New California Real Estate Laws - July 2019
- Description of all new laws or proposed legislation
- New Ballot Measures
- Impact on you investments
- AB 1482 – Rent Cap Increases
- AB 2343 – changing 3 day notice for eviction
- SB 50 – killed in committee
- AB 36 – expanding rent control
- New Costa Hawkins Ballot Measure
AB 1482 - Rent Cap Bill
California Assembly passed (pending Senate vote and governor signature) AB 1482 – restricting how much landlords of apartments can raise rents each year. The bill calls for 7% maximum increases plus inflation, which is currently around 2.5%. It also set to expire in 2023 and only applies to apartment buildings larger than 10 units.
The goal of the new law is to help with the rising cost of rentals for renters not in rent control cities. Some local authorities had limits on rental increases, but AB 1482 will apply state-wide. The bill will impact large apartment complex with long term tenants on low rents. The vast majority of tenants do not see giant rent spikes every year, but the practice will affect renters with really low rents.
Status of AB 1482 – the language of the law is still negotiated, and was approved in the California Assembly. The bill will now advance to the California State Senate for further analysis and vote, and will have to be approved by the governor.
AB 36 - Expanding Rent Control
Ab 36 was introduced in the California Assembly by Richard Bloom (D), in order to modify current rent control laws state-wide. It will give the cities the power to impose rent control over single family homes and condos.
AB 36 also allow cities to place apartment buildings that are not under rent control to be regulated – after they are leased for 10 years. The impact of this proposed change is significant – it means that potentially every single large apartment building and single family home could be rent capped. This is a massive expansion of rent control statewide. It is unlikely that cities will impose a rent cap on homes everywhere in California – but the ability to pass this law will matter in the future.
Status of the law – as of mid-2019 – the law is currently stalled in committee. As we saw on proposition 10, voters are still not ready to give cities the power to limit rents on homes and condos – a controversial part of the proposed Costa-Hawkins repeal. It may return, depending on the result of the 2020 ballot measure trying to do the same.
New Costa-Hawkins Repeal - 2020 Ballot Measure
After voters rejected proposition 10 in the 2018 midterm elections, a new refined version of it will appear in 2020. Voters were not ready for a complete Costa Hawkins repeal, which could give local cities the power to impose rent control on single family homes, condos, and new construction.
The new ballot measure, set to come on the ballot for 2020, will be a toned down version of proposition 10:
- Homes, duplexes, and condos will be excluded from rent control regulation.
- New construction of apartment buildings will be excluded from rent control regulation for the first 15 years.
This version of the proposed law is much more friendly to homeowners. This fact, with a larger voter turnout in a presidential election cycle, could tip the scale towards a partial Costa-Hawkins repeal in 2020.
The current state of the ballot measure – organizers of the ballot measure (the AIDS foundation) is gathering signatures in order to qualify for a vote on the 2020 election. 623,121 California residents will have to sign the petition in order for it to qualify to be on the ballot.
AB 2343 - Changes to 3 Day Notice/Eviction
AB 2343 is a simple change to the notice to evict residential tenants. Currently, when a tenant defaulted on the lease the landlord must serve the tenant with a notice to pay or quit – and the tenant has 3 or 5 days to cure the breach or leave the premise. As of now the day countdown does not include Saturday or Sunday, and AB 2343 will also exclude Judicial holidays.
Status of the law – AB 2343 was signed into law in 2018, and currently in force.
SB 50 - Streamlining Housing Development
SB was the headline legislation to tackle the housing crisis head-on. The goal of SB 50 was to drastically increase housing density near mass-transit areas. Large cities in California have too much single family zoned areas and SB 50 is designed to dramatically increase height limits and number of unit constructed in a specific lot. The proposed law will transform zoning laws around mass-transit stations, and will supersede any local zoning ordinance by the city. SB 50 will also lower parking requirements for multifamily buildings in those zones.
SB 50 was introduced by State Senator Weiner (D) from San Francisco, and it is not the first version of this vision. SB 828 was previously introduced in 2018, but due to significant resistance from liberal groups and local cities, the bill failed.
Status of the bill – SB 50 is again delayed, at least until next year (2020). Multiple tenant groups still resist the idea behind SB 50, and homeowners fear their home value will be effected due to multifamily construction.