Compliance with the statewide rent control requirements

The set of statutes defining the California statewide rent- and eviction-control were enacted back in September 2019 (the AB 1482 bill).  For the most part, it is a set of prohibitions, regulating how the rent can be raised or the tenancy terminated, in effect since January 1, 2020.  But the statutes also require of the landlords to include new language in their leases, and these requirements kick in on July 1, 2020. This article is written to help you not to overlook them.

The legislation is reflected in Civil Code sections 1946.2, 1947.12, and 1947.13. Section 1947.13 does not contain disclosure requirements, so we will concentrate on the first two. For the ease of reference, section 1946.2 is the "just cause" eviction-control statute, and section 1947.12 is about the rent-control. All three clauses are defined in section 1946.2, and the last of those is also referenced in section 1947.12, which section does not add any other or different clauses, nor does it refer to the first two clauses from 1946.2.

Section 1946.2  defines the grounds, for which the lease can be terminated, and what properties or property owners are exempt from it.  Check if you and your property are exempt. If no exemption applies, then these are the two provisions in the lease for you to consider, for any lease entered on or after July 1, 2020. If the exemption applies, surprisingly the statute is not done with you yet even then, and the third provision is required, to inform the tenant about the exempt status of the tenancy. I list the exemptions in this post for both sections.

First, the optional clause to include regarding the landlord's right to do an owner-move-in eviction later. If this clause is not included, it would have to be made part of the lease as the lease's modification, or otherwise the tenant would have to agree in writing to the landlord's right to do the owner-move-in. CC § 1946.2(b)(2)(A)(ii).

This recommended optional addition to the lease language is a provision of the lease stating that it «allows the owner to terminate the lease if the owner, or their spouse, domestic partner, children, grandchildren, parents, or grandparents, unilaterally decides to occupy the residential real property.» (Id.)

If it is not in the lease at the time of its creation, it can be added on the lease's renewal, and tenant's refusal to this modification aparently constitutes a just cause of termination itself. (This is from reading together the last sentence in CC § 1946.2(b)(2)(A)(ii) and the referred therein CC § 1946.2(b)(1)(E)).

Second, is the mandatory inclusion, under CC § 1946.2(f)(3), for the leases entered on or after July 1, 2020 (it is optional but recommended for the earlier leases):

«California law limits the amount your rent can be increased. See Section 1947.12 of the Civil Code for more information. California law also provides that after all of the tenants have continuously and lawfully occupied the property for 12 months or more or at least one of the tenants has continuously and lawfully occupied the property for 24 months or more, a landlord must provide a statement of cause in any notice to terminate a tenancy. See Section 1946.2 of the Civil Code for more information.»
If it is not included in the lease, or the lease predates July 1, 2020, then the same notice has to be served on the tenant no later than August 1, 2020. CC § 1946.2(f)(1)–(3).

The notification or the lease provision shall be in no less than 12-point type. CC § 1946.2(f)(3). It also should be in compliance with the foreign language provisions of CC § 1632 (a requirement to keep in mind for all three of these clauses). (Id.)

The third disclosure is for the exempt tenancies. Exemptions are listed in subsections (e) and (g) of the statute. The language to include in those exempt leases, commencing from July 1, 2020, is this:

«This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12 (d)(5) and 1946.2 (e)(8) of the Civil Code and the owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation.» CC § 1946.2(e)(8)(B)

The above language is also required under the rent-control statute, CC § 1947.12(d)(5)(B).

The exemptions under CC § 1946.2 are:

• Transient and tourist hotel occupancy as defined in subdivision (b) of Section 1940.
• Housing accommodations in a nonprofit hospital, religious facility, extended care facility, licensed residential care facility for the elderly, as defined in Section 1569.2 of the Health and Safety Code, or an adult residential facility, as defined in Chapter 6 of Division 6 of Title 22 of the Manual of Policies and Procedures published by the State Department of Social Services.
• Dormitories owned and operated by an institution of higher education or a kindergarten and grades 1 to 12, inclusive, school.
• Housing accommodations in which the tenant shares bathroom or kitchen facilities with the owner who maintains their principal residence at the residential real property.
• 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.
• A duplex in which the owner occupied one of the units as the owner’s principal place of residence at the beginning of the tenancy, so long as the owner continues in occupancy.
• Housing that has been issued a certificate of occupancy within the previous 15 years.
• 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.

(B) (i) The tenants have been provided written notice that the residential property is exempt from this section using the statement we just covered above (the "third" provision).

• 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.
• The tenancy is subject to a local / municipal rent- or eviction-control ordinance, provided that such ordinance either precedes this statute (existed on or before September 1, 2019), or, if it was enacted after September 1, 2019, that it only preempts this statute if it is "more restrictive." This last exemption is from subdivision (g) of the statute, all others are from (e).

The exemptions under CC § 1947.12 are:

• a new lease (this one is found in subd. (b), the rest below under subd. (e))
• 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.
• 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.
• 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).
• Housing that has been issued a certificate of occupancy within the previous 15 years. 
• 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.

(B) (i) The tenants have been provided written notice that the residential real property is exempt from this section using the statement informing about the exemption, as mentioned above, the one starting with the language «This property is not subject to the rent limits ...»

• A duplex in which the owner occupied one of the units as the owner’s principal place of residence at the beginning of the tenancy, so long as the owner continues in occupancy.