Dear Valued Client:
On October 8, 2019, California Governor, Gavin Newsom signed Assembly Bill 1482 (AB 1482) into law. AB 1482, entitled Tenant Protection Act of 2019, imposes statewide rent control and governs annual rent increases and evictions. The effective date of the new law is January 1, 2020.
A copy of AB 1482 may be reviewed at http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB1482.
AB 1482 adds to the Civil Code sections 1946.2, 1947.12 and 1947.13 relating to tenancy.
Although California has had similar local rent stabilization ordinances in place, for example in the cities of Los Angeles and San Francisco, AB 1482 applies statewide.
The law will apply to all owners of residential real property, including owners who acquire properties via foreclosure.
If one of the former owners lives in the property, along with tenants or alone, there is no change to current law. However, if the property is solely tenant-occupied with an existing lease for twelve or more months, there must be “just cause” to evict the tenants. If no just cause exists, owners must collect rent in the amount stated on the lease.
Just cause includes tenant at-fault and tenant not-at-fault. Tenant at-fault evictions do not require any relocation assistance to be paid. Tenant non-at-fault evictions require relocation assistance in the amount of one month’s rent, unless prescribed more by a local ordinance, which must be provided within 15 days of the notice to quit. If they do not vacate pursuant to the notice, the relocation assistance is recoverable as damages in the eviction action.
Tenant at-fault evictions include:
1. Non-payment of rent
2. Breach of lease
5. Refusal to sign new lease of like terms
6. Illegal activity
7. Subletting or assigning in violation of lease
8. Failure to grant reasonable access
9. Failure to vacate after tenant has given written notice of termination of their tenancy
10. Employee’s failure to vacate after termination of employment
Tenant not-at-fault evictions include:
1. New owner occupying property
2. Withdrawal from rental market (Ellis Act)
3. Compliance with a governmental order or local ordinance that requires tenants to vacate property
4. Intent to demolish or substantially remodel
The most common just cause evictions in the default industry are Non-payment of rent, Breach of lease, and Failure to grant reasonable access.
Once a property reverts into the REO portfolio, we recommend taking the following steps:
1. Determine who occupies the property, namely whether one of the former owners occupies the property
2. If the former owner occupies the property, along with tenants or without, move forward with standard post-foreclosure eviction
3. If the former owner does not occupy the property and tenants do:
a. Determine whether a just cause exists prior to collecting rent
b. If just cause does not exist, send a change of ownership letter and request a copy of tenant(s)’s lease (or proof of amount of rent paid) immediately
c. Via a rent demand letter, demand rent in the amount stated on the lease provided (rent can be prorated for the current month)
d. If tenant refuses to provide lease or lease information, request that they sign a lease for the fair market rental value of the property
e. Provide reasonable notice (at least 24 hours) of entry and attempt to enter the property for the purpose of an inspection or appraisal until they provide access or fail to grant access three times
f. Collect rent until just cause to evict exists
It should be noted that negotiating cash for keys agreements and selling the property are options in lieu of the above eviction options and may be better options depending on the circumstances. We are happy to help determine what the likelihood of eviction is to help make this decision as easy as possible.
Please don’t hesitate to reach out to us if you have any questions or concerns about this new law. Thank you for the opportunity to be of service.
Talia M. Cortese, Esq. | ZBS Law, LLP