New Rental Laws in California 2024

Jul 22, 2024

Attorney Edrin Shamtob from SNS Law Group recently joined a discussion with the Apartment Owners Association to talk about new rental laws in California for 2024 so landlords can stay up to date on these issues.

Transcript:

Welcome everybody, my name is Jeff Faller with the Apartment Owners Association, and it is just great to have you with us today. Wow, there are a lot of changes, and there are changes that impact all California housing providers, whether you own one unit or whether you own many. So today is a very important live stream to watch, and we are so glad that you’re here with us.

AOA is the largest individually organized group of apartment owners here in the state of California, and we are dedicated to your real estate success.

Apartment Owners Association

Part of that is just being compliant with all the laws that are existing and all the things that will be enacted starting next year. Up and down the state, we have state laws that have changed; we’re going to cover that. Then in the latter half, we’ll cover some of the things that are specific to L.A.

You may have missed how to prepare and serve a three-day notice, and also, man, we had such a great time in San Diego—had a triple header there, very cool. Man, we didn’t record it, unfortunately, but yeah, a lot of the in-persons we do not record. Anyway, for those of you that went, it was great to see you; it was great to network and just kind of be together as a family.

In January, we will have several in-person seminars, and it will be how to write off almost anything—that’s the title, how to write off almost anything legally. So that will be in person. You won’t see those seminars up yet, but they will be up soon where you can register for those. And if you’re a member, of course, those are free; non-members, thirty-nine bucks.

Also, I’m excited about the AOA Landlording Power Conference that we’re going to have on February 21st in Santa Clara. So there will be five different speakers, at least, at that event, and just very excited about that, man. You can’t believe the things, the attacks that continue to come. The San Francisco Chronicle now has a search engine where if you enter the address of the property, it will pop up the owner and their residential address, if you can believe it or not.

Part of that power conference, the Landlording Power Conference, one of the speakers is going to speak about how you can regain your privacy with that by using a land trust, and there’ll be other, you know, we’ll have an eviction attorney there, along with several other speakers, and that will be a great time. But can you just believe the way that they’re treating us? We’re providing housing; we’re part of this solution, and yet it’s just crazy what’s going on, of course.

If you haven’t subscribed to this channel, you’re an AOA member, even if you’re not. If you want to see more of this kind of content, please go ahead and subscribe. Sometimes we put stuff out that we don’t—you know, that’s kind of impromptu. So you may want to subscribe.

And if you’re watching for the first time and you’re watching live and you’re on aoausa.com, there’s a blue help button at the bottom-right side of the screen. You will be able to put your questions in there, and we’ll be able to answer those and I know that a lot of you are coming with questions already. If you hold them till the end, it’s better because we have an excellent speaker who is very thorough, and he may just answer your question.

Guest Speaker: SNS Law Group

Our speaker today graduated from USC and UCLA with a Juris Doctorate from the Gould School of Law. Besides leasing and landlord-tenant disputes, there are many other facets of real estate law that he covers: easement disputes, foreclosure defense, along with many other things. He’s the founding member of SNS Law Firm, and you know, when we look at different advertisers that advertise with us and we looked at his Google reviews, he’s, I think he probably still has all five-star reviews, and he’s a guy that we haven’t even gotten a complaint on yet. So, it’s my pleasure to introduce to you today attorney Edrin Shamtob.

Edrin Shamtob, Esq.

Thank you so much. Thank you for the introduction. Yeah, we haven’t had any complaints, and then we’re looking to keep that track record going. Thank you so much for having us on today.

Just to kind of speak a little bit about myself, I’ve been a practicing attorney for about a decade now. I do specialize in real estate law, all facets of real estate litigation and transactions, and a big chunk of that is unlawful detainer actions. I’ve probably done over 500 to 600 eviction actions just in the last four years since the pandemic and subsequent to the end of the pandemic. We also focus on business litigation cases here at my firm, and we’ve been highly successful in the last decade.

California Rental Laws 2024

I know your viewers and the association members are really interested to know where we’re headed to in 2024. The landlord-tenant landscape is constantly changing here in Los Angeles and all across California. So why don’t we just dive in?

AB 12 California Security Deposit Cap

I’m sure most of your viewers have heard about Assembly Bill 12 from the California legislature. I always marvel at the constant changing landscape. They never want to let landlords just be free and earn sufficient income from their properties, and they’re constantly trying to restrict their ability to safeguard their properties. Assembly Bill 12 is another step in that direction.

Before I dive into the bill, prior to its enactment, landlords were allowed—and it’s really a security deposit bill, that’s what it is—landlords were allowed to collect up to 2 months’ rent for unfurnished units and up to three months’ rent for furnished units. Well, all of that is changing now.

Landlords will be capped at one month’s rent irrespective of the unit being furnished or unfurnished. And the problem this creates—and it’s going to come into effect in July 2024—the biggest problem this creates is, at least when you could have had up to two months’ security deposit, you had a bit of a buffer zone to protect yourself for those tenants who failed to pay their rent payments or caused damage to the property. Now, you have a situation where you’re capped at one month.

I used to have clients that initially in their lease agreements charged one month’s rent and they were allowed to change the terms of the tenancy if they had a problem tenant to require two months’ rent. That’s no longer allowed both from a statewide law, AB12, and also the Just Cause Ordinance, that now prohibits landlords from altering the terms of their tenancy, even if it’s on a month-to-month basis. So, you’re going to be stuck, all you landlords out there, you’re going to be stuck at charging only one month’s rent, regardless if it’s a furnished unit or an unfurnished unit, regardless if it’s an apartment, or a single-family property, or a condominium.

Senate Bill 567: Alters AB 1482 Tenant Protection Act

I think far more important is what we’re going to be seeing with Senate Bill 567, which is going to come into effect in April 2024. SB 567 is going to alter the Tenant Protection Act of 2019. For those of you who are unaware of the nuances of AB 1482, the Tenant Protection Act, let me dive into some specifics.

Before 2019, there was no statewide rent control law in effect. The state essentially took a back seat and allowed local jurisdictions—City of Los Angeles, Inglewood, micro cities—who essentially governed themselves with respect to rent control. Then you have places like Ventura County, which has not instituted any local rent control. The state came in and said, “We’re going to make a uniform law that’s going to apply to almost all properties running up and down California.”

