SB 775: Tenancy: rent control: certification.
- Session Year: 2015-2016
- House: Senate
- Latest Version Date: 2016-07-22
(1)Existing law regulates the terms and conditions of residential tenancies. Existing law, the Costa-Hawkins Rental Housing Act, prescribes statewide limits on the application of local rent control with regard to certain properties, including those that have a certificate of occupancy issued after February 1, 1995. Existing law requires a local ordinance or charter controlling residential rent prices that requires registration of rents to provide for the certification of permissible rent levels and prescribes a process in this regard, including a requirement that, upon the request, a local agency provide a landlord and a tenant with a certificate reflecting the permissible rent levels of the rental unit. Existing law provides that the permissible rent levels reflected in the certificate are, in the absence of intentional misrepresentation or fraud, binding and conclusive upon the local agency unless the determination of the permissible rent levels is appealed.
This bill would specify that the certification provisions described above, on and after January 1, 2016, do not apply to tenancies for which the owner of residential property may establish the initial rent under the Costa-Hawkins Rental Housing Act, as specified. The bill would except from this exclusion a tenancy for which the property owner provides the local rent control agency with a writing, signed under penalty of perjury, of the tenancys initial rent that complies with the agencys requirements, which would create a rebuttable presumption that the statement of the initial rent is correct. By expanding the crime of perjury, this bill would impose a state-mandated local program.
(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(1)Existing law regulates the terms and conditions of residential tenancies. Existing law, the Costa-Hawkins Rental Housing Act, prescribes statewide limits on the application of local rent control with regard to certain properties, including those that have a certificate of occupancy issued after February 1, 1995. Existing law requires a local ordinance or charter controlling residential rent prices that requires registration of rents to provide for the certification of permissible rent levels and prescribes a process in this regard, including a requirement that, upon the request, a local agency provide a landlord and a tenant with a certificate reflecting the permissible rent levels of the rental unit. Existing law provides that the permissible rent levels reflected in the certificate are, in the absence of intentional misrepresentation or fraud, binding and conclusive upon the local agency unless the determination of the permissible rent levels is appealed.
This bill would specify that the certification provisions described above, on and after January 1, 2016, do not apply to tenancies for which the owner of residential property may establish the initial rent under the Costa-Hawkins Rental Housing Act, as specified. The bill would except from this exclusion a tenancy for which the property owner provides the local rent control agency with a writing, signed under penalty of perjury, of the tenancys initial rent that complies with the agencys requirements, which would create a rebuttable presumption that the statement of the initial rent is correct. By expanding the crime of perjury, this bill would impose a state-mandated local program.
(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(1)Existing law regulates the terms and conditions of residential tenancies. Existing law, the Costa-Hawkins Rental Housing Act, prescribes statewide limits on the application of local rent control with regard to certain properties, including those that have a certificate of occupancy issued after February 1, 1995. Existing law requires a local ordinance or charter controlling residential rent prices that requires registration of rents to provide for the certification of permissible rent levels and prescribes a process in this regard, including a requirement that, upon the request, a local agency provide a landlord and a tenant with a certificate reflecting the permissible rent levels of the rental unit. Existing law provides that the permissible rent levels reflected in the certificate are, in the absence of intentional misrepresentation or fraud, binding and conclusive upon the local agency unless the determination of the permissible rent levels is appealed.
This bill would specify that the certification provisions described above, on and after January 1, 2016, do not apply to tenancies for which the owner of residential property may establish the initial rent under the Costa-Hawkins Rental Housing Act, as specified. The bill would except from this exclusion a tenancy for which the property owner provides the local rent control agency with a writing, signed under penalty of perjury, of the tenancys initial rent that complies with the agencys requirements, which would create a rebuttable presumption that the statement of the initial rent is correct. By expanding the crime of perjury, this bill would impose a state-mandated local program.
(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing
(1)Existing law regulates the terms and conditions of residential tenancies. Existing law, the Costa-Hawkins Rental Housing Act, prescribes state-wide statewide limits on the application of local rent control with regard to certain properties, including those that have a certificate of occupancy issued after February 1, 1995. Existing law requires a local ordinance or charter controlling residential rent prices that requires registration of rents to provide for the certification of permissible rent levels and prescribes a process in this regard, including a requirement that, upon the request, a local agency provide a landlord and a tenant with a certificate reflecting the permissible rent levels of the rental unit. Existing law provides that the permissible rent levels reflected in the certificate are , are, in the absence of intentional misrepresentation or fraud, binding and conclusive upon the local agency unless the determination of the permissible rent levels is appealed.
