Understanding Tenant Protection Laws in California: A Guide for Tenants and Landlords

Dax Nollenberger
- Dax Nollenberger

Understanding Tenant Protection Laws in California: A Guide for Tenants and Landlords

On its own, CA law can be a complex web of lawyer speak and hidden protections. Mix in with political agenda and exterior noise, and you have a recipe for confusion. Confusion doesn’t decrease importance, in fact, this is one of the most critical factors to consider when determining whether to buy or sell a home. For Californians, a huge percentage of net worth is locked into your home(s) and a major factor in determining what you do with that home is related to tenant protections. There is an immense amount of fear attributed to becoming a landlord in a landlord-UNfriendly state. From squatters to inheriting tenants to under-market value rents, fear has become a key driver for every homeowner. In this blog, we will address current tenant protection laws at the state and local level, highlight the responsibilities of the tenants and landlords, discuss the eviction process, talk through the implications of tenants when attempting to sell a home, and provide further resources for you to explore further. 

The importance of understanding tenant laws in CA

Why does it matter? For investors the answer is obvious. For homeowners, maybe not so much. Circumstances are ever-evolving. Life happens. Maybe it’s a job change, an increase in family size, growing children, retirement, marriage or divorce, or inheritance. In any one of those life events, you will be asking: what should I do next? Maybe selling is the obvious choice, maybe holding the home as a rental makes more sense. 

The reality is, that you could be stuck in a nightmare if you don’t understand how tenant laws affect the owner. Additionally, you could lose out on hundreds of thousands of dollars at the sale if you have a problem tenant. 

DISCLAIMER: This blog is intended for informational purposes only and does not constitute legal advice. I am not a lawyer. For any legal questions or concerns regarding tenant protection laws in California, please consult a qualified attorney.

Key Protections Under CA law

Tenant protections have long been a conversation amongst CA politicians. How do keep housing “affordable” and avoid tenants being pushed out onto the streets? 

In 2019, California enacted Assembly Bill 1482, better known as the Tenant Protection Act. This law had two main benefits for tenants, rent caps and restrictions on evictions. It capped annual rent increases at 5% plus the local rate of inflation, up to a maximum of 10%. The Act also introduced statewide “just cause” eviction protections, requiring landlords to provide a valid reason for evicting tenants. 

Note: Prior to the Tenant Protections Act, landlords were not required to state a reason for ending the tenancy when using a 30-day or 60-day notice. 

Just-Cause Eviction Requirements: 

“At Fault- Just Cause” evictions include: 

  • failure to pay rent
  • subletting or assigning the property in violation of the lease
  • refusing to renew a lease on similar terms to an expiring one
  • refusing to allow the owner to enter the property when authorized
  • maintaining a nuisance or committing waste on the property
  • using the property for criminal or unlawful purposes
  • failing to deliver possession of the property after providing the tenant with written notice or agreement to do so.

“No Fault- Just Cause” 

  • removing the unit from the rental market
  • the owner’s intent to occupy the unit for themselves or their family members. Family members are defined as a spouse, domestic partner, children, grandchildren, parents, or grandparents.
  • the owner’s intent to demolish or substantially remodel the premises. Substantial remodel is defined as the replacement or substantial modification of any structural, electrical, plumbing, or mechanical system that requires a permit from a governmental agency, or the abatement of hazardous materials… that requires the tenant to vacate for at least 30 days. 

Note: In situations where the tenant is not at fault, but the landlord has just cause to terminate, the landlord must provide relocation assistance of one month’s rent in the form of a payment or waiving the final month’s rent. Local regulations may be more costly. 

Who is Exempt?

Single-family homes and condos are exempt from AB 1482 laws as long as the home is not owned by a real estate investment trust, a corporation, or an LLC in which one member is a corporation. Homes that are less than 15 years old and owner-occupied duplexes in which the owner has been in the unit for the entire tenancy are also exempt. 

Important: The landlord must notify the renter that the home is exempt from the Tenant Protection Act in order to be exempt. 

SB 567 Coming Soon

Beginning April 1st, 2024, SB 567 will add additional language protection for “no-fault just cause” evictions. Previously, stating a family member was moving into the property was enough to get tenants out. Now, owners (or their relatives) must move into the property within 90 days and continuously occupy the property as their primary residence for 12+ months. Additionally, landlords claiming “substantial remodel” as cause for eviction must now provide written notice along with a description, plans, permits, and expected completion date. 

