As we draw the curtain on what has been a challenging year for rental housing providers, there is no reason to believe that the legal landscape in 2026 will be any friendlier for landlords forced to comply with an already maddening regulatory regime.
Unlike in years past, the rental housing community did not have to engage in an epic battle against big, bold initiatives aimed at repealing the decades-old Costa-Hawkins Rental Housing Act in 2025. Yet it didn’t stop militant tenant advocates from trying to chip away at the rights of property owners in piecemeal fashion. If the rights of landlords could not be wiped out through a sweeping bill, the next best thing is to incrementally change the law and watch these rights melt away slowly, like a candle.
We have to give credit to our industry partners in rallying opposition to several bills that have been defeated for now, most ominously a piece of legislation that would have lowered maximum allowable rent increases under state law and, by stripping exemptions, exposed a vast inventory of housing stock to rent control. Efforts to meddle with fees and screening charges have been shelved for the time being, but one thing we've learned about the tenant rights camp is that they are a resilient bunch, and their agenda will march on. In short order, the California Legislative Renters Caucus has doubled in size.
This rather exclusive group is composed of state lawmakers who are tenants themselves and are adamant about giving other renters an elevated voice in the state legislature, and you can expect their cause to continue gaining momentum.
When we think of new laws impacting landlords, we normally think of recently enacted state laws and local ordinances, but let’s not forget about the role of the judicial branch of government, tasked with interpreting the law and setting uniform policies in place to adjust to the changing times.
In 2026, housing providers need to be hyper-vigilant about staying up to date and following procedural requirements to the letter.
A case in point is a recent California Court of Appeal decision, Eshagian v. Cepeda. The court ruled that a 3-day Notice to Pay Rent or Quit was defective because it did not provide enough information for an “ordinary tenant” to reasonably understand the deadline to pay rent and the consequences of failing to pay after the three-day window expires (excluding weekends and judicial holidays).
Many in our fraternity of landlords were aware of the court’s guidance and scrambled to add and fine-tune verbiage in their 3-day notices to ensure that they were brought into compliance. Countless more are still in the dark about the new verbiage that must be included in the notice. This underscores the importance of owners to tether themselves to an eviction attorney and/or an industry partner like the East Bay Rental Housing Association to stay abreast of an ever-changing regulatory regime.
More than ever, rent increases should be carefully reviewed in 2026.
Under current law, landlords face costly consequences when an illegal rent increase is discovered, but there may be additional hell to pay in light of another case that says an improper rent increase can amount to receiving stolen property, a criminal offense under California Penal Code § 496. Aggrieved tenants who have paid too much rent can be emboldened to sue their landlord for up to three times the amount of their loss in civil courts.
In Randy Johnson v. Connie, LLC, the Court of Appeal for the 4th Appellate District left it up to a jury to decide whether a rent hike is so egregious that it warrants stiffer penalties. Although this is a binding precedent throughout California, it will be interesting to see how other courts will apply it, and how much latitude is given to attorneys representing tenants who are looking to “shake down housing providers who slip up by demanding more rent than what is legally due. Suffice it to say that, given new ammunition to sue landlords and the upside potential for windfall payouts, the legal counsel of tenants will test the new case law and milk it for all it’s worth to inflict the most monetary damage on housing providers who charge more rent than what is legally allowed.
Tenant attorneys, though perhaps not great litigators, are adept at identifying procedural errors, and the financial stakes for unsuspecting landlords who fumble have now gotten higher.
It is instructive to watch what is happening in Southern California, as it may shape the narrative in our region.
Southern California has become a laboratory of increased tenant protections. Politicians, eager to appease their constituents – predominantly made up of renters – have floated many crackpot ideas. These include making rent stabilization ordinances more restrictive and limiting the ability of property owners to recoup rising costs. In the aftermath of a poorly managed government response to raging fires and rebellion against ICE raids, local lawmakers have called for eviction moratoriums and rent freezes. Other initiatives have included banning gas stoves and mandating climate control to ensure rental units are not uncomfortably hot.
Many of you in the East Bay, watching from afar, may wonder what this has to do with you — to which we say that ill-conceived policy proposals in Los Angeles and elsewhere can easily spread our way. Rarely do tenant advocates have an original idea. Instead, it becomes a game of “follow the follower.” When one municipality inks greater tenant protections, other local governments take notice and come up with their own set of new rules that are similar, if not a carbon copy of what they learned from another pioneering locale. There is no reason to believe that the concerning spike in tenant activism brewing in Southern California will not be imported to the Bay Area.
Insurance will continue to be a vexing challenge for housing providers in 2026.
It is hard enough to obtain and keep traditional insurance necessary to minimally protect a multifamily property. It becomes easier when rental property owners invest in maintaining the premises and making upgrades, with special attention to their roofs and electrical systems, but this is still problem.
Securing coverage for claims of wrongful eviction and habitability issues is even more difficult, if not impossible, given the rising costs of litigation, a heightened awareness of tenant rights that makes lawsuits more probable, and the price tag nowadays for building materials. Insurance carriers are hemorrhaging money, and what this means for landlords is that even the slightest of errors in evicting tenants or delays in making repairs will expose them to costly legal dustups with tenants, without any guarantee that the insurer will foot the bill for an attorney. More often than not, the insurance company will leave owners to fend for themselves, making it imperative to avoid mistakes in the first place.
Owners who are tethered to proper counsel and informed organizations like EBRHA are best positioned to navigate these minefields, cauterize risk, and ensure that the New Year is one of prosperity, not calamity — even when the most innocuous of blunders are made.