Tenant Protection Act Applies to Multifamily Properties

The Tenant Protection Act, importantly, applies mostly, if not exclusively, in multifamily properties. It specifically excludes single family properties and condominiums that are not owned by a corporation. So, if you own an SFR or a condo, and you own it in your own name, or you own it through a trust, or you own it through an LLC, you can exempt yourself from the Tenant Protection Act so long as you serve a notice of exemption on your tenant.

For any tenancies that commenced after August 2020, the notice of exemption has to be embedded within the lease agreement. So make sure if you’re bringing on any new tenants and you own a single family property or a condominium, make sure your lease agreement has a provision in there exempting the property because you certainly do not want to add any additional tenant protections to the properties that you’re renting out.

Just Cause Evictions

The importance of the Tenant Protection Act is in its effect on the properties that it applies to. It has two main elements. The first element is the just cause eviction requirement, which means that even if a property converts to a month-to-month tenancy after determination of the initial term, you cannot get rid of your tenant unless you have one of several identifiable reasons for an eviction.

Those are actually broken down into an at-fault just cause category and a no-fault just cause category.

Rent Increase Caps

And the second element is the rent caps. Properties are typically capped in terms of rental increases at the lesser of 10%, or 5% plus the change in CPI.

SB 567 Impact on Tenant Protection Act

But really, what I want to get into is the impact that SB 567 is going to have on the Tenant Protection Act. Before I dive into there, whenever I get a client, before the enactment of SB 567, whenever I have a client who has a property that’s not subject to any local rent control law, that’s only subject to the Tenant Protection Act, I always convey to them that it’s much easier to evict your tenant. Because there’s no local governmental body that’s overseeing the enforcement of the Tenant Protection Act. And, its provisions are a lot milder, they’re a lot less harsh, than what you see for instance in the City of Los Angeles RSO, the L.A. County RSO, Culver City RSO, so on and so forth.

Alters No-Fault Just Cause Evictions: Strengthens Tenant Protections

But what essentially is going to happen with SB 567, they’re strengthening the protections, specifically as to the no-fault just cause evictions. Before, you used to have several identifiable no-fault just cause provisions.

Owner Move-In Evictions

For instance, owner move-ins. If you decide after the tenancy converts to a month-to-month tenancy, if you decide that you want to move in, or your kids or your parents or your grandparents want to move in, that’s a completely lawful reason to evict your tenant. All you would have to do is provide your tenant a 60-day notice, advise them that you’re going to move in yourself, or a family member is going to move in, and you can get them out.

Now what they’re doing with the owner move-ins, they’re tacking on additional requirements because what the state has seen is landlords are trying to evict tenants on the notion that they’re going to move in, they get rid of the tenants, but then they don’t move in.

Now there’s going to be a requirement that for any owner who actually evicts a tenant based off of a owner move-in, the landlord has to—this is a requirement—that the landlord must occupy the subject property for a minimum of 12 months, for a whole calendar year, after the tenant vacates the unit.

The second requirement is that the landlord must move in within 90 days. So this is not a situation where you can evict the tenant and then leave the property vacant, or occupy the premises yourself for 30 days, and then turn around and rerent it out to another tenant. There’s going to be more oversight on enforcement, as well.

Substantial Remodel Evictions

The second impact it has is on substantial remodels or renovations. I’ve had dozens and dozens of clients who have come to me, because they intend to substantially renovate their units and they need to get possession back. The way AB 1482 is set up, so long as you’re going to, you intend to, engage in any structural, electrical, plumbing renovations and the expectation is that the tenant has to vacate for at a minimum of 30 days, AB 1482 would allow you to evict your month-to-month tenant. You would not have to necessarily provide any evidence to the tenant that you’re going to be engaging in a substantial remodel, it’s just the intent to do so would have given you a right to get rid of the tenant.

SB 567 is going to alter that provision as well. Now, in the notice to vacate that you’re required to provide to the tenant, the 60-day notice, you must advise the tenant of the planned renovation. Specifically, what you intend to perform, you have to provide the tenant copies of any pulled permits that’s going to reflect the work that’s going to be performed. And you must advise your tenants of their right to reoccupy the premises in the event you change course, in the event you decide not to commence any substantial renovation, or the substantial renovation is not completed. So the tenant is going to have an opportunity to come back at the same rental rate they had with their current tenancy.

Withdrawal of Property from Rental Market

And then lastly, and this is actually a huge change, AB 1482 allowed you to evict a tenant because you decided or elected to remove the property from the rental market entirely. One of the biggest criticisms from a tenant perspective, tenant advocacy groups, they’ve been contending over the years that the AB 1482 did not have sufficient protections for tenants. It did not specify any specific requirements that the landlord had to follow in order to withdraw the property from the rental market and what they saw is landlords would convey to the tenant that they were removing the property from the rental market—there’s no oversight from any governmental agency—and landlords would simply just not go through with it.

What we’re likely going to see is, that provision is going to mirror what the Ellis Act requires. And that’s a whole complex web of requirements. You have to file documents with governmental agencies and you have to pull the property from the rental market for a certain number of years before you’re allowed to put the property back onto the rental market.

So it’s very likely that removing the property from the rental market is going to mirror what we see currently in the Ellis Act.

Consequences of Non-Compliance

Now, what are the consequences of non-compliance with these requirements? What SB 567 also implements is damages. In the event landlords violate these provisions, tenants are allowed to commence a civil cause of action, a lawsuit against the landlord, in effect.

And they can actually recover up to three times the amount of damages they’ve suffered, in addition to attorney’s fees. The state can also pursue landlords for civil violations and criminal prosecution in the event landlords trying to take advantage of tenants by contending that they’re going to do an owner move-in, for instance, and not going through with it; contending that they’re going to do a substantial renovation and not going through with it; attempting to withdraw the property from the rental market and immediately placing it back onto the rental market.

So this is actually going to squeeze landlords for those few properties that are actually solely covered by AB 1482, that are not covered by local rent control laws. This is going to squeeze landlords even more. It’s going to restrict their ability to regain possession of their properties. So, be on the lookout in April and make sure that you’re in compliance if you do have a property that’s subject to the tenant protection act.

