During the week of December16, 2019, CAR will be releasing a new 3-page form entitled Rent Cap and Just Cause Addendum that will provide Landlords and Tenants with general information about the new Rent Cap and Just Cause Eviction law (AB 1482 which goes into effect January 1, 2020). The Addendum also provides Landlords with a mechanism to add the necessary, statutory language to existing leases to take advantage of specific exemptions in that law.
More information about this and all of the other new Landlord-Tenant laws will be discussed in the Weekly Practice Tip distributed on December 20, 2019.
PRDS has created a similar 2-page form entitled Rent Cap and Just Cause Eviction Addendum which is designed to be used with the PRDS® Residential Lease or Month-To-Month Agreement. As used in this Weekly Practice Tip, the term “RCJC Addendum” refers to either the CAR form or the PRDS form.
NOTE: If a Landlord intends to claim that the Property is Exempt, the Landlord needs to indicate which exemptions apply by checking the box in the exemption paragraph of the RCJC Addendum. It is not sufficient to simply have the Tenant sign a blank form.
CAR has announced that the RCJC Addendum should be provided to all Landlords before January 1, 2020 so that Landlords can immediately take advantage of any applicable exemption. If the exemption language is not in the lease, then the Landlord’s property may be subject to the limitations detailed in the new Rent Cap and Just Cause Eviction law.
If the Tenant is on an existing lease, the RCJC Addendum should be provided as a stand-alone notice; for new or renewed Tenants, the RCJC Addendum should be included and made part of the new or renewed lease.
If the tenancy is month-to-month, CAR recommends incorporating the RCJC into a Notice of Change in Terms of Tenancy (CAR Form CTT) and sending that documentation to the Tenants.
NOTE: If a Tenant whose lease has expired after January 1, 2020 refuses to sign a new rental agreement with the Addendum included, that may be the basis to evict.
Although not addressed by CAR in its material regarding this new state law, there are potential risks in Agents providing the RCJC Addendum to past clients. It is well established that when a transaction closes, the agency relationship with the client terminates as a matter of law. Agents who previously represented a Landlord in a lease transaction are not legally obligated to keep the Landlord apprised of any or all changes in state or local Landlord-Tenant laws.
Unless serving as a Property Manager, with ongoing agency duties and responsibilities to the Landlord, Agents do not have an obligation to provide past Landlord clients with any documentation to change existing leases to conform to current law.
It is definitely true that it would be a good customer service to provide prior clients with updated information, but that service should be provided in a way that makes it clear that the Agent is not providing legal advice and that the Agent is not acting as a Property Manager.
The most efficient way to manage these potential risks, is to provide the RCJC along with an email message or, if delivered in person, with a cover letter which explains why the Agent is providing the document and making the necessary recommendation to the Landlord to discuss rental property questions and concerns with a qualified, local Landlord-Tenant Attorney. A sample form is attached to this Tip and should be used when transmitting the CAR RCJC.
PRACTICE TIPS
- Real estate professionals who have, or are currently working with, Landlords should provide the new RCJC Addendum to the Landlord as quickly as possible.
- If real estate professionals are not providing property management services, then they should transmit the RCJC Addendum to the Landlord with the language on the attached sample form inserted into an email message or cover letter.
- PRDS will be bundling a transmission letter to Landlords with the PRDS® Rent Cap and Just Cause Eviction Addendum.
- If anyone has any questions about what laws affect any given property anywhere in California or any given Tenant or tenancy, they should be advised to consult with a qualified, local Landlord-Tenant Attorney.
This Weekly Practice Tip is an attorney-client privileged document for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright 2019 Broker Risk Management 12/13 /19
TRANSMISSION LETTER TO LANDLORD
WITH RENT CAP AND JUST CAUSE EVICTION ADDENDUM
(Not Designed for Use by Agents providing Property Management Services)
(Copy/Paste)
You may already be aware that California has a new Rent Cap and Just Cause Eviction Statute which goes into effect on January 1, 2020. Not all Landlords will be impacted by this statewide law; some Landlords may be exempt and others may be subject to more restrictive local ordinances.
The California Association of REALTORS® (C.A.R.) has created the attached Rent Cap and Just Cause Addendum; it is designed to provide a brief summary of the state law and to enable Landlords to add statutory language to existing leases to notify Tenants whether or not the rental property is exempt from that law. CAR has recommended that REALTORS® provide the attached form to Landlords for immediate use since it could well be of assistance in the management of rental property; it is being sent to you as a courtesy and not part of any property management services.
Due to the inter-relationship of the state law and local ordinances, determining whether or not a Landlord can safely increase rents (and by what percentage) for any specific property, and/or whether a Landlord can safely evict any given tenant has become a challenging process that can have serious implications for Landlords. Real estate licensees cannot provide you with legal advice or assist you in determining which law(s) will affect you as a Landlord, your rental property and/or any of your Tenants.
It is strongly recommended that, before you take any action with respect to the matters discussed in the attached 3-page Addendum, you discuss your rental property questions and concerns with a qualified, California Landlord-Tenant Attorney who has expertise in the city/county where the property is located.