considering a similar program called TOPA or Tenants Opportunity to Purchase Act which paves the way for tenants to have a first right of refusal to purchase the building in which they live before other offers are considered.

Read all about the tenant and Small Sites success story in San Francisco via the following link from CBS News.

https://sanfrancisco.cbslocal.com/2019/12/11/a-housing-solution-success-story-nonprofits-buy-buildings-to-prevent-displacement/

MEDA advises tenants to be on the lookout for signs that the building may be sold. For example, the Owner may suddenly decide to paint the building exterior after 30-years or make other major capital improvements. Building improvements can be a tell-tale sign that the Owner is prepping the building for an appraisal and a subsequent sale.

Ellis on My Mind

Berkeley tenants are not taking Ellis Act eviction notices lightly. For more about their story, see link below:

https://www.berkeleyside.com/2019/12/10/theyve-been-evicted-from-a-north-berkeley-building-now-they-want-to-buy-it-with-help-from-a-land-trust

AN ELLIS STORY. . .

This is a story, a true story, about a property owner, a building, and tenants in Berkeley;

about tenants who lost their homes; and

about Owners who undoubtedly profited on a real estate investment; and

about a situation that is often played out in the Bay Area, in Los Angeles, and other California cities concerning the Ellis Act, a state law passed in 1985. 

Now, here's the story:

In 1972, a partnership was formed between several individuals, a company (Royston Herts), and an LLC (Channing Prop.) The partnership was recorded with the Alameda County Recorders Office under Instrument Number 72116117 and the name Channing Properties. Between 1972 and 1981, the partnership was modified several times and the modified partnership recorded with the recorder’s office.

According to Property Shark, on December 4, 1998, the property at 2601 Channing Way, Berkeley, California, parcel number 055-187201200, was deeded to Channing Properties. 2601 Channing Way is a 33-unit building. The building was covered by rent control.

It is believed that sometime between 1998 and 1989, Channing Properties served all tenants with an Ellis eviction notice.

On June 28, 1989, Channing Properties “filed a complaint for declaratory relief concerning the validity of the City of Berkeley’s laws restricting removal of housing from the rental market.” See Channing Properties v. City of Berkeley, 14 Cal.Rptr.2d 32, 11 Cal.App.4th 88 (Cal. App., 1992). Channing Properties was contesting the 6-month eviction notice period required by the City on the Ellised tenants and the City mandated $4,500 per unit relocation fee.

On November 9, 1989, the complaint was amended to add “2601 Channing Way Tenants Union” as a real party in interest.

On April 9, 1990, 2601 Channing Way Tenants Union “filed a cross-complaint for injunctive relief against Channing Properties and its general partner.”

On March 7, 1991, the City moved for judgment on the pleadings on the grounds that the municipal code challenged was not preempted by the Ellis Act. (The Ellis Act is state law is found under Cal. Gov. Code sections 7060-7060.7.) The motion was granted on April 17, 1991.

On May 14, 1991, Channing Properties appealed the judgment which was decided in favor of the City. The appellate court overruled the trial court and instead held in favor of the Owner that 1) a six-month notice period conflicts with the notice requirements of the Ellis Act and was invalid, and 2) that Berkeley’s relocation assistance program, if not limited to lower income households, also violated the Ellis Act.

Since the Channing case, Berkeley’s municipal laws have changed and currently require 1) a 120-day notice for all tenants with some exceptions such as senior citizens and/or disabled tenants who receive a 365-day notice, and 2) Berkeley awards a base relocation fee of $15,585 for most tenants plus an additional $5,195 for low income, disabled, elderly citizens, or households with minor children whose tenancies began prior to January 1, 1999. See: https://www.cityofberkeley.info/Rent_Stabilization_Board/Home/Ellis__Explanation_of_Required_Conditions_and_Owner_Obligations.aspx

What happened to the tenants? What happened to the tenants is probably documented in the Berkeley Rent Stabilization files; they relinquished their tenancy rights either through voluntary relocation, a tenancy buyout, a settlement in lieu of eviction, or an actual eviction.

Today, the municipal code, is considerably different than it was in 1989. Today Berkeley Municipal Code states: 

• “Once a Notice of Intent to Withdraw Accommodations has been filed with the Rent Board, no vacancy rent increase may be taken on the affected rent controlled units during the five year period following the date the notice is filed or the actual date of withdrawal, whichever is later. This prohibition applies even if the Notice of Intent is subsequently rescinded or the withdrawal of the units from the market is never completed. Thus, once a Notice of Intent to Withdraw is filed, the rent on the units covered by the notice may be increased only as authorized by the Rent Board, regardless of how many vacancies occur during the next five years. (BMC §13.77.040.A.)”

And the following:

• “You must offer to those [Ellised] tenants who expressed an interest, the opportunity to re-establish their tenancy in your property if you elect to re-rent the property within ten years of the date you withdrew the units from the rental housing market. (BMC § 13.77.040.)”

