Happy New Year everyone! As we chime in the New Year, we also chime in some new laws that may affect your real estate practice. Here are some highlights:

Statewide Rent Control to Take Effect: Starting January 1, 2020, California’s landmark Statewide Rent Control law will generally restrict rent increases and evictions, unless a property is exempt. Rent increases will generally be restricted to 5% per year, plus the rate of inflation (but not to exceed 10% max). As for evictions, landlords must generally have an acceptable reason to evict their existing tenants of 12 months or more, including 11 “at-fault” reasons (e.g., nonpayment of rent) and 4 “no-fault” reasons (e.g., withdrawal of property from the rental market). Unfortunately, the sale of the property is not one of the enumerated just-cause reasons for eviction. These rent control requirements do not apply to single-family residences or condominiums, but only if 2 requirements are met: (1) the property owner is not an Real Estate Investment Trust (REIT); a corporation; or an LLC that has a corporation as an LLC member; AND (2) the tenant has been given a notice of exemption. C.A.R.’s new Rent Cap and Just Cause Addendum (RCJC) form can be used as the notice of exemption, but be sure to check the “Exemption” box at the bottom of page 2. Other notable exemptions to the Statewide Rent Control law include, without limitation: (1) Newer properties built within the last 15 years; (2) Owner-occupied duplexes; and (3) As an exemption from just-cause eviction only, owner-occupied single-family homes with no more than 2 bedrooms or 2 accessory dwelling units rented out. For more information, see C.A.R.’s legal article on Statewide Rent Control (Assembly Bill 1482) (password-protected for C.A.R. members only).

New California Consumer Privacy Act: Effective January 1, 2020, this new law requires covered businesses such as ours to inform clients that their personal data may be collected and shared with others, such as the MLS. To comply with the new law, make sure that your clients for a listing, sale, or lease transaction, sign C.A.R.’s California Consumer Privacy Act Advisory (CCPA) form. The CCPA will be bundled in zipForm® with the Agency Disclosure Statement (AD). In addition to informing clients about the collection of their personal data, the CCPA also advises clients about the possibility of opting out, such as by using C.A.R.’s Seller Instruction to Exclude Listing From MLS (SELM) form. For more information, go to C.A.R.’s CCPA Q&A (password protected for C.A.R. members).

Home Inspectors and Appraisers Distinguished: Commencing January 1, 2020, the law clarifies that home inspectors cannot give an opinion of valuation on a property, given that they are not exempt from the licensing and certification requirements for appraisers. To even out the playing field, the new law also clarifies that an appraiser performing a real estate appraisal, cannot engage in the activity of a home inspector performing a home inspection.

Fair Housing Protection for Members of the Military: Starting January 1, 2020, discrimination in housing based on military or veteran status (including National Guards), is illegal under the Fair Employment and Housing Act. The fair housing law prohibits, among other things, the refusal to sell, rent, or lease housing accommodations to certain people, which includes making an offer with inferior terms and conditions.

Reduced Security Deposits for Military Tenants: Another new 2020 law generally limits the maximum security deposit that can be collected from someone in active military service who rents and lives in residential property. Instead of 2 months of rent for an unfurnished unit or 3 months of rent for a furnished unit, the maximum security deposit for someone in active military service will generally be one month’s rent for an unfurnished unit and 2 months’ rent for a furnished unit. Additionally, a landlord cannot refuse to rent to an active service member because of these security deposit restrictions. These security deposit restrictions do not apply if the service member has a history of poor credit or causing damage to rental property. It also does not apply if a property is rented to a group of individuals, one or more of whom is not the service member’s spouse, parent, domestic partner, or dependent.

Anti-Discrimination Protection for Section 8 Tenants: Under pre-existing law, a residential landlord is prohibited from discriminating based on a tenant’s source of income. Starting January 1, 2020, the term “source of income” will be expanded to include Section 8 vouchers or other public assistance. This new law does not affect a landlord’s right to prescreen tenants based on the landlord’s income and credit standards.

90-Day Notice Requirement for Rent Increases Over 10%: Starting January 1, 2020, a residential landlord must give a tenant a 90-day notice before increasing rent by more than 10% over the most recent 12-month period. The pre-existing law only requires a 60-day notice. The new law does not apply to properties that fall under the Statewide Rent Control law, which have a 5% rent cap per year plus the rate of inflation, not to exceed a total of 10%.

These new laws and other new laws that may affect your real estate practice are available at C.A.R.’s New Laws webpage (password-protected for C.A.R. members only). The full text of a new California Senate and Assembly Bill is available at the California Legislature website.

-Best wishes to everyone for a great 2020 New Year!

Copyright© 2019 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of December 30, 2019. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.