Blog

Whether by successor owners or investors purchasing residential property as a long-term investment, many owners in California become landlords, and thus subject to state and local laws relating to rent control. To keep rents affordable, some local governments have enacted rent control ordinances to stabilize rents in the neighborhood and give tenants a little more security against rapidly rising rents. The landscape has been in flux since even before the pandemic, but starting just before the pandemic, additional rules went into place. However, many of those pandemic-related provisions have expired, except for a few rare cases. In 2019, California passed numerous laws including AB 1482 that were established to ensure there is affordable rental housing in the state. The law went into effect on January 1, 2020, prior to the pandemic, and is currently scheduled to sunset on January 1, 2030. The stated purpose of this legislation is to try to solve the state's housing crisis and stabilize the population, although many critics of rent control indicate that rent control is not effective to solve such broad public policy concerns. The information which follows provides a basic overview of the landscape of the current law in California, as of the date stated above. Information changes from time to time (and sometimes drastically when crises happen), and this information is only as accurate as the date stated above, and is in no way is considered to be legal advice. For complicated situations, an owner is advised to consult with his or her own attorney or other real estate professional. Rent Control Laws Rent control refers to legislation that caps rental rates and annual rent increases in cities and states. Municipalities can have different rent control regulations; however, they generally limit annual rent increases and protect tenants from eviction without reason. Furthermore, rent control is more common in urban areas since residents' access to market-rate housing is restricted by competition for available rental units. While many states officially prohibit rent control, several U.S. cities, such as Washington, D.C. and New York City, have rent control laws. In 2019, California and Oregon passed the first statewide rent control laws. Generally, a landlord is free to set the rent at any level upon the vacancy of a residential rental unit, but some proposals may limit that option in the future. State Law Provisions The state of California does have rent control that prevents excessive rent hikes. Furthermore, several California communities have their rent control regulations. In addition to the state's legislation, a significant number of California's major cities have adopted rent control measures that provide tenants with additional rights. The state's rent control laws can contradict the city's rent stabilization ordinance. If a city's local rent control laws are contradictory to the state law, the city law will take precedence if it was passed before September 1, 2019, and/or if it provides more protection for tenants. Law Under AB 1482 Rental Increase Provisions A statewide law called AB 1482 governs rent hikes and gets rid of a landlord's ability to evict renters without good reason. Under AB 1482, the maximum annual rent increase is limited to 10% and consists of a local cost-of-living adjustment of no more than 5%. The starting rent is determined from March 2019 under the law, which is retroactive. As stated previously, no upper rent cap or limit exists on how much a landlord can raise the rent from one occupant to the next. Law Under AB 1482 Eviction Provisions When it comes to tenants who have lived in a rental property for more than one year, landlords can only evict lessees if they have a legal reason to do so, and those reasons fall into two (2) categories - 1) at fault evictions; and 2) no-fault evictions. At Fault This includes failure to pay rent, breaching the lease contract, or engaging in criminal activity on the property. When it comes to lease violations, the landlord must allow the tenant to rectify the issue. No-Fault This includes converting the apartment into a condo, the owner moving into the rental unit, or demolishing or renovating the property. In these instances, the landlord needs to offer the tenant a "relocation fee" equal to one month's rent. Keep in mind that the rent control law does not enforce these rules - but If a landlord does violate them, many attorneys are more than eager to take on a landlord who does not follow the exact rules. Other Restrictions on Rent Increases In California, landlords are prohibited from increasing rent in the middle of a fixed-term lease for certain types of discrimination (such as age or race) or certain types of retaliation (such as in response to the renter complaining about bugs). The following grounds of discrimination are prohibited by the Federal Fair Housing Act Race Age Religion Gender Disability Sexual orientation Familial status Nationality or origin The Unruh Civil Rights Act of California also prevents discrimination because of: Source of income Medical condition Immigration status Primary language Veteran or military status Physical appearance According to California law, landlords cannot raise the rent in response to a legitimate action taken by a tenant, regardless of whether it makes common sense or not. If an action takes place within 180 days of a tenant's action, it is seen as retaliatory. If a tenant complains about one of the following factors, and the landlord raises the rent, it is seen as retaliation Organizing or joining a tenant's union or group. Filing a complaint regarding the