• “You must notify the City of Berkeley of your intent to re-rent your property.”

Berkeley also limits condominium conversions of Ellised buildings as follows:

• “Berkeley Municipal Code section 21.28.050.A specifically prohibits the conversion to condominium of dwelling units for the 10-year period immediately following the date of filing of a notice of intent to withdraw accommodations from the rental housing business under the Ellis Act. (Note: There is also a 10-year prohibition on condominium conversion from the date of an owner or relative move-in eviction. (BMC § 21.28.060.C.1; B.M.C. 21.28.090 B.1.(a))”

So, what happened to the 33-unit building at 2601 Channing Way? 

Deeds to the property were transferred to different owners[1] until a transfer in 2010 to Royston Apartments, LP The property currently appears to be offered as apartments for rent. See: https://www.apartments.com/royston-apartments-berkeley-ca/0hjy2j2/

Did the owner withdraw housing from the rental market? Yes.

But, it appears that they waited the requisite time to re-rent the apartment units at market rate.

Did the owner also sell some of the units as TIC’s? Only a lot of “digging” will tell.

What’s the real purpose of the Ellis Act? You tell me.

It's Noteworthy:

to note that on June 30, 1993, the City of Berkeley Rent Stabilization Board sued Channing Properties et al in the Superior Court of Alameda County, Case No. C-718880. The case was settled on December 7, 1995 and dismissed on July 8, 1996. The Register of Actions shows a highly litigated record. Another case brought by the City of Berkeley Rent Stabilization board against Panoramic Way Associates was consolidated with the former case (C-718882-8).

See AntiEviction Mapping Project

See: https://www.kcet.org/shows/city-rising/mapping-ellis-act-evictions-throughout-california

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Is Your Building being TIC'ed?

There appears to be a growing trend for land owners to get out of the rental business by using the Ellis Act to evict sitting tenants and then to re-sell the units under a Tenancies In Common Agreement (TIC). At least, this trend appears to be growing in Los Angeles as reported by "Curbed Los Angeles." 

But, exactly what is a TIC? A good explanation of the ownership model is explained in this article, "TIC's could change LA's housing market."

According to the article linked here, Mitch O'Farrell, Los Angeles City Council-member, is "trying to get a handle on just how many rent-controlled tenants are being pushed out to make way for" TIC's. "O'Farrell recently introduced a motion calling on the city planning department to explore creating a tracking system for the number of rent-controlled apartments that have been flipped into TICs." 

A good primer on what a TIC is, how to create one, how to secure a mortgage, and state requirements has been developed by Goldstein & Gellerman. Click here to review.

The California Department of Real Estate provides TIC guidelines here.

The San Francisco Tenants Union advises tenants on how to fight the development and sale of a TIC here: https://www.sftu.org/newtic/ 

Last, Berkeley's municipal code Chapter 21.28, "Condominiums and Other Common Interest Subdivisions" states under B.M.C. 21.28.020A(4):

"The City of Berkeley discourages tenancies in common (TICs) as a less desirable form of home ownership because this form of ownership may be less separable while carrying greater financial and legal risks, despite initial costs appearing more affordable than condominiums, community apartments and stock cooperatives."

If your building is being Ellised, perhaps it's in the plans to sell the units under a TIC relationship. This is definitely worth investigating.

Housing is a Human Right - Join Berkeley Tenants at a Rally on 11/22/2019

Join tenants or express your support by clicking on the Facebook invitation below.


https://www.facebook.com/BerkeleyTenants/photos/gm.1364596140392508/2367152620056980/?type=3&theater

State Closes Loopholes in Ellis Act Eviction Law

An excerpt from a public announcement made by State Assembly Member Richard Bloom is published below: For the full press release, click here.

"The Ellis Act gives rental property owners in rent control jurisdictions the right to exit the rental housing market but also places reasonable conditions and restrictions on landlords in order to avoid unscrupulous use of the bill simply to evict tenants and re-rent one or more units for more money. These conditions include a requirement to notify tenants 120 days prior to withdrawing a unit (or 1 year for tenants who are disabled or over the age of 62. The Act also restricts when owners can re-enter the market, what price they can re-rent units at when they re-enter, and requires that all units in a building be removed simultaneously. As the housing crisis has driven up the market rate for rental units, some landlords have increasingly subverted the intent of the Ellis Act by withdrawing individual units from the rental market, then returning them in a piecemeal manner to avoid the Ellis Act’s restrictions and to evade rent control. In the Los Angeles area alone, over 20,000 rent-stabilized units have been removed from the rental market since 2001, with tens of thousands of tenants evicted in the process.

AB 1399 prohibits this conduct by establishing that there can only be one withdrawal date for a property and by clarifying that the date on which the accommodations are deemed to have been withdrawn from the rental market is the date on which the final tenancy among all tenants are terminated. AB 1399’s reforms mandate that wrongfully evicted tenants be offered the opportunity to re-rent their former unit."

For further details about the changes to the law, please click here.