Landlords Wake Up!

 

California Landlords the walls are closing in on you. SB 567 goes into affect April 2024

Were you thinking of moving back into your rental building ?

Were you thinking of doing major improvements to your rental building?

Think again. SB 567 makes it ridiculously tough to remove a tenant from your building so you can simply move into it or fix it up.

While I love the idea of having a rental property I need to share with you what that means

 

A bit of history – The San Diego Tenant Protection Ordinance back in May 2023 put penalties on a landlord for removing a tenant without cause but the landlord could bite the bullet and pay a tenant 2 to 3 times their monthly rent to end their tenancy anyway. Those were the good old days because less than a year later, as of April 2024, the penalties to move back into your building to live or to do a remodel will get much steeper. 

In April if you don’t have a valid reason to end a tenancy a tenant can be awarded actual damages which can be tripled for a willful violation on the part of the landlord.  And the rules establishing a “valid reason” just got way more restrictive as well. 

I know it sounds crazy but bear with me.

How much might you be on the hook for as a landlord?

Possibly quite a bit depending on the judge and situation. Here’s an example of how things could get ugly for a landlord :

Assume your ex-renter’s next rental costs $500 more a month. If the tenant claims he planned to live in your property for a year that is $6,000 in damages and if they claimed they wanted to stay for 10 years then is that $60,000 in “damages” over the future decade?  Can a tenant demand these type of damages? And and if you are found to have willfully ending the tenancy might the triple penalty apply pushing your cost to $180,000?

I’m not saying this will happen to you. I really hope the penalties are reasonable but with SB 567 damage scenarios are now a risk.

An exception or temporary reprieve? If you are a landlord of a single family home you are currently protected from these rules by a 10 word exception statement.  Are you ready for it? Here it is:

If your property is “Alienable Separate from the title of any other dwelling unit” these rules don’t apply to you  . . . yet.

I say yet because single family homes don’t appear to be affected today but annually there are a tidal wave of bold anti-landlord bills floated through the legislature and it’s a toss up which ones will make it through.

 

You may have dodged a bullet this year but what might a future bill look like? Have a look at the intensity of the language in SB 567 when it comes to removing a tenant . To move into your building without penalty you need to do these 7 things: 

  1. You must live at the property for at least 12 consecutive months after moving in
  2. It must be your primary residence
  3. You must not already live in another unit in the property
  4. You must not have a similar vacant unit available 
  5. The tenant may request proof that the person is an owner or qualified relative
  6. You must include the name of the person moving in with the notice to terminate the tenancy
  7. You must move in within 90 days of the prior tenant moving out

Yes it is frightening!

You may be thinking that’s quite a bit of restrictions. You’re right. What if instead you tried to evict a tenant to improve your building? The state has made that almost as bad: For improvements:

  • It must be a substantial remodel requiring tenants to be out of the building continuously for 30 days or more
  • Copies of the permits must be given to the tenants or a copy of the signed contract with the contractor
  • Tenant must also be provided notice of their options to reoccupying the unit after remodeling
  • Notice to terminate must be in specific language

 

Just as frightening as the language of these specific bills is the rate in which the state can churn out harsh unchallenged regulations.  If not this year, perhaps next.

What can you do?

Again this may not apply to landlords of single family homes with the proper lease language. (Check your situation specifically to be sure).   However it is a shot across the bow and a good time to rethink your longterm rental strategy, especially if you’ve lived in the home and can get a tax break on selling soon.

If you own a multi-unit property you may want to exchange it for another property out of the state of California to have more control of your asset.

Sorry for the bad news but hopefully it helps you better understand your options.

Give a call to talk more about your situation and check out my video on the San Diego Tenant Protection Ordinance and Assembly Bill 1492 which set the landlord restrictions in motion last May.

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