Procedural Pitfalls to Avoid for Your Eviction Case

I also want to discuss, and this kind of goes hand-in-hand with new laws—the new laws that have come into effect over the past year and that will continue to be in effect—and what type of issues they cause if you do want to commence an eviction action against your tenant.

Determine Jurisdiction

As I discussed in many of my past presentations and discussions, a big part of what I do, and a big part of what landlords need to do, is they need to determine what jurisdiction they’re in. Over the last three years, there’s been a bunch of micro jurisdictions that have popped up and they’re all divergent. The City of Los Angeles is dissimilar to the County of Los Angeles, it’s different than Culver City, it’s different than Santa Monica, it’s different than Inglewood.

So you always have to first ask yourself, “What jurisdiction do I fall under?” because there’s varying rules depending on where the property is located. So, I’m going to cover these four jurisdictions today, which we already covered, we covered the State of California, partially. I’m going to address one other issue for the State of California. I’m going to discuss the City of Los Angeles, unincorporated L.A. County, and finally the City of Santa Monica.

Notice of Change in Ownership

The State of California, in addition to the Tenant Protection Act and the Senate Bill, and the Assembly Bill we just discussed, this is an issue that I see my clients get into hot water over many, many, many times. A lot of my clients hire my office when they’re in the escrow process—they’re in the process of acquiring the property and they bring me on to assess the tenancy, assess the viability of evicting the tenants because they’re probably trouble tenants, and a lot of problems I see for buyers of real property after they’ve closed escrow they acquired the property they fail to serve the tenant with a notice of change in ownership.

The California civil code requires all owners, all new owners, to advise tenants that ownership has changed. You have to provide a formal notice to your tenant. That formal notice must advise the tenant on who to pay, who the new landlord is, where to pay, in terms of a location that a payment can be furnished, when to pay, in terms of Monday through Friday 9:00 am to 5:00 pm. And also, the method of payment, how to make a payment.

So you want to provide your contact information in the notice of change in ownership, you want to provide your contact information or your property manager’s contact information, you want to specify the location where the payment has to be furnished, and most importantly you want to specify how the payment has to be made.

You have to keep in mind that the civil code requires landlords to provide one non-electronic method of payment. I know that Venmo and Zelle are being used very commonly these days, but you have to provide a check payment or cash payment form a payment for your tenants. Unless the tenant has ever provided you a dishonored check. If the tenant has provided you a dishonored check, you can exclude their ability to provide you a personal check going forward.

So for all of you landlords who are acquiring properties, make sure you issue and serve to your new tenants a notice of change in ownership. Failure to do so—even let’s say, for the sake of argument, you acquired a property today, you failed to provide a notice of change in ownership, the tenant pays you rent, two years later you want to evict them. If you file that eviction action, a defense that a tenant has is, “Hey, you never provided me a notice of change in ownership. You’re not entitled to the rent payment.” That’s going to result in an almost automatic dismissal of your eviction action where you’re going to have to start from the beginning and absorb a ton of costs and expenses.

So it’s a simple form. I think it’s on the AOA’s website. My office also has a copy that we’d be happy to provide you.

City of Los Angeles

City of Los Angeles. Good old City of Los Angeles where it’s almost impossible to be a landlord from a financial perspective these days, but I know a lot of your viewers still are in the game, so there’s some important requirements.

RSO Requirements

I’m not going to spend a whole ton of time on this. I’ve addressed this issue in terms of property registration for RSO buildings before, but just a quick snippet, I’m sure you guys are already aware. If you have an RSO building, you have to register the building with LAHD. You have to pay annual RSO fees. More importantly, or equally as important, after you register your properties, you have to post the required notices on the property.

I’m sure most of you are aware of the RSO certificates that are issued after you register the property. Those are issued annually. You have to post those in a conspicuous place on the property.

There’s a tenants rights notice that has to be printed in both English and Spanish. It’s a red and yellow copy that I’m sure you guys have already seen. And also, the new renter protections notice.

Now, there’s something important about the renters protection notice. Whereas the RSO certificate and the tenants rights notice only applies to RSO buildings, the renters protections notice, the one that they issued earlier this year, in the spring of this year, that has to be posted on all properties, all residential properties in the City of Los Angeles irrespective of RSO or non RSO.

Severe Penalties for Non-Compliance

Failure to do so will result in a dismissal of your eviction action. Failure to register your property with LAHD or failure to post your RSO certificate results in some pretty severe consequences. Number one you’re technically not allowed to collect rent until you’ve registered the property and posted the notices.

If you have collected rent, you expose yourself to treble damages. The tenant can come after you to claw back all of the rent payments they’ve made to you while you were in a state of non-compliance. The tenant can also recover their attorney’s fees if they file a lawsuit, the clawback, the rent.

And lastly, as I mentioned a little earlier, it’s going to result in a dismissal of the eviction action.

All of our viewers have to understand, most of these requirements have been imposed for one reason and one reason only, and that’s to prevent you, to create as many hurdles and obstacles as possible to prevent a landlord from evicting a trouble tenant. These are technical requirements, they are easy to satisfy, but unfortunately I see far too often, landlords either being ignorant of the requirements, they’re just completely unaware of it, or they’re aware of it and they just don’t comply. And that’s going to cost you a lot of time, a lot of money, and a lot of heartache down the line.

Must File All Termination Notices with LAHD

Now, following registration, I want to talk to you about some new requirements for the City of Los Angeles for notices to quit. Since the Just Cause Ordinance was passed back in January of this year—which essentially imposes a just cause eviction requirement on all properties in the City of Los Angeles, not just RSO properties—in that same ordinance, they have a requirement that all notices to quit—it doesn’t matter if it’s a 3-day notice, if it’s a 30-day notice, if it’s a 60-day notice, if it’s a notice to evict to comply with a government order, for an owner move-in, for a substantial remodel, doesn’t matter—any notice of termination must be filed with the Housing Department within three business days of its service to a tenant.

I know that a lot of my clients are aware that it has to be filed for three-day notices to quit, three-day notices to pay or quit or three-day notices to perform or quit, what they’re unaware of is that again it applies to any notice of termination: 60-day notices, 30-day notices, it doesn’t matter. You have to file it. If you don’t file it, the tenant’s attorneys—BASTA, Eviction Defense Network, Bet Tzedek—this is the first thing they’re going to look for, this is the first thing they ask for in discovery when we file our UD action, so make sure you comply and you file your notices with the Housing Department.