This bill creates additional hurdles to get tenants out. 

Local laws & protections

Local regulation supersedes state legislation. The Tenant Protection Act set the baseline but cities and counties have the authority to enact stricter guidelines. This emphasizes how critical it is to understand local ordinances. Here are the local ordinances in Santa Cruz County (subject to change).

City of Santa Cruz 

The City of Santa Cruz has a “Large Rent Increase Ordinance.” According to the city, A “large rent increase” is defined as a rent increase of more than 5% in one year or cumulatively more than 7% in any two consecutive years. In such case that the tenant is forced to move out due to a large rent increase that they can’t afford, the landlord is required to provide the tenant with relocation assistance equivalent to two months of the tenant’s actual rent. 

Santa Cruz County

Santa Cruz County, like the rest of the state, is governed by the Tenant Protections Act of 2019. I found no specific ordinances related to tenant protection from evictions other than 8.43.010 titled Tenant Protections Against Retaliation and Harassment. This ordinance aims to protect against retaliation related to legally organizing for affordable rents, tenant’s rights, and substandard living conditions. 

Scotts Valley & Watsonville

I see no additional protections provided to tenants in these incorporated areas. 

Responsibilities of Landlords and Tenants

In California, both landlords and tenants have specific responsibilities designed to maintain the quality and fairness of the rental agreement. Landlords are required to ensure their rental properties are habitable and comply with state and local health and safety codes. This includes making necessary repairs, maintaining structural integrity, providing adequate water and heating, and ensuring the property is free from pests. On the other hand, tenants are responsible for keeping the property clean and undamaged, using fixtures and appliances properly, and adhering to the agreed-upon terms of the lease, including noise regulations and restrictions on unauthorized occupants. Both parties must act in good faith, with landlords providing necessary repairs and maintenance, and tenants respecting the property and paying rent on time.

Eviction Process 

In California, the eviction process and tenant protections are carefully regulated to balance the rights of both landlords and tenants. Landlords must provide a valid reason for eviction, categorized under “just cause” which we covered earlier. The process begins with the landlord issuing a notice to the tenant, specifying the reason for eviction and providing a legally mandated period to remedy the issue if applicable (e.g., pay overdue rent). If the tenant does not rectify the issue within the given timeframe, the landlord can then file an unlawful detainer lawsuit to seek formal eviction through the court system. The notice length depends on the length of the tenancy. 

Squatter Rights 

The idea of squatters is quite scary for homeowners, but homeowners have more rights than the general public seems to believe. Squatters can sometimes acquire rights over the property through a legal concept known as adverse possession. To claim adverse possession, squatters must occupy the property openly, continuously, and exclusively for a period of five years, and they must pay property taxes on the property during that time. While squatters do not initially have legal permission to reside on the property, if they meet these stringent requirements, they may be able to gain legal ownership. However, property owners have various legal measures to evict squatters before they can establish such rights, including serving eviction notices and filing for an unlawful detainer lawsuit to regain possession of their property.

Impact of tenants on sales 

The most ideal way to present a home is vacant, professionally staged, professionally photographed, and easily accessible for potential buyers. Inhibiting any of these ideals impacts the home’s likelihood to sell for top price. Add on inheriting a tenant and it could cost you hundreds of thousands of dollars. Traditional buyers prefer acquiring a vacant home for the obvious reason that they don’t have to be responsible for the eviction process (amongst many other benefits listed above). Investors often prefer a vacant home because then they can easily upgrade and/or get the rents up to market rate, otherwise, they are capped on the property’s potential return. 

Conclusion

Understanding California’s tenant protection laws is crucial for homeowners, impacting decisions on buying, selling, and investing. The Tenant Protection Act of 2019, along with upcoming changes like SB 567, underscores the importance of staying informed and compliant. Whether facing decisions about leasing, eviction, or property sales, knowledge is your best defense against potential pitfalls.

Don’t let the complexities of tenant laws deter you from seizing the opportunities that California’s real estate market offers. Empower yourself with the right information and support. If you’re seeking guidance or need recommendations for legal experts who can help you make the most of your investment, I’m here to assist. Contact me to explore how you can confidently invest in real estate, armed with the knowledge and resources to navigate tenant protections effectively. Let’s turn the daunting into the doable, and find the real estate opportunities waiting for you.

Email me today at [email protected].

Thanks for reading! 831-227-5847

– Dax Nollenberger

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