California Governor Gavin Newsom had a busy 2023, signing 56 housing laws into law! Several of these measures, which go into effect in 2024, will have a significant influence on California rental homeowners.
In this post, we will look at five developments that California landlords should be aware of in 2024. But, first, here’s a quick review of what a landlord cannot do in California:
What a Landlord Cannot Do in California in 2024
- Most residential tenants in California are subject to the Tenant Protection Act, which limits their rent increases. Landlords are not permitted to raise rent by more than 10% in total or 5% plus CPI increase (whichever is lower) over 12 months.
- No-fault evictions are forbidden, which means landlords cannot evict a tenant without cause.
- If a landlord terminates a tenancy agreement to reoccupy the property, it cannot be relisted for rent within 12 months.
- Landlords cannot terminate a tenancy to modify the rental property without providing information of the planned work.
- Landlords in California cannot ask for more than one month’s rent as a security deposit. When you leave, you cannot keep a security deposit for more than 21 days or deduct any charges for wear and tear. An itemized list of deductions must be accompanied by receipts or confirmation of repair and cleaning expenses.
- Landlords in California cannot discriminate against applicants based on credit history if they get a government rental subsidy.
- Landlords cannot charge more than $62.02 in tenant application fees in 2024 (this is updated annually).
- Landlords cannot disregard upkeep or repairs, especially if it jeopardizes a tenant’s health or safety. In California, tenants may use a “repair and deduct remedy” to make emergency repairs and deduct the costs from their rent if their landlord fails to solve the problem.
City regulations and state laws take precedence over lease agreements, so you cannot escape tenant rights by including language in your lease. It’s also crucial to investigate the rules at the municipal level, as they may include additional tenant protections than those listed above. What is true in San Diego might not apply in San Francisco.
5 Changes to California Tenancy Rules Landlords Should Be Aware of in 2024
1. Modifications to no-fault Eviction Policies for Owner Move-ins and Remodels
- Legislation: Senate Bill 567
- In effect as of April 1, 2024
The California Tenant Protection Act of 2019 has been updated, changing the regulations for “no fault” evictions and the termination of a residential lease agreement. As of April 2024, extra information is required if a homeowner wishes to terminate a tenancy owing to moving in or completing a large renovation of the property.
If you would like to reoccupy a rental home as an owner-occupier:
- You must move in within 90 days of your residents going out.
- You must stay in the home for a minimum of 12 months before it can be rented out again.
- The same regulations apply to close family members (spouse, parents, children, and grandkids). Their name(s) and
- your relationship must be revealed in the termination notice.
- If you or your family already occupy a rental unit on the property, or if a comparable apartment is available, you may not use moving in as a reason to terminate your lease.
If you intend to remodel a rental home:
- Owners of rental homes must now offer more information about the planned work, such as copies of permits or signed contracts, to existing residents.
- If the renovation is not completed, you are legally compelled to contact the former renters and offer them the opportunity to move back in.
2. Security Deposits are Limited to One Month’s Rent
- Legislation: Assembly Bill 12.
- Effective as of July 1, 2024
As of July 2024, security bonds are limited to one month’s rent. Previous legislation enabled up to three months’ rent to be collected in bond, in addition to the normal first month paid before occupancy. With rates soaring across the country, move-in charges were becoming prohibitively expensive for renters, particularly for furnished houses. Moving forward, if you charge $2,500 per month in rent, the move-in cost will be capped at $5,000, which includes the security deposit and the first month’s rent. This cap applies to both furnished and unfurnished dwellings.
However, there is an exception for certain particular homeowners. If you own only 1-2 rental properties, you may be classified as a “small landlord”. In this situation, you could receive a security deposit equivalent to or less than two months’ rent. It is critical to read the fine print or consult with a specialist before proceeding, as there are regulations and exceptions. If your potential resident is a service member, the small landlord exception does not apply.
What happens if my security deposit exceeds one month’s rent?
Don’t worry; there’s no need to repay the difference. If you (or your property manager) collected a bigger security deposit before July 1, 2024, you may keep it, even if it exceeds the new caps. Just make sure to examine the guidelines for repaying the amount when your resident moves out.
Pro Tip: Let Belong handle the headache of collecting rent and security deposits (among other things). Discover why homeowners in Los Angeles, San Diego, San Francisco, and Sacramento are switching from antiquated property management to Belong, which offers guaranteed rent and the ability to pay security bonds in installments.
3. Homeowners are Better Protected Against Unauthorized Occupancy
- Legislation: Senate Bill 602.
- Effective as of January 1, 2024
Trespassing and ‘ squatting’ can be a major problem for homeowners with abandoned homes. However, new regulations allow homeowners to notify local law enforcement that their property is unoccupied, allowing officers to remove any trespasser who seeks to take up residence or claims to be a lawful occupant.
Previously, trespass notices were only valid for 30 days. The SB 602 amendment extends the validity of trespass letters to 12 months and allows them to be sent electronically (if permitted by your local government). When a legitimate letter is on file, homeowners are not required to go to court to remove somebody living illegally on their property.
Pro Tip: When it comes to abandoned properties, prevention is generally more effective than cure! Read “10 Proven Ways to Reduce Vacancies and Keep Great Rental Tenants Long-Term.”
4. New Screening Laws Prohibit Credit History Discrimination
- Legislation: Senate Bill 267.
- Effective as of January 1, 2024
If you conduct your tenant screening, make sure to update your procedures for 2024.
If an applicant receives a government rental subsidy, you should reconsider how you evaluate their credit history and application to rent your house. To prevent discrimination, revisions to SB 267 restrict landlords from using a person’s credit history unless they are allowed to provide alternative proof of their capacity to pay their half of the rent.
This could include benefit statements, wage records, or bank statements. You must also allow them a reasonable amount of time to furnish this information and weigh it against their credit history when choosing whether to offer them a lease deal.
5. San Francisco Implemented An “Empty Home” Tax
- Law: Proposition M
- Effective as of January 1, 2024
Proposition M will tax Bay Area property owners who have at least three vacant units for more than six months at a rate of $2,500 to $5,000 per empty unit. Penalties will be increased annually to up to $20,000. Money collected will be used to subsidize affordable housing in the city, including for persons over the age of 60.
Individual homeowners, such as those Belong supports, are less likely to be affected by the regulations at this time, with single-family homes and duplexes exempt. However, it’s a timely reminder that many counties are actively working to eliminate vacant properties as the homelessness situation worsens and more families are priced out of home ownership.
Homeowners frequently wait on vacant homes for a variety of reasons. Some have inherited a family house and are unsure whether they are made out for property management. Others relocate for jobs and intend to return home, yet they are hesitant to rent up their home. If this is the case, Belong offers a solution. We find people who will love and appreciate your home as much as you do, while also completing all of the work to ensure its upkeep and maintenance. Discover more about Belong’s exclusive residential network and homeowner services here.
Reference: California Rental Laws Changed in 2024: What Landlords Need To Know