property's safety or health with the respective agency. Exercising their rights under the law. Complaining about the rental property's habitability. Rental Increases Allowed According to AB-1482, the Tenant Protection Act of 2019, landlords in California are only permitted to increase rent by 5% plus 10% or the annual inflation rate, whichever is lower. The rate of inflation is also referred to as the Consumer Price Index (CPI). Several areas are implementing the 10% rent increase limit as it is significantly less than keeping up with the Consumer Price Index given the substantial inflation experienced in the last year. However, keep in mind that this only applies to properties where rent control is in effect and that there are exceptions to the norm. State law calculates the rent increase using the regional CPI if you own property in the following counties: Orange and Los Angeles County San Diego San Bernardino and Riverside San Francisco, Alameda, Mari, Contra Costa, and San Mateo The maximum rent increase is determined using the California CPI, as reported by the Department of Industrial Relations if the residence is not located in one of these counties. Landlords in California are free to increase the rent by any amount while signing a new lease agreement if no existing occupants are present because the state's rent control regulations currently only apply to rent increases for existing tenants. Moreover, local governments are currently prohibited by state law from imposing "vacancy control," which sets a ceiling on the maximum rent increases permitted for new lessees. Frequency of Rent Increases Landlords in California are only permitted by state law to raise rent twice every 12 months if they give adequate notice and do not do so throughout the lease term. If the rent is raised twice in a calendar year, the total increase cannot go over the yearly cap. In certain cities with local rent control laws, such as East Palo Alto and Oakland, there are different increments for raising rent. These cities only allow one rate increase yearly unless the rental unit is exempt from rent control. Notice When Raising Rent Normally, rent increases require a 30-day notice from the landlord. The landlord is required to provide 90 days' notice if they plan to increase the rent by more than 10%. In California, landlords are prohibited from raising rent throughout a lease term unless the lease agreement expressly permits it. Exemptions from Statewide Rent Control Provisions Keep in mind that certain properties are exempt from California rent control law. These types of properties include: Condos and single family-homes not owned by a real estate investment trust (REIT), corporation, or corporation-owned LLC; Mobile homes; Commercial properties; Hotels; Duplexes whether the owner lives in one of the rental units; College dorms and schools; Rental property managed by a non-profit organization; Buildings constructed in the past 15 years; and Rental properties that are subject to pre-existing rent control ordinance If there are no other local laws that the landlord must abide by, they are free to increase the rent as much as they want on properties that are exempt from rent control. However, they must inform their tenants of the exemption under AB 1482 by giving them notice. Additional Local Rent Control Laws Various cities and counties impose additional rent controls in addition to the state limits. Some of these cities are: Southern California A. Beverly Hills: There's an annual limit of 8% on rent hikes. B. Los Angeles: Rent increases are limited to 8% per annum. However, the limit is 10% if a new roommate moves in. C. Palm Springs: Rent increases are limited to 75% of the CPI. D. Santa Monica: Rent hikes are limited to 75% of the CPI of Los Angeles for the past year. E. West Hollywood: The West Hollywood rent stabilization division determines the maximum allowable rent increase Berkeley: Local laws place a limit on rent prices, parking fees, garbage fees, eviction protocols, and security deposit laws. Northern California F. East Palo Alto: Rent hikes are limited to 10%, including parking and utility fees as well as any other services. G. Hayward: Annual rent increases are limited to 5%. H. Los Gatos: Rent can increase by over 5% of the existing monthly rent. I. Oakland: Rent increases are limited to 10%. J. San Jose: There's a 5% cap on annual rent increases. K. San Francisco: The annual rent increase rate is determined by the San Francisco Rent Board.  Additional Local Rent Control Laws Numerous laws in California limit the amount of rent that landlords are permitted to charge. If you own an investment property in California, it's advisable to familiarize yourself with state and local regulations on rent hikes. This will help you avoid legal issues. Alternatively, you can consult with a property management company like SHL Management Company or a California-based real estate attorney

