October 13, 2023, by Christie Slatcher
California rental laws are notoriously strict. You don’t have to be a property management expert to understand this. When you invest in a property in Hawthorne, Long Beach, or any of the surrounding areas, it’s important that you have at least a basic understanding of landlord and tenant laws. Otherwise, you can make a pretty serious (and expensive) legal mistake.
There are tons of tenant protections in California, and that can sometimes feel like a challenge for landlords. However, when you understand the laws and how to navigate them, it’s not too difficult to remain in compliance.
One thing to know is that the laws are always changing. Pay attention and keep up. The laws you’re required to follow will generally depend on the type of property you’re renting out and the length of your lease agreements. A short-term vacation home, for example, has an entirely different set of laws and requirements than a lease that’s a year or longer.
Let’s take a look at some of California’s rental laws – both new and established – that rental property investors need to understand before renting out a home.
New Laws Investors Need to Know
Some of the laws we’ll be talking about today are old favorites that require constant review; laws involving rent control, fair housing, and eviction. But, before we dive into those, we want to make sure you understand some of the more recent legislation that has been passed in California.
Recently, we’ve been learning about California state laws around organic waste, habitability, and even emotional support animals. Here are some highlights that you need to know as a property investor:
- Organic Waste (SB 1383)
Organic waste needs to be disposed of in new ways, and this is a law that has been in effect for almost a year. It applies to multi-family properties with five or more rental units. If you’re an owner of a building, you need to provide your tenants with a way to dispose of organic waste separately and in accordance with state law. This will require a bin or container that’s effectively labeled as being designated for organic waste. You will also need to provide the composting information on organic waste collection to any new tenants who move into your property. You’ll have two weeks to give them this information after they move in.
Make sure you have subscribed to the city’s curbside collection service for organics. Otherwise, you will be required to haul the waste to a composting facility.
The Implied Warranty of Habitability is not a new law in California, and we’ll talk about habitability standards a bit further along in this blog. However, there are new laws around enforcement. The city or county now has to investigate any habitability complaints from residents. The municipality you live in cannot ignore a complaint that might be considered a mere nuisance rather than a legitimate concern. Instead, they must communicate with residents who file the complaint and reasonably enforce the state housing laws that speak to habitability.
- Support Animal Documentation (AB 468)
The laws around service animals and support animals can sometimes be frustrating for owners who are not sure what they’re allowed to ask or require. Companion animals are different from service animals but still protected by fair housing and anti-discrimination laws. Most companion animals, but not all, are emotional support animals.
These animals are not pets. They’re protected accommodations that tenants can request – even if you don’t allow pets. Emotional support animals would be exempt from a pet fee, pet deposit, or pet rent.
Landlords in California have often complained that it is too easy for tenants to claim a pet is a support animal. Recent laws require that any licensed physician who provides documentation about an individual’s need for an emotional support animal must have an established relationship with their patient. That relationship must have been established for at least 30 days for the documentation to be accepted. The physician must also complete an in-person clinical evaluation of the individual who requests the emotional support animal.
California’s Implied Warranty of Habitability
Now that we’ve discussed some of the new laws that you may or may not be aware of, let’s review the laws that have been in place for decades and still need your constant attention when you’re renting out a home.
Perhaps, the most basic property law of all is habitability.
A property must be safe and habitable for you to rent it out to tenants. You must be able to provide hot water, heat, electricity, and a roof that doesn’t leak. Ventilation must be clean and safe. There cannot be pest infestations and you cannot allow gas leaks or sewer backups.
Don’t rent your property out unless it is clean, in good condition, and safe for residents. California has an implied warranty of habitability, which means you’re renting out your property with the understanding that tenants can live there without putting themselves at risk. As we discussed earlier, the local cities and counties are more willing to enforce these laws than they might have been before.
California Fair Housing Laws
California’s fair housing laws are stricter than the federal Fair Housing Act. There are more protected classes. The federal act has seven protected classes. In California, you cannot discriminate in rental housing based on:
- Skin color
- Religion or creed
- National origin or ancestry
- Physical or mental disability
- Familial status
- Sexual orientation
- Gender identification
- Gender expression
- Veteran or military status
- Primary language
- Marital status
- Source of income
- Genetic information
This is a list that is always evolving. Make sure you are keeping up on all fair housing laws at a state, local, and federal level.
Rent Control Laws in California (AB 1482)
Statewide rent control laws apply mostly to multi-family properties that are at least 15 years old. If you rent out a single-family home or a condo and you’re not a corporation, you’re likely exempt from rent control.
The rent control limits and requirements cap rental increases to five percent plus the cost-of-living increase set by the Consumer Price Index (CPI).
Check your lease agreement. It must reflect whether your property is bound by the statewide rent control law. The language has to be specific, so make sure you have an attorney-approved template or verbiage provided by a local property manager. If your property is exempt from rent control but you don’t have the lease language stating that, you will have to follow state rent control laws.
Just Cause Eviction
Eviction law is specific, when your property falls under The Tenant Protection Act, you cannot simply terminate a tenancy because you don’t want to rent your unit to a particular tenant anymore.
Instead, you must have just cause (which means a good, legal reason) if you want to terminate a tenancy and not renew a lease agreement.
Just causes include:
- Nonpayment of rent
- Property damage
- Lease violations
- Criminal activity
If you’re evicting for a reason that isn’t considered just cause, a tenant relocation payment will be required.
California’s Security Deposit Laws
Security deposit laws can be tricky, and California is specific about how much you collect, when you give the deposit back, and how you make deductions from it.
Here’s what you need to know about security deposit laws and your rental:
- Security deposit limits. There are limits to how much you can collect in a security deposit. For unfurnished units, you cannot charge more than two months’ rent. If you’re renting out a furnished unit, you can charge up to three months’ rent for the security deposit.
- Deposits are refundable. There is no such thing as a nonrefundable security deposit.
- Deposits must be returned within 21 days. At the end of the lease term, you have 21 days after a tenant moves out to return the security deposit and/or an itemized accounting of why money was withheld and what it’s being used for.
Always double-check your math and your documentation when you’re deducting from a security deposit.
Section 8 Tenants and Screening
You may have applications from tenants and renters who benefit from housing voucher programs. You cannot turn them away before they apply and doing so is a Fair Housing violation. All applicants must be considered for your property and screened consistently, regardless of how they earn their income. Those housing vouchers used by Section 8 tenants can be legally considered a source of income.
This impacts how you market your rental property and screen your potential tenants. In the past, you could actively advertise that you did not accept Section 8 tenants for a property. There was some distinction about whether certain units were approved for Section 8. This is no longer legal.
Update and document your qualifying rental criteria. When it comes to being fair to Section 8 applicants, your screening criteria can remain the same if applied evenly and consistently and does not violate Fair Housing law. Keep in mind that when dealing with Section 8, the rent to income standard you set applies only to the Section 8 applicant’s portion of rent. Ultimately, if the applicant meets your set rental criteria, they should be approved to rent your home.
The laws are complex, and we know how difficult it can be to keep up. If you’d like some help from a knowledgeable property manager, please contact us at Jamison Management Company. We make staying up to date with the laws a priority, and we can keep you compliant.