3-Day Notices

Just generally about three-day notices to pay or quit, because we see a lot of those in my office. I actually just saw one this morning, a client sent me a copy that they sent over to a tenant. What is specified is three days to pay or quit. It’s a defective notice because it has to be three business days. It has to exclude weekends and judicial holidays, so make sure your notice specifies three business days.

The second requirement, the new requirement they’ve imposed, the 3-day notice must specify the number of bedrooms. If you fail to specify the number of bedrooms and you follow UD action your case is going to get tossed by the court.

And thirdly, you can only include, and I see this so often, you can only include base rent in a three-day notice to quit. You cannot include RSO fees, you cannot include late fees, interest charges, none of that. That’s going to result in a defective notice.

Fair Market Value Threshold

And I’m sure you guys are already aware, but if you’re not, they’ve also instituted a fair market value threshold. And this has to do with the requirement—and this is why they’re requiring us to specify the number of bedrooms in our three-day notice to perform or quit—what the city has said is that there has to be a minimum amount owed by the tenant before you’re able to commence an eviction action. For instance, for a one-bedroom, the tenant has to be behind on rent at least $1,747 before you can commence an eviction action. It’s $2,222 for a two-bedroom. If you’re below that threshold, you cannot file an eviction action. This is why it typically requires, at least on the lower rental income properties, for the tenant to miss multiple months of rent.

And what I see far too often is I see landlords collecting partial rent. If a tenant tries to pay you partial rent, you’re not required to accept it. And in fact, what I recommend to my clients is to reject partial rent payments so you’re able to eventually hit that fair market value threshold so you can commence your eviction action.

That’s the city of Los Angeles.

County of Los Angeles

I want to turn to unincorporated Los Angeles County. As you guys are probably aware, in 2020, the County of Los Angeles unincorporated regions instituted their own rent stabilization ordinance.

Post and Serve Tenant’s Rights Notice

Similarly to the city of Los Angeles RSO you have to post and serve a tenant’s rights notice. I actually want to highlight one point. I have a lot of clients who are aware of the posting requirement. They post it on their properties and they do a damn good job of it. What they fail to do is, they fail to serve a copy to the tenant. They fail to actually mail a copy to the tenant. All they do is post it on the wall but they don’t serve it, so if you do register your properties, both with the county or the city, make sure you serve a copy on your tenant.

I suggest you do so through registered mail so you have a receipt if the tenant tries to defend the UD action down the road on the basis of a failure to serve. At least you have evidence of its service.

10-Day Notice to Cure or Quit

The second thing I want to highlight with the County of L.A., and this is something that a lot of people are unaware of. I’ve seen clients who have properties in the County of Los Angeles, the tenant parks their vehicle in an improper fashion, they move a door, they make alterations, they commit a lease violation, and I’ve seen clients issue three-day notices to perform or quit. That is a defective notice. The County of Los Angeles RSO requires a 10-day notice to cure or quit. A 10-day notice for any material lease violation, okay. So, a three-day notice is not not going to do you any good. You have to make sure it’s a 10-day notice.

Must File Notice of Termination with DBCA

Similarly to the City of Los Angeles, there’s a requirement for you to file any notices of termination again any notices of termination whether it’s a 3-day notice, a 10-day notice, 30-day, 60-day, whatever it is, you have to file it with the Department of Business and Consumer Affairs within five days of its service on the tenants.

Failure to do so will result in a dismissal of your eviction action. You’re going to have to start start all over, which will give the tenant another opportunity to comply, which will be disastrous to your eviction case. So make sure you’re filing it with the County of Los Angeles, as well.

Fair Market Value Threshold

And also, similarly to the City of L.A., there’s also a fair market value threshold for the County of Los Angeles, where the tenant has to be behind in rent a specific amount. This is determined by HUD, it’s an income determination which you can easily find online.

City of Santa Monica

City of Santa Monica. I have a lot of clients who own properties in Los Angeles and the City of Santa Monica. Santa Monica has its own requirements, it has its own RSO.

Must Register with Santa Monica Housing Department

As with the County of Los Angeles and the city of Los Angeles, you have to make sure your properties are registered with the Santa Monica Housing Department.

Service of Warning Notice

I see clients, similarly to the County of Los Angeles, they issue three-day notices to quit, or perform or quit, in the city of Santa Monica. Santa Monica has a very quirky requirement that a lot of people are unaware of.

Prior to issuance of any notice to perform or quit—perform or quit, not pay or quit, perform or quit—for a violation of a lease covenant, you’re required to provide what’s called a warning notice. You basically have to write your tenants a letter or provide them a notice specifying the lease violation, and you have to give them 14 days notice. Putting them basically in a state of awareness of the violation and giving them an opportunity to fix the violation.

Only after the expiration of the 14-day period are you allowed to serve them with a three-day notice to perform or quit.

So essentially in the city of Santa Monica, tenants are provided two opportunities that collectively provide them 17 total days to fix the lease violation. So make sure you’re providing the warning notices. I have a lot of clients come to me, they file actions, lawsuits, in pro per, and they run into an issue where the tenants attorney asks them in discovery again for the warning notice. They don’t have it. It’ll result in a dismissal of your action.

Must File Termination Notice with Santa Monica Housing Department

Any termination notice has to also be filed with the Santa Monica Housing Department. In this jurisdiction, it has to be filed within three days, so make sure after you serve your tenants to also file a copy with the Santa Monica Housing Department in order to avoid any issues with your eviction action down the line.

SNS Law Group, LLP – Thank You

That’s about all the material I have today. I’m hoping it was quite helpful for your viewers, both to become aware of what to expect down the line with the changes that are forthcoming in 2024. And also the new laws that were just instituted this past six months. And I’d love to take any questions your members have.

Question and Answer

Jeff Faller

Great Edrin, thank you so much. There’s a whole lot to digest there. And like I said, we’ve updated over like over 30 forms, even just in the last 50 days. So there’s a whole lot there. Make sure you’re using not a stale form, but download it, log into your member account, download it and get the right one. Don’t try to go cheap. It’s $97 folks. It’s $97 for the year and there’s no per unit charge.

