Governor Newsom recently signed the Tenant Protection Act of 2019 into law, which for the first time enacts statewide just cause eviction limitations and annual rent caps on rental housing. The Act's provisions are effective January 1, 2020 but sunset after 10 years.

Just Cause For Eviction (Civil Code section 1946.2)

Under the Act, landlords of non-exempt residences where tenants have continuously and lawfully occupied the residence for 12 months or more must state in writing a just cause basis for termination of a tenancy. Just cause reasons may be "at-fault" or "no-fault."

Just cause reasons for termination where the tenant is at fault include:

  • A default in rent payment;
  • A material breach of the lease (after service of a cure/quit notice providing tenant the opportunity to cure);
  • Maintenance of a nuisance (after cure/quit notice);
  • Waste (after cure/quit notice);
  • Refusal to execute a lease;
  • Criminal activity;
  • Unauthorized subletting or assigning;
  • Refusal to allow lawful entry;
  • Use of premises for an unlawful purpose;
  • If the unit is occupied by an employee, failure to vacate after termination of employment or license to occupy; and
  • Failure to vacate if the tenant provided a notice to terminate/vacate that was accepted by landlord but the tenant subsequently failed to vacate.

Just cause reasons where the tenant is not at fault include:
  • The intent of the owner or an immediate family member to occupy the residence;
  • The unit being withdrawn from the rental market;
  • The unit must be vacated to comply with a government agency or court order or local ordinance; and
  • The owner's intent to demolish the residence or substantially remodel it (defined as requiring more than 30 days.)

No-fault just cause terminations also require the owner to notify the tenant in writing of the tenant's right to either relocation assistance equal to one month's rent or waiver of the last month's rent; however, the choice is the owner's option.

Properties exempt from the Act include:

  • Single-family owner-occupied residences where no more than two tenants also occupy rooms or units in the residence;
  • Owner-occupied duplexes;
  • Housing less than 15 years old;
  • A single property where the owner is not an investment trust, corporation, or an LLC with a corporate member;
  • Adult care facilities and hospitals; and
  • Dormitories and hotels.

Finally, the statewide just cause provisions do not apply to residential property subject to a local just cause ordinance enacted before September 1, 2019, in which case the local ordinance would apply. Just cause ordinances enacted or amended after September 1, 2019, that are more protective than Civil Code section 1946.2 shall supersede it. In Marin County, just cause ordinances were enacted before September 1, 2019 in the Town of Fairfax, City of San Rafael, and unincorporated areas under county jurisdiction; therefore, section 1946.2 does not apply in these areas. In all other cities and towns in Marin County, section 1946.2 will apply.

Rent Control (Civil Code section 1947.12)

The Legislature has found and declared that "the unique circumstances of the current housing crisis require a statewide response to address rent gouging by establishing statewide limitations on gross rental rate increases." (Civil Code § 1947.12, subd. (k)(1).)

The Legislature's response was to enact Civil Code section 1947.12, which prohibits owners of residential real property from increasing the gross rental rate for a dwelling or unit more than 5% per annum plus the percentage change in the cost of living, or 10%, whichever is less.

While the statute does not become effective until January 1, 2020, it will apply to all rent increases occurring on or after March 15, 2019. This means that if between March 15, 2019 and January 1, 2020, an owner has increased the rent by a percentage above the statutorily allowed increase (e.g., 20%), then effective January 1, 2020, the rent will decrease to the prior pre-increase gross rent plus the percentage increase allowed by statute. For example, if rent were $1,000 on March 1, 2019 and was otherwise lawfully raised to $1,500 on April 1, 2019, the rental amount effective January 1, 2020 would decrease to $1,000 plus the percentage change in the cost of living or $1,100 (i.e., $1,000 + 10%), whichever is less. Notably, the property owner would not be liable for any corresponding rent overpayment between the date of the 2019 rent increase and January 1, 2020.

Civil Code section 1947.12 does not:

  • Prohibit an owner from raising the rate to market rate when the prior tenant vacates.
  • Allow a tenant to enter into a sublease that results in a total rent more than is allowed by the Act.
  • Apply to housing subject to a rent control ordinance that restricts annual increases in the rental rate to an amount less than that provided by the Act.
  • Apply to housing less than 15 years old.
  • Apply to duplexes where the owner occupies one of the units as their principal place of residence.

Disclaimer: This article presents a general overview only. Each of the items addressed have numerous and specific restrictions, requirements and limitations which must be reviewed and addressed in order to be compliant with the Tenant Protection Act of 2019.