This bill would specify that the certification provisions described above, on and after January 1, 2016, do not apply to tenancies commencing for which the owner of residential property may establish the initial rent under the Costa-Hawkins Rental Housing Act, as specified. The bill would except from this exclusion a tenancy for which the property owner provides the local rent control agency with a writing, signed under penalty of perjury, of the tenancys initial rent that complies with the agencys requirements, which would create a rebuttable presumption that the statement of the initial rent is correct. By expanding the crime of perjury, this bill would impose a state-mandated local program.
(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law regulates the terms and conditions of residential tenancies. Existing law requires a landlord or his or her agent to allow a tenant to pay rent or a security deposit by at least one form of payment that is neither cash nor electronic funds transfer, except as specified. Existing law, the Costa-Hawkins Rental Housing Act, prescribes state-wide limits on the application of local rent control with regard to certain properties, including those that have a certificate of occupancy issued after February 1, 1995. Existing law requires a local ordinance or charter controlling residential rent prices that requires registration of rents to provide for the certification of permissible rent levels and prescribes a process in this regard, including a requirement that, upon the request, a local agency provide a landlord and a tenant with a certificate reflecting the permissible rent levels of the rental unit. Existing law provides that the permissible rent levels reflected in the certificate are , in the absence of intentional misrepresentation or fraud, binding and conclusive upon the local agency unless the determination of the permissible rent levels is appealed.
This bill would state the intent of the Legislature to enact legislation that would clarify when a landlord or his or her agent agrees that a tenants payment for rent or deposit for security is accepted or rejected. specify that the certification provisions described above, on and after January 1, 2016, do not apply to tenancies commencing for which the owner of residential property may establish the initial rent under the Costa-Hawkins Rental Housing Act, as specified.
Existing law regulates the terms and conditions of residential tenancies. Existing law requires a landlord or his or her agent to allow a tenant to pay rent or a security deposit by at least one form of payment that is neither cash nor electronic funds transfer, except as specified.
This bill would state the intent of the Legislature to enact legislation that would clarify when a landlord or his or her agent agrees that a tenants payment for rent or deposit for security is accepted or rejected.
(a)If an ordinance or charter controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and requires the registration of rents, the ordinance or charter, or any regulation adopted pursuant thereto, shall provide for the establishment and certification of permissible rent levels for the registered rental units, and any changes thereafter to those rent levels, by the local agency as provided in this section.
(b)If the ordinance, charter, or regulation is in effect on January 1, 1987, the ordinance, charter, or regulation shall provide for the establishment and certification of permissible rent levels on or before January 1, 1988, including completion of all appeals and administrative proceedings connected therewith. After July 1, 1990, no local agency may maintain any action to recover excess rent against any property owner who has registered the unit with the local agency within the time limits set forth in this section if the initial certification of permissible rent levels affecting that particular property has not been completed, unless the delay is willfully and intentionally caused by the property owner or is a result of court proceedings or further administrative proceedings ordered by a court. If the ordinance, charter, or regulation is adopted on or after January 1, 1987, the ordinance, charter, or regulation shall provide for the establishment and certification of permissible rent levels within one year after it is adopted, including completion of all appeals and administrative proceedings connected therewith. Upon the request of the landlord or the tenant, the local agency shall provide the landlord and the tenant with a certificate or other documentation reflecting the permissible rent levels of the rental unit. A landlord may request a certificate of permissible rent levels for rental units which have a base rent established, but which are vacant and not exempt from registration under this section. The landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate. The permissible rent levels reflected in the certificate or other documentation shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed.
(c)After the establishment and certification of permissible rent levels under subdivision (b), the local agency shall, upon the request of the landlord or the tenant, provide the landlord and the tenant with a certificate of the permissible rent levels of the rental unit. The certificate shall be issued within five business days from the date of request by the landlord or the tenant. The permissible rent levels reflected in the certificate shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed. The landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate. Any appeal of a determination of permissible rent levels as reflected in the certificate, other than an appeal made pursuant to subdivision (b), shall be filed with the local agency within 15 days from issuance of the certificate. The local agency shall notify, in writing, the landlord and the tenant of its decision within 60 days following the filing of the appeal.
(d)The local agency may charge the person to whom a certificate is issued a fee in the amount necessary to cover the reasonable costs incurred by the local agency in issuing the certificate.
(e)The absence of a certification of permissible rent levels shall not impair, restrict, abridge, or otherwise interfere with either of the following:
(1)A judicial or administrative hearing.