Edrin Shamtob

Your guys are busy over there, constantly just monitoring and revising and altering. You guys do great work to help out your members, that’s for sure. It’s a complex… to keep track of all the changes.

Section 8 Rent Increase

Q:

One of the other things that is right around the corner is, if you’re a Section 8 and you want to do that rent increase, we’re almost right on the mark where you have to serve that notice now, because you need 60-day notice for that, isn’t that right?

A:

Edrin Shamtob

That’s absolutely correct, yeah. To do so now in expectation of its occurrence down the line, yes, you should do that now. It’s prudent.

HUD Income Numbers

Q:

I know that HUD changes their numbers. It’s a yearly thing where that changes, and I think it changes in October.

A:

Edrin Shamtob

That’s correct, yeah. It’s a little different than what the city has done, because the city just publishes the numbers. With the county, you have to go online frequently, annually, to see what those numbers look like. So it’s kind of like a moving target that the members should be aware of going forward.

Jeff Faller

Right. So, that rental protection notice that every single housing provider has to post, has to serve, that thing’s changing every year.

Edrin Shamtob

It is changing every year, so it’s an annual requirement. And the way I like to explain it to my clients is, just like the RSO certificates, new ones are issued every single year, annually… so are these tenant protection notices. So make sure you’re staying abreast of the changes so you have the correct version posted.

If you don’t have the correct version posted, it doesn’t matter if you have a prior one posted, it’s going to lead to a dismissal of your action.

Jeff Faller

I just wanted to bring that up because we sell those notices, and I just hope people understand that this is getting updated and you need to post a new one. And man, what a hassle that is.

Edrin Shamtob

Hassle is stating it kindly and mildly. They’ve created so many hurdles and roadblocks. And again, like I mentioned earlier, there’s no substantive reason why they have all of these requirements. It’s only instituted for one reason and that’s to keep the tenants in place.

So there’s a lot of technical requirements. My office is aware of almost all of them. We’re constantly monitoring any changes that are coming into effect, so we’re keeping our clients updated on new developments.

Presentation Slides and Contacting SNS Law Group

Q:

One of the first questions that we have for you here is, are you able to share those slides with the viewers here?

Edrin Shamtob

Absolutely. We always do and I could provide it to AOA and we can get it posted up. I think the recording today is going to be on YouTube subsequently, but yeah, we can absolutely put it up so they can use it as a resource.

Jeff Faller

Okay, great. Well, thank you for that. And we have your number listed there as well, and your email address.

Edrin Shamtob

When you call, you’re mostly speaking to myself or my partner Bijan Shakibkoo. We don’t hand you off to an associate straight out of law school who doesn’t know what they’re doing. You’ll be dealing directly with myself, and like I said, I’ve been doing this for a decade and I know the ins and outs.

Listing Requirements

Q:

When listing a property for rent do I have to list the credit score and income requirements or can I leave that out?

A:

Edrin Shamtob

You’re not required to post anything. You could do so and I actually did this in the trade show when I discussed tenant screening requirements. So you can post it. You’ve got to make sure you’re not engaging in any unlawful discrimination. And if you want, you can go back and listen to my presentation, from I think about a month ago at the trade show, which covered tenant screening, and all of the requirements, and what you’re allowed to ask and not ask, and what you can market and you can’t market.

But yeah, I mean, I always tell my clients, do proper tenant screening to avoid having to hire me in the first place. You can save yourself a lot of time and keep a lot of dollars in your pocket by doing appropriate screening.

Jeff Faller

So I’m going to put you on the spot here. Could we do a tenant screening live stream sometime soon?

Edrin Shamtob

Absolutely. 100 percent. I know it’s really a critical step in the whole spectrum of rentals. Like I said, doing it upfront—and I see a lot of clients who fail to do it upfront, and they get a real trouble tenant come in—if you do your due diligence upfront, you’ll get a well qualified tenant who’ll pay your rent, won’t destroy your property, hopefully.

It’s just a couple forms and a little bit of time to do your due diligence. But yeah, I’d be delighted to present on that.

Jeff Faller

One thing I just want to mention, just because we’re on this topic, is when you are running an instant criminal search in L.A. County, the wonderful County of L.A. has redacted the date of birth. And so, what happens, ladies and gentlemen, is that—it doesn’t matter if it’s AOA tenant screen or any other company—they cannot show you the results even when there are results because there aren’t three different points that they can match and provide to you.

So that’s kind of a way that they’ve made it so that you can’t see it. However, you can see it if you do a single county criminal search. And so I just want to mention that—it’s not just L.A. County either, it’s actually over half of the counties in the whole state of California. So please, please, when you run that credit report, please get the single county criminal report. If you get your tenant screening somewhere else, you can still get the single county report with us. It’s like $12. It’s not super expensive, but man, an ounce of prevention is worth a pound of cure, for sure.

Evict Loud Tenant?

Q:

I rent out three rooms in a shared house. One tenant is very loud, turns the heater on and leaves the house. Can I evict her?

A:

Edrin Shamtob

I always mention this, I need to know more facts. It sounds to me like it’s a single family property. I’m assuming three separate leases, she’s renting out room by room. I’d have to know the jurisdiction. Like I said, jurisdiction is really important because if that property is in the City of Los Angeles, that Just Cause Ordinance, even though it’s a single family property that’s likely exempt from the Tenant Protection Act, if it’s in the City of Los Angeles, the Just Cause Ordinance would apply. So, even if it’s on a month-to month, you can’t voluntarily terminate the lease.

But you can do so on a lease violation or covenant violation basis. So if there’s a requirement in the lease agreement for them not to be noisy and not to damage the property, or whatever it is, then yes, that could be a sufficient basis to get rid of the tenant.

Jeff Faller

Right, and this probably be a good time just to give a disclaimer that we don’t know everything here, so this can’t be legal advice. It’s just generally, “Hey this is California state law,” and hopefully you apply it well to your situation and hopefully you call Edrin if you’re in the L.A. area. Or if you’re in Northern California, you call one of the AOA attorneys that are up there.

AB 12 and Separating Properties into Multiple LLCs

Q:

If we have multiple fourplexes under one LLC, if we change it to a different LLC for each fourplex, can we still charge two months security deposit, since each LLC would own less than four units?

This is a good question about AB 12.