The once vibrant insurance landscape in Los Angeles is undergoing a major shift, leaving property owners and residents grappling with a looming crisis. As an increasing number of insurance companies withdraw from California, coverage availability and affordability have become increasingly difficult to secure. Climate Change and Catastrophic Fires The primary culprit behind this mass departure is the escalating threat of wildfires fueled by climate change. The devastating fires that have ravaged California in recent years have inflicted immense damage, leading insurers to reassess their risk exposure. There have been too many insurance claims for habitability issues such as mold or pests in the apartment industry. The sheer cost of claims, coupled with the uncertainty of California laws and natural disasters, has led many insurance companies to retreat from California. A Wave of Departures The list of insurers leaving California is growing rapidly. High-profile names such as State Farm, Mercury, Farmers, Nationwide, and Tokio have announced their departure from the multi-family market. Apartment owners, who have often relied on these companies for decades, are facing the daunting task of finding new coverage. The Impact on Homeowners The insurance crisis has far-reaching consequences for homeowners. As competition dwindles, premiums are soaring, making it increasingly difficult for many to afford adequate coverage. Additionally, the availability of policies, particularly in high-risk areas, is becoming scarce. Navigating the Insurance Landscape For property owners facing non-renewal notices, securing new insurance can be a complex and time-consuming process. Here are some essential steps to consider: Act Promptly: Contact insurance agents early, as they are likely to be inundated with requests. Expect Inspections: Prepare for thorough inspections of your property to assess potential risks. Be Prepared for Delays: Inspectors are very busy and inundated with work, so expect potential delays. Request Loss Runs: Obtain a record of your insurance claims history. Consider Alternative Carriers: Explore smaller, regional insurers or specialized providers that may offer coverage in high-risk areas. The Road Ahead If you are fortunate enough to find a new insurer willing to cover your property, be prepared for a thorough insurance inspection. While previous insurers may not have conducted inspections as frequently as they should have, New insurers will send their inspectors. SHL Management encourages you to stay informed about the latest developments in the insurance market and to reach out to our team for guidance and support. www.SHLManagment.com

In the world of renting, tenants often overlook the importance of renter’s insurance. However, when faced with unexpected natural disasters or damages, the value of this insurance becomes evident. At SHL Management, while we don’t require tenants to purchase renter’s insurance, we highly recommend it. Let's explore why having renters insurance is crucial, particularly when the landlord's insurance is not liable for any damage to the tenant’s personal property. Protection Against Natural Disasters Natural disasters such as floods, fires, and windstorms can wreak havoc on rental properties, resulting in significant damage and loss of belongings. Renter’s insurance offers financial protection in such situations, covering replacing or repairing damaged items. Whether it's water damage from a flood or structural damage from a windstorm, renter’s insurance ensures tenants are not left to bear the burden alone. Given the recent heavy rain and unpredictable weather in Los Angeles, renter’s insurance can be a crucial safeguard against unforeseen costs. Coverage for Remediation Work In the unfortunate event that remediation work is required due to water damage, mold, or other issues, renter’s insurance can provide coverage for additional living expenses. This means tenants can secure alternative accommodations while repairs are underway, without incurring substantial out-of-pocket costs. Whether it's temporary lodging or other accommodations, renter’s insurance makes it easier for a landlord to get the cooperation and understanding of the tenants. Protection Against Various Scenarios Renter’s insurance offers coverage for a wide range of scenarios beyond natural disasters. This includes damages resulting from vandalism, smoke, theft, or accidental discharge or overflow of water. With comprehensive coverage, tenants can have peace of mind knowing that their belongings are safeguarded against various risks. Affordable Peace of Mind One of the most compelling reasons to invest in renter’s insurance is its affordability. For a relatively low monthly premium, tenants can access significant coverage that protects them from unforeseen events and potential financial hardships. Considering the potential costs of replacing belongings or covering temporary living expenses out of pocket, renter’s insurance offers invaluable peace of mind at a reasonable price. Renters insurance is beneficial as it provides liability protection, property coverage, and financial security. By requiring tenants to carry renters insurance, apartment owners mitigate their own risk and promote a safer renting environment. Overall, renters insurance serves as a valuable risk management tool for apartment owners, helping to provide temporary housing coverage, also called loss of use, and reimburses the tenants for additional living expenses resulting from a covered loss that renders the apartment uninhabitable. While we highly recommend renter’s insurance at SHL Property Management, we understand that it's ultimately the tenant's decision. However, we encourage all our tenants to consider the benefits of renter’s insurance and the peace of mind it offers, especially in times of extreme weather conditions we are currently facing in Los Angeles, CA. For more information about SHL Property Management services, please visit www.SHLManagement.com . With 49 years of experience, we are the leading property management company in Greater Los Angeles, CA. [Disclaimer: This blog post is for informational purposes only and should not be construed as legal advice. Readers are encouraged to consult with legal professionals regarding specific legal matters related to rental housing and pet policies.]