(2)Any matter in connection with a conveyance of an interest in property.
(f)The record of permissible rent levels is a public record for purposes of the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code).
(g)Any notice specifying the rents applicable to residential rental units which is given by an owner to a public entity or tenant in order to comply with Chapter 12.75 (commencing with Section 7060) of Division 7 of Title 1 of the Government Code shall not be considered a registration of rents for purposes of this section.
(h)Local agency, as used in this section, means the public entity responsible for the implementation of the ordinance, charter, or regulation.
(i)Nothing in this section shall be construed:
(1)To grant to any public entity any power which it does not possess independent of this section to control or establish a system of control on the price at which accommodations may be offered for rent or lease, or to diminish any such power which that public entity may possess, except as specifically provided in this section.
(2)On and after January 1, 2016, to apply to tenancies commencing on or after January 1, 1999, for which the owner of residential property may establish the initial rent under Chapter 2.7 (commencing with Section 1954.50). However, for a tenancy that commenced on or after January 1, 1999, if a property owner has provided the local agency with the tenancys initial rent in compliance with that agencys registration requirements in a writing signed under penalty of perjury, there shall be a rebuttable presumption that the statement of the initial rent is correct.
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)If an ordinance or charter controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and requires the registration of rents, the ordinance or charter, or any regulation adopted pursuant thereto, shall provide for the establishment and certification of permissible rent levels for the registered rental units, and any changes thereafter to those rent levels, by the local agency as provided in this section.
(b)If the ordinance, charter, or regulation is in effect on January 1, 1987, the ordinance, charter, or regulation shall provide for the establishment and certification of permissible rent levels on or before January 1, 1988, including completion of all appeals and administrative proceedings connected therewith. After July 1, 1990, no local agency may maintain any action to recover excess rent against any property owner who has registered the unit with the local agency within the time limits set forth in this section if the initial certification of permissible rent levels affecting that particular property has not been completed, unless the delay is willfully and intentionally caused by the property owner or is a result of court proceedings or further administrative proceedings ordered by a court. If the ordinance, charter, or regulation is adopted on or after January 1, 1987, the ordinance, charter, or regulation shall provide for the establishment and certification of permissible rent levels within one year after it is adopted, including completion of all appeals and administrative proceedings connected therewith. Upon the request of the landlord or the tenant, the local agency shall provide the landlord and the tenant with a certificate or other documentation reflecting the permissible rent levels of the rental unit. A landlord may request a certificate of permissible rent levels for rental units which have a base rent established, but which are vacant and not exempt from registration under this section. The landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate. The permissible rent levels reflected in the certificate or other documentation shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed.
(c)After the establishment and certification of permissible rent levels under subdivision (b), the local agency shall, upon the request of the landlord or the tenant, provide the landlord and the tenant with a certificate of the permissible rent levels of the rental unit. The certificate shall be issued within five business days from the date of request by the landlord or the tenant. The permissible rent levels reflected in the certificate shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed. The landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate. Any appeal of a determination of permissible rent levels as reflected in the certificate, other than an appeal made pursuant to subdivision (b), shall be filed with the local agency within 15 days from issuance of the certificate. The local agency shall notify, in writing, the landlord and the tenant of its decision within 60 days following the filing of the appeal.
(d)The local agency may charge the person to whom a certificate is issued a fee in the amount necessary to cover the reasonable costs incurred by the local agency in issuing the certificate.
(e)The absence of a certification of permissible rent levels shall not impair, restrict, abridge, or otherwise interfere with either of the following:
(1)A judicial or administrative hearing.
(2)Any matter in connection with a conveyance of an interest in property.
(f)The record of permissible rent levels is a public record for purposes of the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code).
(g)Any notice specifying the rents applicable to residential rental units which is given by an owner to a public entity or tenant in order to comply with Chapter 12.75 (commencing with Section 7060) of Division 7 of Title 1 of the Government Code shall not be considered a registration of rents for purposes of this section.
(h)Local agency, as used in this section, means the public entity responsible for the implementation of the ordinance, charter, or regulation.
(i)Nothing in this section shall be construed:
(1)To grant to any public entity any power which it does not possess independent of this section to control or establish a system of control on the price at which accommodations may be offered for rent or lease, or to diminish any such power which that public entity may possess, except as specifically provided in this section.
