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Changes to the California Tenant Protection Act

Changes to the California Tenant Protection Act

The California Tenant Protection Act of 2019 (TPA) continues to be largely unknown to many California landlords of single-family and small multi-family properties.

The TPA was originally passed in 2019 via Assembly Bill 1482 and went into effect in 2020. You may be familiar with hearing the TPA referred to as AB 1482. The TPA has drawn attention recently as California’s AG announced his enforcement efforts as he sued a Bay Area developer and settled for close to $400k.

We have been predicting since the inception of the TPA that it was the first stop on a long road to increased regulation on California landlords. That has proven true as the first modification to the almost four year old law has just been passed.

SB 567 was signed on September 30, 2023 and goes into effect on April 1, 2024 and includes a couple of key changes that are meant to close “loopholes” in the existing TPA. All owners of residential rental property need to be aware of these changes.

Changes to the “Substantial Remodel” Just Cause Tenancy Termination

The “Substantial Remodel” just cause tenancy termination allows owners of properties subject to the TPA to terminate tenancies on the basis of wanting to substantially remodel the property.

The law in its original form did not specify what types of repairs qualified as “substantially remodeling” the property. As a result, this became one of the most popular forms of tenancy termination for non-exempt properties. Owners would issue tenants termination notices siting the substantial remodel just cause reason and then paint and install new carpet and put the unit back on the market for rent.

Tenant advocacy groups found this problematic and wanted the bar for substantially remodeling the property to be raised. SB 567 accomplishes that by actually defining what types of repairs and upgrades qualify in order for owners to use this clause.

This new bill will require new language to be added to the termination notice that provides existing tenants with the following information:

  • Detailed information about the remodel.
  • Copies of the permits related to the remodel or a copy of the agreement with the contractor doing the remodel if a permit is not required.
  • Notice of the tenant’s right to reoccupy the unit on the same terms of the existing lease if the remodel doesn’t go through.
  • Notice of the tenant’s right to give contact info to the landlord to be contacted after the remodel is completed so they can reoccupy the unit.

Changes to the “Owner Move-In” Just Cause Tenancy Termination

The “Owner Move-In” just cause tenancy termination allows owners of properties subject to the TPA to terminate tenancies on the basis of the owner (or close relatives of the owner) wanting to move in to the property.

This is another frequently used tenancy termination as many landlords, especially in California, are what we refer to as “accidental” landlords meaning they never bought the property as an investment but life circumstances changed and they decided to rent it out for a time. Those circumstances have changed yet again and now they want to move back in to their property. This is very common Even if the owner is an intentional investor, wanting to move in close family is also common.

The new bill makes the following changes to this just cause tenancy termination:

  • Owners must provide names of the family member moving in as well as how they are related.
  • Owners must provide proof of the relationship if requested by the tenants.
  • The owner or relative must move in within 90 days of the tenant vacating.
  • The owner or relative must live in the property for a minimum of 12 consecutive months after terminating a tenancy for this reason. If they do not fulfill this, they must offer the unit back to the previous tenant on the same lease terms that they had prior to moving out.

Addition of Damages for Improperly Terminating Tenancies

The current version of the TPA does not specify damages that tenants are owed from landlords who violate the tenancy termination limitations in any way.

SB 567 changes that by adding a clause that specifies damages if an owner improperly terminates the tenancy in a non-exempt property.

Damages can consist of the following:

  • Actual damages.
  • In the court’s discretion, reasonable attorney’s fees and costs.
  • Upon a showing that the owner has acted willfully or with oppression, fraud, or malice, up to three times the actual damages. An award may also be entered for punitive damages for the benefit of the tenant against the owner.

Three times actual damages can be quite substantial. The bar for oppression, fraud, and malice is  high, but if you have knowledge of this law and proceed with improperly terminating a tenancy, it is conceivable that you could meet that bar.

The law has a three year statute of limitations, so owners can be liable long after they violate this law.

The Need for Professional Property Management

This isn’t a plug for our services, but the need for professional property management in California continues to grow. Laws are not only changing, but they are adding teeth. Penalties for violating tenant protection laws, even in ignorance, can be severe.

It isn’t just self-managing owners that need to remain educated on these laws, but property management companies as well. Believe it or not, there are several, even in our area, that are not well versed in the TPA. Hiring a property manager that doesn’t understand these laws can be an extremely expensive mistake.

In case you think this isn’t a big deal because it doesn’t apply to the type of property that you own, we must warn you that it really is only a matter of time. Just this year, there was legislation introduced that would have struck the single-family exemption and subjected all California rental properties to the TPA. It didn’t pass this go around, but it really is just a matter of time before it does pass and your property becomes subject to this law.

If you don’t want to keep up with these laws and want to decrease your liability exposure, contact us. We are not only up to date on these laws but are actively educating our owners and our industry on them. Property management is as much about compliance as it is actually managing the asset. Make sure you partner with a property management company that does both well!