It’s easier than ever to make a legal mistake in California when you’re renting out a home. The laws continue to change, and California has a reputation for being one of the most resident-friendly states in the country.
Protect your investment by educating yourself on the laws. Here are five of the most important laws you’ll need to know as a landlord.
1. Fair Housing Laws – Federal and State
California fair housing laws are stricter than the federal laws. While the federal Fair Housing Act sets up seven protected classes, the state laws go further. The federal laws say that anyone involved in renting, selling, or financing a home cannot make decisions based on a person’s:
That provided a starting point for California’s state fair housing laws. In California, all those federal classes are protected and the state also makes it illegal to discriminate based on:
Source of income
Most landlords believe that they won’t discriminate, but you’d be surprised at how easy it is to treat one application differently than another unintentionally. When you’re marketing your home, working with residents, screening applications, and enforcing your lease agreement, make sure you’re consistent. Always follow well-documented processes that are objective, fair, and consistent.
2. Rent Control Laws in California
Statewide rent control laws were passed in 2019, and went into effect in 2020.
You’ll first need to understand whether your rental property is impacted by the rent control laws or whether it’s exempt. Generally speaking, single-family rental homes and condominiums are exempt. Units in multi-family buildings must follow rent control laws unless they are less than 15 years old.
The Resident Protection Act of 2019 included a number of provisions, but it’s mostly known for its rent control laws. According to this law, you cannot raise your rent more than five percent plus whatever the cost of living increase is. This is determined based on the Consumer Price Index (CPI). Whatever the CPI increase is, the rent cannot be raised by more than 10 percent, and you can only raise the rent one time in a 12-month period.
If your property is exempt from rent control laws, you must state that in your lease agreements so residents know that their rent might be raised more than what the law limits for those properties that are subject to this law.
3. Just Cause Eviction Laws for San Diego Landlords
Another law that’s embedded in The Resident Protection act of 2019 pertains to just cause evictions.
What is a just cause eviction?
Previously, landlords could refuse to renew a lease agreement with a resident for any reason at all. When it was time for the lease to renew, you could simply choose not to do it. You could ask a resident to leave when the lease ended for no reason at all.
That’s not the case any longer. Now, you cannot evict a resident unless you have a good reason, or a just cause.
Just cause evictions are most often defined as evictions due to:
Nonpayment of rent.
Lease violations that were not cured.
Criminal activity at the property.
Damage to the rental home.
Causing a nuisance.
Refusing to sign a lease renewal or extension.
Refusing to let the landlord enter the home for maintenance or repairs.
Subletting the property illegally.
Source of income.
To effectively and lawfully evict a resident, there are specific processes that need to be followed. You must provide a required amount of notice, depending on the reason for eviction. You must gather all of your supporting documentation, and you may be required to attend mediation before a court hearing is scheduled.
California does not make it easy to evict residents, even when it’s a just cause eviction. Make sure you have legal support before you try to evict, or work with a San Diego property manager.
You can evict a resident if you need to make major renovations or repairs to the property in order to keep it habitable. However, you do need to offer the property to the resident again once that work is complete. You are also permitted to evict a resident when you or an immediate family member wants to move into that property. You may have to pay a relocation fee, however, since the resident is being evicted through no fault of their own. This is often the equivalent of one month’s rent.
4. California Security Deposit Requirements
Make sure you know the security deposit laws before you begin renting out a home in San Diego. Most of the disputes between residents and landlords occur over some misunderstanding about the security deposit. You can avoid this by knowing exactly what your responsibilities are and what you can expect from your resident.
There are limits to what you can collect. For an unfurnished property, which you are likely renting out, you can collect no more than the equivalent of one month’s rent for a security deposit. If your rent is $3,000 per month, your security deposit cannot be more than $6,000 per month.
Should you be renting out a furnished home, the limit for a security deposit rises to three times the monthly rent.
At the end of the lease term, you’ll have to decide whether the resident is getting all of the deposit back, some of the deposit back, or none of the deposit back. This will depend on the condition of the property and whether any damage was left behind. If you withhold any money from the security deposit, you need to provide an itemized accounting of what you pet and what that money paid for.
5. Section 8 Residents and Screening
Another legal requirement in California affects Section 8 Residents. You cannot disallow Section 8 Residents from applying for your property. Their housing vouchers or benefits can be used as a source of income while they’re applying for your property. In the past, a San Diego landlord could prohibit Section 8 Residents from renting their home. As long as they meet your standard rental criteria and their housing benefits cover the rent, you cannot deny them because of the Section 8 program. Their housing benefit can be used as income.
These are the five most important laws all California landlords need to know before renting out a property. The legal landscape in this state has become far more complex over the last two years, and if you have any questions about how to avoid an expensive legal mistake, we invite you to contact us at PURE Property Management San Diego Office.