(2)On and after January 1, 2016, to apply to tenancies commencing on or after January 1, 1999, for which the owner of residential property may establish the initial rent under Chapter 2.7 (commencing with Section 1954.50). However, for a tenancy that commenced on or after January 1, 1999, if a property owner has provided the local agency with the tenancys initial rent in compliance with that agencys registration requirements in a writing signed under penalty of perjury, there shall be a rebuttable presumption that the statement of the initial rent is correct.
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)If an ordinance or charter controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and requires the registration of rents, the ordinance or charter, or any regulation adopted pursuant thereto, shall provide for the establishment and certification of permissible rent levels for the registered rental units, and any changes thereafter to those rent levels, by the local agency as provided in this section.
(b)If the ordinance, charter, or regulation is in effect on January 1, 1987, the ordinance, charter, or regulation shall provide for the establishment and certification of permissible rent levels on or before January 1, 1988, including completion of all appeals and administrative proceedings connected therewith. After July 1, 1990, no local agency may maintain any action to recover excess rent against any property owner who has registered the unit with the local agency within the time limits set forth in this section if the initial certification of permissible rent levels affecting that particular property has not been completed, unless the delay is willfully and intentionally caused by the property owner or is a result of court proceedings or further administrative proceedings ordered by a court. If the ordinance, charter, or regulation is adopted on or after January 1, 1987, the ordinance, charter, or regulation shall provide for the establishment and certification of permissible rent levels within one year after it is adopted, including completion of all appeals and administrative proceedings connected therewith. Upon the request of the landlord or the tenant, the local agency shall provide the landlord and the tenant with a certificate or other documentation reflecting the permissible rent levels of the rental unit. A landlord may request a certificate of permissible rent levels for rental units which have a base rent established, but which are vacant and not exempt from registration under this section. The landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate. The permissible rent levels reflected in the certificate or other documentation shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed.
(c)After the establishment and certification of permissible rent levels under subdivision (b), the local agency shall, upon the request of the landlord or the tenant, provide the landlord and the tenant with a certificate of the permissible rent levels of the rental unit. The certificate shall be issued within five business days from the date of request by the landlord or the tenant. The permissible rent levels reflected in the certificate shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed. The landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate. Any appeal of a determination of permissible rent levels as reflected in the certificate, other than an appeal made pursuant to subdivision (b), shall be filed with the local agency within 15 days from issuance of the certificate. The local agency shall notify, in writing, the landlord and the tenant of its decision within 60 days following the filing of the appeal.
(d)The local agency may charge the person to whom a certificate is issued a fee in the amount necessary to cover the reasonable costs incurred by the local agency in issuing the certificate.
(e)The absence of a certification of permissible rent levels shall not impair, restrict, abridge, or otherwise interfere with either of the following:
(1)A judicial or administrative hearing.
(2)Any matter in connection with a conveyance of an interest in property.
(f)The record of permissible rent levels is a public record for purposes of the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code).
(g)Any notice specifying the rents applicable to residential rental units which is given by an owner to a public entity or tenant in order to comply with Chapter 12.75 (commencing with Section 7060) of Division 7 of Title 1 of the Government Code shall not be considered a registration of rents for purposes of this section.
(h)Local agency, as used in this section, means the public entity responsible for the implementation of the ordinance, charter, or regulation.
(i)Nothing in this section shall be construed:
(1)To grant to any public entity any power which it does not possess independent of this section to control or establish a system of control on the price at which accommodations may be offered for rent or lease, or to diminish any such power which that public entity may possess, except as specifically provided in this section.
(2)On and after January 1, 2016, to apply to tenancies commencing on or after January 1, 1999, for which the owner of residential property may establish the initial rent under Chapter 2.7 (commencing with Section 1954.50), except that, 1954.50). However, for a tenancy that commenced on or after January 1, 1999, if the a property owner provides has provided the local agency with the tenancys initial rent in compliance with that agencys registration requirements, requirements in a writing signed under penalty of perjury, there shall be a rebuttable presumption that the statement of the initial rent is correct.
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)If an ordinance or charter controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and requires the registration of rents, the ordinance or charter, or any regulation adopted pursuant thereto, shall provide for the establishment and certification of permissible rent levels for the registered rental units, and any changes thereafter to those rent levels, by the local agency as provided in this section.
