2020 is a big year for legislative changes affecting landlords and tenants. In fact, with the passing of statewide rent control, it may be one of the most significant legislative years yet.
Staying up to date and compliant with new laws is one of the most important responsibilities of a landlord. Failure to do so can result in unnecessary legal exposure.
Here are 11 new laws that we have identified as being significant to California landlords in 2020:
1. AB-1482 - Rent Cap and Just Cause Evictions
This law mainly just applies to multi-family homes (2 units or more) or single-family homes and condos where the owner is a corporation, REIT or LLC with one member being a corporation.
Under AB 1482, landlords can only raise the rent 5% plus CPI (with a max of 10%) every 12 months. They also must have a just cause reason to ask a tenant to vacate.
This is the most in depth and complicated law passed affecting landlords in 2020. We wrote a very detailed article on it which you can find here.
Most single-family and condo owners are exempt, but you MUST notify your tenants that they are not under rent control if you want to stay exempt. Again, check out that detailed rent control article for more info.
2. SB-329 - Accepting Section 8 Vouchers is Mandatory
Section 8 is a government assisted housing program that helps low income individuals and families afford homes by providing them with a monthly housing voucher to be used towards rent. Sounds great, right?
Landlords across the country have reported poor experiences when agreeing to accept Section 8 vouchers. Not because of the renters, but because of the government's complete inability to efficiently and effectively operate this program.
From delayed inspections to missed landlord payments during government shutdowns to befuddled paperwork, Section 8 has been a landlord's worst nightmare due to the increased burden of renting to a tenant with the bureaucrats involved.
With the passing of SB-329, Section 8 vouchers have been reclassified as source of income and refusing to accept them is now considered discrimination.
This means no more "No Section 8" on your advertisements or refusing to rent to someone just because they have a Section 8 voucher. You now must consider their voucher as income to be used towards rent.
You can still require Section 8 applicants to meet all of your other criteria such as credit score and rental history requirements. You just can't deny them for trying to use a Section 8 voucher.
3. AB-74 - Budget Act of 2019
This act allocates $20 million to be used for legal service projects and support centers that provide eviction defense or other landlord-tenant disputes for tenants.
That's right, your tax dollars will now be used to help your nightmare tenant fight that eviction you file against them for non-payment of rent or other lease violations.
This act is a great reminder to do everything you can to avoid evictions in the first place. California is becoming more and more tenant friendly and landlord hostile and making it that much more difficult to evict a bad tenant. The best way to avoid those evictions is by having a stringent screening process in place with clear, legal written criteria.
4. AB-1110 - 10% Rent Increase Requires 90 Day Notice
Up until January 1, 2020, landlords were required to give tenants a 60 day notice if raising the rent more than 10% in a 12 month period.
Now, landlords must give tenants a 90 day written notice instead. This of course assumes the property is exempt from rent caps under AB-1482.
5. SB-222 - Discrimination, Veteran or Military Status
This bill is similar to SB-329 in that it requires landlords to accept VASH (Veterans Affairs Supportive Housing) vouchers as a source of income.
The law also makes it illegal under the FEHA to refuse to rent to someone on the basis of their veteran or military status.
6. SB-644 - Reduced Security Deposit for Military
Under current California law, a landlord can charge a security deposit of two times the rent for an unfurnished property and three times the rent for a furnished property.
SB-644 makes it so that a landlord can only charge an active duty service member one times the rent for an unfurnished property and two times the rent for a furnished property.
If the service-member has a history of poor credit or of causing damage to past rentals, the landlord can collect the normal deposit. Note that the law does not specify what qualifies as "poor credit history" or what kind of past damage would justify an increased deposit, so tread lightly here.
7. SB-1188 - Adding Homelessness Risk to Rental Agreement
This law makes it so that a tenant can add a person who is at risk of homelessness to the lease, regardless of the terms with written permission from the landlord.
If the landlord chooses to allow this, they can increase the rent to take into account the additional person. The landlord would also have to provide 7 days written notice to evict the person at risk of homelessness.
8. AB-827 - Recycling Bins
This law applies to multi-family dwellings of 5 units or more, as well as businesses, to provide a separate recycling bin.
The recycling bin must be adjacent to the container meant for trash. By July 1, 2020, landlords must also develop signage that clearly marks the bins as recycling.
Note that the law goes into effect on January 1, 2020 requiring the recycling bins and only the signage is not required until July 1, 2020.
9. SB-652 - Religious Items on Doors
This law prohibits landlords or HOAs from enforcing any rule or lease provision that does not allow for the display of religious items on an entry door of door frame.
If your tenants want to put something religious on their front door, as long as it does not threaten public safety, violate code, prevent the door from closing, contain obscene language, and does not exceed the size of the door, they can.
10. SB-18 - Protection for Tenants in Foreclosed Properties
This law just indefinitely extends an existing law, so nothing new here.
Landlords of a foreclosed property must give a month-to-month tenant a 90 day notice to terminate and existing leases must continue to be honored until their expiration.
11. SB-234 - Family Daycare Homes
Large family daycare homes up to 14 children must be classified as residential for the purpose of local laws.
This law also clarifies that apartments can be used as daycares. Landlords cannot refuse to rent to a tenant on the basis that they want to run a daycare in the home, as long as it is compliant with all laws and ordinances.
Wrapping It Up
All of the info on these laws is based on our interpretation of them. We aren't lawyers and cannot give legal advice. Landlords are advised to read and understand the full bill texts and take action accordingly.
California is continuing to make it more and more difficult to manage rental property. Basically, they are changing the rules and updating the rulebook. As a landlord you need to adopt that new rulebook and play by the new rules.
If that sounds exhausting to you, give us a call. We pride ourselves on our ability to mitigate your risk as a landlord while ensuring you are receiving the highest rental income possible in the process.