A:

Edrin Shamtob

I think the AB 12 is determined under the membership interest of the LLC. I’d have to go into the language of the Assembly Bill itself, but I think that the way that they’re defining it is any, they look past the entity level to the membership and see if the membership is the same across the board. I imagine if the membership is not the same across the board, then then you’d be able to avoid it.

And in fact, I advise my clients, depending on their situation, to have separate LLCs for their buildings. I know it creates additional logistical requirements, in terms of franchise minimum tax and state minimum information filings and all of that, but you typically, depending on the value of the asset, you want to separate those assets so you have limited liability protection. In the event a person gets injured in one building, they cannot go after your assets in a separate LLC. So it’s probably prudent even outside of the security deposit issue, to be placing these properties into different entities.

Jeff Faller

We kind of go back to the trade show we had. We had a speaker talk about asset protection and there’s a whole lot there, and there’s a whole lot that needs to be researched for you to understand. What do you really want? Do you want the asset protection, do you want more the tax savings? There’s a whole lot there to look into and understand, and so, look in the magazine for articles that we have written there and do some due diligence on it.

And from what I understand, it’s five units or more. Or, if you’re owning those, so what you’re saying is exactly right. I would just confer with you on that, that yeah, even if you put it into different LLCs, you’re still going, it’s still going to apply to you, unfortunately.

Tenant Protection Act Exemption Notice

Q:

How have courts treated single family homes, condos, etc., that the owner didn’t properly notice the tenant prior to September 2020? Did the judge still treat it as exempt? What if the landlord served the notice after September 2020?

A:

Edrin Shamtob

Excellent question. Excellent, fantastic, because I, that comes across my desk so many times. And here’s the issue. And the issue kind of results from California legislators’ poor drafting of the Tenant Protection Act. They did a really horrendous job of making the language crystal clear.

What the Tenant Protection Act, the provisions provide, is that if you have a tenancy commencing after August 2020, you have to put it in the lease agreement. If you had a tenancy that predated August 2020, you have to serve the tenant with a notice of exemption. What the Tenant Protection Act does not provide, it’s actually silent on this issue, is what happens if you do not timely provide it. Because there was a requirement that you had to actually provide it within one month, I think it was by August 2020 for tenancies that pre-dated August 2020.

What I tell my clients, and this is what my experience has been, if you fail to do so, do so immediately. I have won, just in the last six months, I have won six motions for summary judgments where we’ve served, retroactively served the Tenant Protection Act exemption notice. I issued a 60-day notice to terminate the tenancy. The tenant, of course, didn’t vacate. I instituted the UD action and I filed the motion for summary judgment, and what all five courts, five, six courts held, is there’s no prohibition on retroactively serving it.

Now this issue has not gone up to the court of appeals yet. And that’s the problem. You don’t have decisional case law until it goes up to the court of appeals and the court of appeals provides a determination on the statute. We’re actually actively monitoring it because we’d love some guidance from the court of appeals on this issue.

For now, the Superior Court’s in a position to individually make those assessments. But it’s been a successful strategy thus far.

Jeff Faller

Yeah, just off of that, do you see any harm in serving the notice and also the addendum, trying to get them to sign the addendum, doing both at the same time.

Edrin Shamtob

The only concern I have in terms of having them sign an addendum, is if they refuse to do so, they might come back and contend that it’s a concession on your part. That their signature is required. I have not counseled my clients to get an addendum signed, but again, it’s a case-by case situation. If you have a tenant that you believe would be cooperative, perhaps it’s not a terrible idea. But if you have a hard nosed tenant that’s going to fight you tooth and nail, it might be more prudent to just serve the notice and see where the chips fall down the line.

Again, I’ve been highly successful. I’ve done it on many properties and if you have failed to do so, do so immediately, because you want to do it well in advance of issuing any notice. Increasing rent for instance, for the rent caps, and also issuing any notices of termination. So do it now.

Rent Control in Pasadena and Relocation Assistance

Q:

In Pasadena with rent control, I have an individual condo rental. My understanding is with SB 567 if I want to sell or move back into my own unit, I need to pay substantial fees and moving costs to tenants.

A:

Edrin Shamtob

You’re talking about the relocation expenses. They’re attempting to change that, as well. So right now what the Tenant Protection Act requires is a paltry one month rent. You can either waive one month or pay the tenant one month.

But 567 is going to attempt to change that to be more in line with local jurisdictions. For instance, in the City of Los Angeles, if you do a no-fault eviction, it could range anywhere from $12,000 to $25,000, depending on if they’re a qualified or eligible tenant, if they have a minor child, elderly or have a disability. So they’re trying to change the statewide law, the Tenant Protection Act, to be more in line with what we see on a local basis. So, that’s likely going to change as well, in terms of the relocation requirement.

Jeff Faller

And definitely watch… we have a video about Pasadena rent control. Watch it please, because there’s a whole lot there with that city that’s just different. And just like Edrin was mentioning at the beginning.

Other Deposits

Q:

After 7/24, will we be able to increase other deposits, such as keys, remotes, pets?

A:

Edrin Shamtob

I think you should be… I’m not sure if AB 12, off the top of my head, I’m not sure if it impacts those other types of deposits, because the civil code section, I think it’s 1950.5, off the top of my head, it addresses security deposits. And they define security deposit as a deposit intended to address any rental debt down the line, or property damage down the line. Security deposits for pets and other reasons, I’m not sure, I don’t believe AB 12 addresses those. I think those are separately addressed by current laws.

But if you want to call my office, it’ll take me about three minutes to look it up for you and advise you on what it’s going to look like in July 2024.

Remove Property from the Rental Market

Q:

Will the ability to remove off the rental market to sell still be available?

A:

Edrin Shamtob

Okay, so he’s probably talking about Ellis Act conversion, yeah. Ellis Act conversion or what the TPA allows for removal of.

So, it’ll absolutely still be, and I’m assuming that he’s talking about a property that’s subject to the Tenant Protection Act. It’s absolutely going to be available. It’s really more about what requirements are going to be imposed and what penalties are going to be imposed for doing so.