(b)If the ordinance, charter, or regulation is in effect on January 1, 1987, the ordinance, charter, or regulation shall provide for the establishment and certification of permissible rent levels on or before January 1, 1988, including completion of all appeals and administrative proceedings connected therewith. After July 1, 1990, no local agency may maintain any action to recover excess rent against any property owner who has registered the unit with the local agency within the time limits set forth in this section if the initial certification of permissible rent levels affecting that particular property has not been completed, unless the delay is willfully and intentionally caused by the property owner or is a result of court proceedings or further administrative proceedings ordered by a court. If the ordinance, charter, or regulation is adopted on or after January 1, 1987, the ordinance, charter, or regulation shall provide for the establishment and certification of permissible rent levels within one year after it is adopted, including completion of all appeals and administrative proceedings connected therewith. Upon the request of the landlord or the tenant, the local agency shall provide the landlord and the tenant with a certificate or other documentation reflecting the permissible rent levels of the rental unit. A landlord may request a certificate of permissible rent levels for rental units which have a base rent established, but which are vacant and not exempt from registration under this section. The landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate. The permissible rent levels reflected in the certificate or other documentation shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed.
(c)After the establishment and certification of permissible rent levels under subdivision (b), the local agency shall, upon the request of the landlord or the tenant, provide the landlord and the tenant with a certificate of the permissible rent levels of the rental unit. The certificate shall be issued within five business days from the date of request by the landlord or the tenant. The permissible rent levels reflected in the certificate shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed. The landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate. Any appeal of a determination of permissible rent levels as reflected in the certificate, other than an appeal made pursuant to subdivision (b), shall be filed with the local agency within 15 days from issuance of the certificate. The local agency shall notify, in writing, the landlord and the tenant of its decision within 60 days following the filing of the appeal.
(d)The local agency may charge the person to whom a certificate is issued a fee in the amount necessary to cover the reasonable costs incurred by the local agency in issuing the certificate.
(e)The absence of a certification of permissible rent levels shall not impair, restrict, abridge, or otherwise interfere with either of the following:
(1)A judicial or administrative hearing.
(2)Any matter in connection with a conveyance of an interest in property.
(f)The record of permissible rent levels is a public record for purposes of the California Public Records Act, Chapter Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code. Code).
(g)Any notice specifying the rents applicable to residential rental units which is given by an owner to a public entity or tenant in order to comply with Chapter 12.75 (commencing with Section 7060) of Division 7 of Title 1 of the Government Code shall not be considered a registration of rents for purposes of this section.
(h)Local agency, as used in this section, means the public entity responsible for the implementation of the ordinance, charter, or regulation.
(i)Nothing in this section shall be construed:
(1)To grant to any public entity any power which it does not possess independent of this section to control or establish a system of control on the price at which accommodations may be offered for rent or lease, or to diminish any such power which that public entity may possess, except as specifically provided in this section.
(2)On and after January 1, 2016, to apply to tenancies commencing on or after January 1, 1999, for which the owner of residential property may establish the initial rent under Chapter 2.7 (commencing with Section 1954.50). 1954.50), except that, for a tenancy that commenced on or after January 1, 1999, if the property owner provides the local agency with the tenancys initial rent in compliance with that agencys registration requirements, in writing signed under penalty of perjury, there shall be a rebuttable presumption that the statement of the initial rent is correct.
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)If an ordinance or charter controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and requires the registration of rents, the ordinance or charter, or any regulation adopted pursuant thereto, shall provide for the establishment and certification of permissible rent levels for the registered rental units, and any changes thereafter to those rent levels, by the local agency as provided in this section.
(b)If the ordinance, charter, or regulation is in effect on January 1, 1987, the ordinance, charter, or regulation shall provide for the establishment and certification of permissible rent levels on or before January 1, 1988, including completion of all appeals and administrative proceedings connected therewith. After July 1, 1990, no local agency may maintain any action to recover excess rent against any property owner who has registered the unit with the local agency within the time limits set forth in this section if the initial certification of permissible rent levels affecting that particular property has not been completed, unless the delay is willfully and intentionally caused by the property owner or is a result of court proceedings or further administrative proceedings ordered by a court. If the ordinance, charter, or regulation is adopted on or after January 1, 1987, the ordinance, charter, or regulation shall provide for the establishment and certification of permissible rent levels within one year after it is adopted, including completion of all appeals and administrative proceedings connected therewith. Upon the request of the landlord or the tenant, the local agency shall provide the landlord and the tenant with a certificate or other documentation reflecting the permissible rent levels of the rental unit. A landlord may request a certificate of permissible rent levels for rental units which have a base rent established, but which are vacant and not exempt from registration under this section. The landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate. The permissible rent levels reflected in the certificate or other documentation shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed.
