Effective April of 2024, statewide eviction rent controls will be altered. What impact will SB 567 have on landlords not subject to more restrictive local rules?
After amendments to the bill, the short answer is not much.
This bill aimed to strengthen statewide rent and eviction controls, but it was watered down quite a bit.
As originally written, the bill would have lowered the statewide rent cap. Under state law, rent increases are limited to 5% plus the local rate of inflation, or 10% of the lowest gross rental rate charged at any time during the 12 months prior to the increase, whichever is lower. This will remain unchanged.
Under the first iteration of SB 567, there would be a complicated process for owners endeavoring to remove rental units from the market in order to sell or convert them, but this language was axed from the final bill that was recently signed into law by Governor Newsom.
As for those owners looking to end tenancies for substantial remodeling must now detail the work that is contemplated, and inform the tenant of their right to reoccupy the unit if work doesn’t commence or isn’t completed.
Where it becomes interesting is owner or relative move-in evictions.
Commonly, an owner, domestic partner, or a close relative wants to move into the property. If the original version of SB 567 came to pass, the termination of a tenancy based on the theory of a no-fault just cause would have been limited to owners who are “natural persons.” This was a reflection of a deep distrust for corporate entities that have gobbled up a huge amount of housing stock.
After some haggling by lawmakers, the bill would allow the owner to recover possession of the unit for an OMI/RMI if they hold the property as a natural person, family trust, partnership, or LLC. It’s more forgiving in terms of business structure.
The duration of the OMI/RMI
There was a big question mark with AB 1482. The intent of the owner to recover possession of the unit for their own use or that of a close relative was a stated just cause under statewide eviction controls, but the law was silent on how long the owner or their relative had to reside in the unit after eviction. SB 567 provides clarity, requiring 12 continuous months as the person’s primary residence.
Like other aspects of state law, this requirement is less strict than many local ordinances. In San Francisco, for example, the owner or relative must stay implanted for 36 months, and in the event the unit is offered for rent during the five-year period following service of the notice to vacate, the landlord must first offer the unit to the displaced tenant, with the added requirement of filing a copy of the re-rental offer with the Rent Board within 15 days of the offer.
Years ago, an investigative reporter in San Francisco knocked on the doors of properties that the owner or their relative was supposed to be residing in as part of an OMI/RMI eviction - again, there is a statutory obligation for them to use the property as a principal place of residence The reporter found that a staggering amount of residents who answered the door were not owners or the owner’s relative. The OMI/RMI was used as a pretext to sell the property or re-rent the unit at a higher price. This infuriated Supervisors, who clamped down on these practices.
Many rogue owners did not get the memo and were slapped with six or seven-figure lawsuits for claiming, deceptively, their intent to move into the property but did not. A few bad apples have spoiled the bunch, but Bornstein Law is proud of the work we have done for first-time homeowners to move into a tenant-occupied property they just purchased.
The mandate of living in a unit for 12 months, then, is a rule we can live with.
Whether it is more generous allowable rent increases, lower relocation payments to be paid out in no-fault evictions, or a shorter period of time for the owner or their relative to live in the unit, state law is preferable to more onerous local rules. Of course, when there are cities or municipalities in California that have more stringent tenant protections, the local rules will take precedence.
SB 567 also addresses the displacement of tenants when there is an intent to demolish or substantially remodel the property, but this goes beyond the scope of this article. Whenever no-fault evictions are contemplated, it is always prudent to consult an attorney.
Consequences for not getting with the program
Landlords are operating in a maddening regulatory regime with plenty of rope to hang themselves with procedural errors. The question becomes, was the error made out of naivete or mistake, or was it a flagrant, malicious disregard for the law?
As originally written, under AB 567, court-awarded attorneys’ fees and related costs would have been levied automatically. After revisions, the bill will leave it up to a judge to evaluate individual circumstances. Any additional penalties would apply only when there is an intentional or malicious act by the owner.
Be aware, however, of anti-harassment ordinances that are proliferating throughout the Bay Area. The whole intent is to punish landlords for skirting the rules and engaging in nefarious behavior to remove a tenant.