As I stated during the presentation earlier, right now, the Tenant Protection Act is silent as to the procedural requirements in order to pull the property off the rental market. What the Senate bill is going to attempt to do is install requirements. For instance, if you try to do an Ellis Act removal here in the City of Los Angeles, you have to file about a 100 page application with the Housing Department. It has to get approved. You have to provide the tenant with a slew of notices: the notice of termination, the notice of the right to return to the property in the event it’s placed back on to the rental market. Those are the items that the TPA, that the Tenant Protection Act, currently does not include.

So, you’re still going to be able to, the question is what requirements are going to be imposed for you to be able to do so. And also, what penalties are going to be imposed. Let’s say, for the sake of argument, you take it off the rental market and you want to put it back onto the rental market. The City of Los Angeles imposes severe penalties right now if you go down that line.

I imagine what the Senate bill is going to try to do is impose the same type of penalties if you remove it then try to put it back onto the rental market. For instance, they might include a specific number of years before you’re allowed to put it back on. Or a requirement of a number of years for a right of first refusal to your tenant to reoccupy the premises.

So, it’ll be allowed, it’s just a question of what it’s going to look like in terms of the procedural requirements.

New Owner Have to Provide New Rental Agreement?

Q:

Does the new owner have to provide a new rental agreement or just change in ownership form?

A:

Edrin Shamtob

Great question. No, you do not have to provide a new rental agreement. In fact, when you acquire the property and the property is sold to you, you inherit the lease. It’s essentially assigned to you and you come in and you fill the shoes of the prior landlord/property owner. All you have to do is provide a notice of change in ownership and include the specific information I addressed earlier in terms of who to pay, when to pay, how to pay, and what method they can use to pay.

So no, no new rental agreement. Of course, you’re you’re allowed to go in there to negotiate if you’d like and convince the tenant to sign a new rental agreement if you wish. But there’s no legal requirement.

Include Maximum Occupancy in Apartment Listing?

Q:

Regarding occupancy for an apartment that is 600 square feet, duplex, can I legally state in the advertisement “maximum occupancy – two.”? And I would imagine it’s a one-bedroom and they’re wondering if you can do that.

A:

Edrin Shamtob

I would have to know the jurisdiction, again, okay? Because the RSO actually permits additional occupants to come in, if for instance, they’re family members or they’re newborns. So, it’s difficult for me to say so, because I don’t know what jurisdiction it falls under.

If it’s just statewide law, Culver City, Santa Monica, so on and so forth. Just call our office, give me a couple more facts, I’ll be able to give you the answer.

Notice Requirements in 2024 for San Diego?

Q:

What do we need to provide to our current tenants in San Diego on these new laws? So, we have the state laws that are going on, are there new notices that need to be given based on the new laws that are coming into effect, either January or in June?

A:

Edrin Shamtob

I always tell my clients, even if there’s an absence of a requirement, most of these new laws do have a requirement for you to serve a copy of the law, or an advisement, on your tenant. Those instances, I’ve seen usually in local jurisdictions—like when the City of Los Angeles passes a Just Cause Ordinance, or when they pass their moratorium resolution, the Tenant Protection Resolution—they required you to serve a copy. The State of California typically does not have an affirmative requirement to serve a copy on your tenant but they might with these new substantial revisions to this law. So, I always advise my clients to serve a copy because if you don’t and there is a requirement, it’s going to make your eviction action defective down the line.

Jeff Faller

I don’t know that there’s a requirement, but also, just there in San Diego, you have your new tenant protection ordinance too, which is totally local. You could give Victoria, you could give Franco Simone, you could look on the website or in the AOA magazine, go to contractors and vendors and just search up eviction and it’ll bring you some other attorneys that you could talk to, as well

Requirement to Serve and Post RSO Certificate

Q:

My understanding, the RSO certificate is what we are required to provide, a copy of it to each tenant, not necessarily to post it. Are you saying that we can just post one copy as opposed to sending?

A:

Edrin Shamtob

I said, not necessarily the opposite, but I said more than that. I’m assuming that he’s talking about the City of Los Angeles, because the county is a little bit different.

There’s two requirements. One requirement is a posting requirement and another requirement is a service requirement. So, you have to post it on the property in a conspicuous place near a mailbox or the front door or a laundry room or wherever, that’s visible. But there’s an additional requirement to serve the tenants. And if you have multiple tenants, for instance, if you have, well you would have multiple units in there, you would have to send a copy to each apartment unit, to each tenant within an apartment unit.

And like I said, do so through registered mail so you have evidence of the service. They’re going to come in—and they always do this—they’re going to come in on a LARSO defense and they’re going to say you didn’t serve it and you need to dismiss your action. So, make sure you serve it certified to registered mail. Posting and service is required, okay.

Can Three-Day Notice Include Pet Rent?

Q:

On the three-day notice, aside from base rent, can we include pet rent? And he’s in Riverside County.

A:

Edrin Shamtob

Not sure if Riverside has a local…

Jeff Faller

They don’t. They’re the land of the free.

Edrin Shamtob

…RSO.  So, assuming they don’t, yeah, pet rent is part of the rent, yeah. It’s not an additional, ancillary charge, like interest expense or late fees or RSO fees. And it also depends on how you categorize it in the lease agreement. So if you have a separate addendum, okay, that requires pet rent to be paid, you might run into an issue including it into the base rent. If you don’t, it’s embedded in the lease agreement, it’s literally part of the actual base rent, then yes, you can include it.

I always, and I’ll tell you one other thing, I always caution on the side of being conservative with my numbers, so long as you’re above the threshold. If you’ve met that fair market value threshold, there’s no need to include all of these ancillary charges. You’re just going to cause impediments for yourself down the line. If you’ve already passed that threshold, be conservative in your number, because it’s unlikely that the tenant is going to pay it. And if you’re above the threshold, you’re in good standing.

Federal Cares Act

Q:

While on the subject of notices, can you address the Federal Cares Act, which gives tenants 30 days to perform when there’s a Section 8 tenancy, or the property has a Fannie/Freddie mortgage?

A:

Edrin Shamtob

Yeah, that’s a requirement, you’ve got to provide it. If it’s subject to the Cares Act and it has a Fannie/Freddie mortgage on there, or Section 8 which is governmental benefits, yeah, there’s a larger requirement in terms of timeline, for the issuance of the notice determination. Again, this goes back to my point, there’s a million different requirements depending on the situation. Depending if you’re in the city or the county, depending if you have a federally backed mortgage or if you have a section 8 tenant, there’s a bunch of nuances and you’ve got to make sure that whatever you do, whatever steps you take, addresses your specific situation. Because that’s going to be dissimilar to perhaps your neighbors or someone down the street or someone in a different county or a different city.