(c)After the establishment and certification of permissible rent levels under subdivision (b), the local agency shall, upon the request of the landlord or the tenant, provide the landlord and the tenant with a certificate of the permissible rent levels of the rental unit. The certificate shall be issued within five business days from the date of request by the landlord or the tenant. The permissible rent levels reflected in the certificate shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed. The landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate. Any appeal of a determination of permissible rent levels as reflected in the certificate, other than an appeal made pursuant to subdivision (b), shall be filed with the local agency within 15 days from issuance of the certificate. The local agency shall notify, in writing, the landlord and the tenant of its decision within 60 days following the filing of the appeal.
(d)The local agency may charge the person to whom a certificate is issued a fee in the amount necessary to cover the reasonable costs incurred by the local agency in issuing the certificate.
(e)The absence of a certification of permissible rent levels shall not impair, restrict, abridge, or otherwise interfere with either of the following:
(1)A judicial or administrative hearing.
(2)Any matter in connection with a conveyance of an interest in property.
(f)The record of permissible rent levels is a public record for purposes of the California Public Records Act, Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code.
(g)Any notice specifying the rents applicable to residential rental units which is given by an owner to a public entity or tenant in order to comply with Chapter 12.75 (commencing with Section 7060) of Division 7 of Title 1 of the Government Code shall not be considered a registration of rents for purposes of this section.
(h)Local agency, as used in this section, means the public entity responsible for the implementation of the ordinance, charter, or regulation.
(i)Nothing in this section shall be construed to grant construed:
(1)To grant to any public entity any power which it does not possess independent of this section to control or establish a system of control on the price at which accommodations may be offered for rent or lease, or to diminish any such power which that public entity may possess, except as specifically provided in this section.
(2)On and after January 1, 2016, to apply to tenancies commencing on or after January 1, 1999, for which the owner of residential property may establish the initial rent under Chapter 2.7 (commencing with Section 1954.50).
SECTION 1.It is the intent of the Legislature to enact legislation that would clarify when a landlord or his or her agent agrees that a tenants payment for rent or deposit for security is accepted or rejected.
It is the intent of the Legislature to enact legislation that would clarify when a landlord or his or her agent agrees that a tenants payment for rent or deposit for security is accepted or rejected.
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Date
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Status
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|---|---|
| Jun 16, 2016 | Read third time and amended. |
| Aug 20, 2015 | Read second time. Ordered to consent calendar. |
| Aug 24, 2015 | From consent calendar on motion of Assembly Member Cristina Garcia. |
| Aug 24, 2015 | Ordered to third reading. |
| Sep 4, 2015 | Ordered to inactive file on request of Assembly Member Holden. |
| May 19, 2016 | Notice of intention to remove from inactive file given by Assembly Member Calderon. |
| May 23, 2016 | From inactive file. |
| May 23, 2016 | Ordered to third reading. |
| Jun 16, 2016 | Ordered to third reading. |
| Aug 19, 2015 | From committee: Do pass. Ordered to consent calendar. (Ayes 17. Noes 0.) (August 19). |
| Jun 27, 2016 | In Senate. Concurrence in Assembly amendments pending. |
| Jun 27, 2016 | Read third time. Passed. Ordered to the Senate. |
| Jun 27, 2016 | Read third time. Passed. (Ayes 75. Noes 0. Page 5515.) Ordered to the Senate. |
| Jun 30, 2016 | Assembly amendments concurred in. (Ayes 38. Noes 0. Page 4637.) Ordered to engrossing and enrolling. |
| Jun 30, 2016 | Assembly amendments concurred in. (Ayes 38. Noes 0.) Ordered to engrossing and enrolling. |
| Jul 13, 2016 | Enrolled and presented to the Governor at 4 p.m. |
| Jul 22, 2016 | Approved by the Governor. |
| Jul 22, 2016 | Chaptered by Secretary of State. Chapter 83, Statutes of 2016. |
| May 14, 2015 | Read second time. Ordered to third reading. |
| Mar 2, 2015 | From printer. May be acted upon on or after April 1. |
| Mar 2, 2015 | Read first time. |
| Mar 19, 2015 | Referred to Com. on RLS. |
| Apr 23, 2015 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on RLS. |
