Proposed New Laws for 2019

California Legislation

When Prop 10 was defeated we thought legislators would back off and we could relax for a while. Not so. In fact, the legislators have been quite busy. Here’s the latest list of proposed bills to watch.

AB 36 would allow rent control to be imposed on multifamily buildings 10 years old or older and on single family homes. This means some of the protections small owners have under Costa Hawkins would be removed.

AB 1482 would cap rent increases statewide. The percentage to be used for the cap has yet to be determined. Oregon recently passed a similar bill. This proposal is being touted as an anti-gouging cap.

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Duplex Owners Are Trapped in San Jose

Owners with only one rental unit may be facing rent contol in San Jose.

We’ve had this discussion several times and yet, some of our San Jose City Council members keep bringing it back to the table. The question they keep asking is, should duplexes be added to the TPO (Tenant Protection Ordinance)?

Many duplex owners (including me) purchased our property years ago with a plan. The plan was to rent out one side and live in the other. Due to the cost of housing in San Jose, the rented side did not pay the mortgage. In fact, in the beginning an owner did well to receive even so much as a third of the property costs. But as time went on and rents went up the percentage got closer to being a shared cost. If an owner worked at paying down the mortgage over the years, they could possibly refinance with little or no mortgage when the time came for them to retire. For a number of owners with no company retirement or pension, this is the best scenario they could hope for.

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Reversing Costa Hawkins will not help the housing crisis

Our state legislature has made several unsuccessful attempts to reverse Costa Hawkins. Perhaps the reason they’ve failed to reverse the ruling is the unintended consequences that would result from such a dramatic change. Often with good intentions our representatives pass knee-jerk legislation to pander to a moment of emotional outcry.

Clearly the need for more affordable housing is a pressing issue, not just for California but for several highly populated states. Cities with large populations and low unemployment rates are most affected by the lack of housing. For every article we read on residents leaving the bay area for more affordable lifestyles there’s an article on yet another big company (Apple, Google, Amazon, etc.) buying up real estate for future sites to expand their work force. Currently, many bay area cities already have a unemployment rate of less than three percent.

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Hiring a Property Manager

A rental property can be a great investment.  You hire a Property Manager (PM).  You get your monthly statements.  And,depending on certain factors such as the condition of the property or the debt obligation, you could receive a nice monthly income. While a great investment, it can also be a huge liability. Careful selection of a competent PM who can lower your liability, maintain your property and select qualified applicants is crucial.

How do you select an excellent Property Manager?  Here are a few questions you may want to ask.

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Landlord Liability

Did you know?  Should you have known?

I’ve always said, “You can do everything right, and still, someone will sue you.”  Being a housing provider is a high-liability business.  No matter how well you maintain your property there is always something that could go wrong.

Michele Holt Mamertoand NielMamerto (referred to as the Mamertos) owned a residential property located in Escondido, California.  In 2005, they rented the property to George Jakubec.  The same year the Mamertos hired Mario Garcia to maintain the landscaping, which he continued to do at least once every two weeks throughout the duration of the tenant’s residency.  On November 18, 2010, Garcia was injured when he walked over unstable explosive (bomb) material on the backside of the premises and the material exploded under him.

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Tenant Move Out Procedures and Security Deposits

Occasionally, someone will contact me saying their tenant just moved out and they want to know what charges they can deduct from the tenant’s deposit.   My first question to them is “Did you offer them an initial inspection?”

In California, you are required by law to offer the tenant an “initial inspection” during the last two weeks of their tenancy to give them the opportunity to repair any items you find so that they know what is expected of them when they move out.  Your notice to terminate the tenancy, or confirmation of the tenant’s notice to vacate, should include the following statement:

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Rental Market Slow Down

The ads are running but the phones aren’t ringing.

Over the last few years we have been dealing with a serious housing shortage causing a steady increase in rental values. This is not new news to anyone. But have the winds begun to change. Historically a hot market reaches a plateau where it flattens out and even declines. We may be experiencing such a market now.

Inquiring with owner/brokers of residential property management companies in Santa Clara County the consensus isthat there has been anundeniable shift in the market.

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Roommates are Okay, Subletting is Not

Do You Know Who’s Living in Your Unit?

We recently had a member ask us about an unusual situation after a tenant moved out.  The tenant had given a 30 day notice to vacate.  Once the tenant had moved the manager noted excessive damage to the unit.  Unfortunately, the manager didn’t send out the disposition of the deposit within the 21 daysprompting inquiries about the late return from not one, but two different parties.  The original tenant had sublet the unit to another party without the manager’s permission.  Both claimed to be entitled to the security deposit.

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