Statewide rent control puts single family homes on the firing squad

It’s part and parcel of a larger and obscure campaign to peel back protections of single-family homeowners.

Our concerns with statewide rent control are manyfold, but let’s isolate an insidious clause in AB 1482 that takes a potshot at single family homes.

In the greater scheme of things, the fine print may not jump off the page, but it’s a big deal for owners who have a false sense of bravado by thinking they are beyond the fray of rent control, since the term "rent control" is synonymous with large apartment complexes. Owners of single family homes should not shrug off the headlines.

Are you a greed-fueled speculator? You may be labeled one.

When crafting statewide rent control, lawmakers seem to have expressed a built-in mistrust of properties that are owned by a corporation, real estate trust, or an LLC when at least one member is a corporation. The reasoning is, owners sophisticated enough to start these entities are most likely to fit the profile of speculators equipped to take advantage of so-called loopholes to raise rents.

We attempted to debunk this logic in an earlier post on tax reform that would benefit landlords who use pass-through vehicles to claim deductions. There, we pointed out that roughly 95% of all businesses are categorized as pass-throughs and so mom-and-pop landlords who rent a single-family home should not be considered a pariah if the title is under the name of these sorts of entities.

Nonetheless, owners of single-family homes can get a black eye when the title is not under the name of a “natural person.” This is not the first time we’ve seen these semantics.

In Berkeley, the Rent Board has maintained that "Golden Duplexes" and perhaps ADU's held in a living trust are not owner-occupied and thus, not exempt from the city’s rent and eviction controls.

If lawmakers are chipping away at the rights of single-family property owners, it may have a sympathetic judiciary. At least two courts have decided that individual living quarters are considered a “dwelling unit” subject to rent regulation, even if it is under the roof of a detached home.

In recent memory, an Alameda County judge has ruled that an owner of a four-bedroom detached home was indeed answerable to Oakland’s Rent Adjustment Program, declaring that,

“For the purpose of landlord-tenant law, a ‘dwelling or unit’ is not the entire property to which an owner holds title; rather it is an area understood to be committed to the habitation of a given tenant or tenants to the exclusions of others.”
~ Honorable Frank Roesch

Main takeaway?

You do not have to be a big landlord with multiple units to feel the ripples of state law. Even if you want to make ends meet or get a little extra income by renting a room or two, statewide rent control can quite literally hit home, but Bornstein Law can soften the blow.