| Apr 27, 2015 | Re-referred to Com. on JUD. |
| May 1, 2015 | Set for hearing May 12. |
| May 13, 2015 | From committee: Do pass. (Ayes 7. Noes 0. Page 984.) (May 12). |
| May 13, 2015 | From committee: Do pass. (Ayes 7. Noes 0.) (May 12). |
| Feb 27, 2015 | Introduced. To Com. on RLS. for assignment. To print. |
| May 20, 2015 | Ordered to special consent calendar. |
| May 22, 2015 | In Assembly. Read first time. Held at Desk. |
| May 22, 2015 | Read third time. Passed. (Ayes 38. Noes 0. Page 1075.) Ordered to the Assembly. |
| May 22, 2015 | Read third time. Passed. (Ayes 38. Noes 0.) Ordered to the Assembly. |
| Jun 11, 2015 | Referred to Com. on H. & C.D. |
| Jul 1, 2015 | July 1 hearing postponed by committee. |
| Jul 8, 2015 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on H. & C.D. |
| Jul 15, 2015 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (July 15). Re-referred to Com. on APPR. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Jun 30, 2016 | Unfinished Business SB775 Allen Concurrence | Senate Floor |
Passed |
|
| Jun 27, 2016 | SB 775 Allen Senate Third Reading By BLOOM | Assembly Floor |
Passed |
|
| Aug 19, 2015 | Do pass. To Consent Calendar. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jul 15, 2015 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Housing and Community Development |
Passed |
|
| May 22, 2015 | Special Consent #2 SB775 Allen | Senate Floor |
Passed |
|
| May 12, 2015 | Do pass | Senate Standing Committee on Judiciary |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| City of West Hollywood | ** Support | Jun 30, 2016 |
| Rent Stabilization Board of the City of Berkeley | ** Support | Jun 30, 2016 |
| Santa Monica Rent Control Board | ** Support | Jun 30, 2016 |
| Santa Monica, City Of | ** Support | Jun 30, 2016 |
SENATE THIRD READING
STR Bill Id:SB 775
Author:(Allen)
As Amended Ver:June 16, 2016
Majority vote
SENATE VOTE: 38-0
Committee | Votes | Ayes | Noes |
Housing | 7-0 | Chau, Steinorth, Burke, Chiu, Beth Gaines, Lopez, Mullin | |
Appropriations | 17-0 | Gomez, Bigelow, Bloom, Bonta, Calderon, Chang, Daly, Eggman, Gallagher, Eduardo Garcia, Holden, Jones, Quirk, Rendon, Wagner, Weber, Wood |
SUMMARY: Provides that the requirement to certify rents in jurisdictions with rent control under the Petris Act does not apply to tenancies beginning January 1, 1999, that are subject to the Costa-Hawkins Rental Housing Act (Costa-Hawkins). Specifically, this bill:
- Provides that the requirement to certify rents in jurisdictions with rent control under the Petris Act does not apply to tenancies beginning January 1, 1999, that are subject to Costa-Hawkins.
- Provides that for a tenancy that began after January 1, 1999, if a property owner has provided the local agency with the tenancy's initial rent in compliance with the agency's registration requirements in a writing signed under penalty of perjury, there will be a rebuttable presumption that the statement of the initial rent is correct.
FISCAL EFFECT: According to Assembly Appropriations Committee, this bill will have negligible state fiscal impact.
COMMENTS:
Background: In 1986, the Legislature adopted the Petris Act which directs cities with rent control ordinances requiring rent level registration to certify the maximum allowable rent for every rent controlled unit under its jurisdiction. Upon the request of a landlord or tenant, a city must certify the permissible rent for a rent controlled unit or if no certification is on file, provide a certification process to determine the maximum allowable rent. A city must provide the certification within five business days of the date of the request.
Nine years after the Petris Act was enacted, the Legislature enacted Costa-Hawkins which preempts local adoption of strict vacancy-control, rent control laws that do not allow a property owner or landlord to increase the rent when a unit is vacated and a new tenancy is created. Instead, Costa-Hawkins permits a vacancy decontrol-recontrol form of local rent control where an owner is authorized to increase the rent without restriction to a new tenant when the tenancy is voluntarily vacated, abandoned, or terminated by lawful eviction. The new rent for the new tenant would then be subject to local rent controls for the duration of the tenancy. Costa-Hawkins applied to tenancies entered into after January 1, 1999, and protected the tenancy rights of all occupants in place prior to January 1, 1999.
This bill would amend the Petris Act to state that its provisions do not apply to tenancies commencing on or after January 1, 1999. For those long-term tenancies still in existence today that were established prior to January 1, 1996, the Petris Act's maximum rent certification process may still apply.