So, it’s an excellent question and I’m very heartened that he’s looking at that specific requirement.

City of Los Angeles vs County of Los Angeles Requirements under AB 1482

Q:

If we’re in the City of L.A., are we subject to county also? Especially those under AB 1482?

A:

Edrin Shamtob

Let me take that apart for a second. If you’re incorporated in the City of Los Angeles, you’re only subject to City of Los Angeles law, you’re not subject, I know this is counterintuitive, you’re not subject to the Tenant Protection Act. Because the Tenant Protection Act has an exception for local jurisdiction RSOs that are more onerous than the Tenant Protection Act, which surely the City of Los Angeles is much more onerous than the Tenant Protection Act

And in the county… only applies to unincorporated Los Angeles County. Those are areas within the county that do not have their own incorporated city. If you go online, you can easily find out if your property is part of the City of Los Angeles or County. One easy way to do it is if you go on ZIMAS, which is a City of Los Angeles real property database, that’ll give you zoning information about your property, whether your property is subject to the RSO, whether your property is subject to the Tenant Protection Act, so on and so forth.

Can Three-Day Notice Include Utility Payment?

Q:

Can a three-day notice include non-payment of a utility payment? L.A. County, Bellflower, and unincorporated city.

A:

Edrin Shamtob

Oh, absolutely. If the rental agreement requires utility payments, and the tenant is failing to pay the utility payment, that’s a breach of a covenant of the lease. In addition to… even if we don’t call it a failure to pay rent type situation, it’s still a covenant in the lease. It’s a requirement on the tenant to pay the utilities and they’ve failed to do so, and you have to pay it… yeah you can absolutely file it. Serve a notice to perform or quit to require them to perform.

Section 8 Rent Increase Requirements

Q:

For rent increases for tenants on Section 8, do we have to inform the housing agency, or is it just a 60-day notice?

A:

Edrin Shamtob

In a rent control property, you absolutely have to inform the Housing Department, yes. For any rental increases, you have to go into your RSO bill pay website, where it has the APN and the information on the tenants and the property, and put it in there. Because they have a database of what the base rent is, so they know whether or not your subsequent rental increase is lawful.

Without knowing what that base rent is, they wouldn’t be able to push compliance on you. So yeah, all rental increases, you have an affirmative obligation to go in there and update the Housing Department.

Partial Rent Sent Electronically

Q:

If a tenant sends partial rent electronically, how can you reject partial payments if you want to evict?

A:

Edrin Shamtob

Lovely question. I see it all the time. We’re in an electronic world these days. Check payments and cash payments are far and few between these days. I have a lot of clients who receive Zelle payments, Venmo payments, Cash App payments. There’s two ways of doing it.

One way to do it is to go to your bank and try to get it reversed. If it’s, for instance, a Zelle payment. If it’s a Venmo payment, really easy to do, you just send the money back. Sometimes the banks are able to do it if it’s a Zelle payment, sometimes they’re not. If they are able to do it, you’re perfectly fine. If they can’t do it, cut them a check, okay? Cut them a check and register mail it to them with a letter saying that we have a policy of not accepting partial rent payments.

In law, I have followed and I continue to follow this principle, it’s always about what you can prove in court. It’s not about what actually happened, it’s about what you can prove. So make sure you register mail it back, because if you send it, let’s say hypothetically, you send a check back, but they don’t deposit it, you have no evidence of actually sending the check back or the money back. Make sure you do it through certified or registered mail so you have evidence of it.

San Bernardino County Requirements

Q:

Asking about San Bernardino County: where do we get this information for our county?

A:

Jeff Faller

San Bernardino is pretty clear, so it’s kind of like the land of the free.

Edrin Shamtob

It’s like Ventura County.

Jeff Faller

You’re good, but you can always call and ask us and we can point you to maybe your local county website, San Bernardino County website.

Owner Move-In Requirements

Q:

For owner move-ins, do owners have to live 24/7, 365 in the house, or if they live out of state, what is the minimum requirement to satisfy the occupancy requirement? This is for Gardena.

A:

Edrin Shamtob

Excellent question. I’m going to assume that the Tenant Protection Act, and then the new Senate bill that’s going to alter the owner move-in requirements—I’m going to assume that we’re talking about that law.

It has to be what’s called your primary residence. It doesn’t mean that you have to be there 24/7, but you do have to be there the majority of the year. So you don’t have to actually live there every single second, you could leave, it’s not a prison, but you have to be there the majority of the year.

Jeff Faller

So, you actually have to reside there. You can’t just say that you are and be in Idaho or Florida.

Edrin Shamtob

And this is particularly important—because of the penalties. One thing that the Tenant Protection Act, right now, doesn’t have is, there’s no enforcement mechanism. But the Senate bill is going to change that. It’s going to give the tenants a private right of action and they can come after you for treble damages, which is three times the amount of actual damages. So, they’re trying to squeeze this thing as hard as they can around you guys.

Closing Remarks

Jeff Faller

Edrin, thank you so much. And guys, remember, we know there’s a whole lot, gosh there’s questions from Orange County. We’re doing one on Santa Ana. We did one on Santa, no we’re doing one on Santa Ana coming up here pretty soon. Orange County is pretty clear and you would fall under the AB 1482 when it comes to how much you can raise the rents.

I just want to, gosh, I just wish we could help everybody. But we have all year long to do that outside of this live stream. If you’re not a member, please join. Again, it’s only ninety-seven bucks and there’s no per unit charge

And Edrin, we’ll have to connect soon here to get a tenant screening live stream set up so we can address questions about that. We really appreciate you so much.

Edrin Shamtob

Always great to be on if your viewers have any questions, issues, concerns, if they just want to say hello, give me a call. I’d love to chat with them and it’s always a pleasure to be here, and try to inform your audience, your members, and make sure that they’re in compliance with all the new requirements. And I wish everyone happy holidays, upcoming holidays. Nice breather for everyone.

Jeff Faller

Yep, all right, thank you everyone. We’ll see you next week.