Purpose of this bill: According to the author, "the problem with the current law is that it is has created opportunities for landlords and tenants to manipulate the certification process to their advantage, rather than for its intended purpose of creating certainty for the parties and the local agency. For example, a landlord or a tenant, knowing that a local agency does not have accurate information regarding a current tenancy, will seek a certificate that will be premised upon a higher or lower rent than what was initially agreed to by the parties. Because current law permits the initial rent to be established by the agreement of the parties, they are in the better position to ascertain the rent than the local agency. Not surprisingly, sophisticated landlords and tenants, knowing that the mandate to issue a certificate within five business days is still required of local agencies, will seek the certificate solely to obtain an advantage or create confusion in a dispute over rent levels, overcharges and/or an unlawful detainer proceeding. Local agency staff is then put in the difficult position of scrambling to ascertain a correct rent level with inadequate information, and to then issue a certificate that may impact the outcome of ongoing litigation.
"By amending existing law to remove the certification requirement for post-January 1, 1999, rents established by the landlord, local agencies would no longer be placed in the impossible position of issuing binding certifications based on incomplete or absent information. The amendment would also protect the integrity of any contemporaneous administrative or judicial processes for establishing rent levels or overcharges by removing the ability to use the certification process to obfuscate the issues in those proceedings.
"Notably, some rent control jurisdictions provide an administrative hearing for ascertaining base rents, current rents and overcharges. But, unlike the certification process, the administrative hearing process provides the parties with adequate notice, and opportunity to present all their evidence and to have the matter decided by a neutral hearing examiner, along with a right of appeal. This approach has been the preferred choice for the vast majority of parties who seek an accurate determination of permissible rent levels and will continue to be available to any landlord or tenant in those jurisdictions that offer such proceedings."
Analysis Prepared by: Rebecca Rabovsky / H. & C.D. / (961) 319-2085 FN: 0003459
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
UNFINISHED BUSINESS
Bill No: SB 775
:
SENATE JUDICIARY COMMITTEE: 7-0, 5/12/15
AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning, Wieckowski
SENATE FLOOR: 38-0, 5/22/15
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Gaines, Galgiani, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Fuller
ASSEMBLY FLOOR: 75-0, 6/27/16 - See last page for vote
DIGEST: This bill amends the Petris Act to state that its rent level certification provisions would not apply to tenancies commencing on or after January 1, 1999, for which the owner of the property may establish initial rent under the Costa-Hawkins Rental Housing Act.
Assembly Amendments provide that for a tenancy that began after January 1, 1999, if the property owner provides the local agency with the tenancy's initial rent in compliance with the agency's registration requirements, in writing signed under penalty of perjury, there will be a rebuttable presumption that the statement of the initial rent is correct.
Existing law, the Petris Act:
- States that if an ordinance or charter controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and requires the registration of rents, the ordinance or charter, or any regulation adopted pursuant thereto, shall provide for the establishment and certification of permissible rent levels for the registered rental units, and any changes thereafter to those rent levels, by the local agency, as specified. Existing law states that the ordinance, charter, or regulation shall provide a process for the establishment and certification of permissible rent levels within one year after it is adopted, as specified. (Civ. Code Secs. 1947.8(a), 1947.7(b).)
- States that upon the request of the landlord or the tenant, a local agency shall provide the landlord and the tenant with a certificate or other documentation reflecting the permissible rent levels of a rental unit. Existing law specifies that the landlord or tenant may appeal the determination of the permissible rent levels reflected in the certificate, and that the permissible rent levels reflected in the certificate or other documentation shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed. (Civ. Code Secs. 1947.8(b), 1947.8(c).)
- Provides that after the establishment and certification of permissible rent levels, the local agency shall, upon the request of the landlord or the tenant, provide the landlord and tenant with a certificate of the permissible rent levels of the rental unit. Existing law specifies that the certificate shall be issued within five business days from the date of request by the landlord or the tenant. (Civ. Code Sec. 1947.8(c).)
- States that the landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate, and that such an appeal shall be filed with the local agency within 15 days from issuance of the certificate, except as specified. Existing law provides that the local agency shall notify, in writing, the landlord and the tenant of its decision within 60 days following the filing of the appeal. (Civ. Code Sec. 1947.8(c).)
- Provides that an owner of a residential rental unit who is in substantial compliance with an ordinance or charter that controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and which requires the registration of rents, or any regulation adopted pursuant thereto, shall not be assessed a penalty or any other sanction for noncompliance with the ordinance, charter, or regulation. (Civ. Code Sec. 1947.7(b).)
Existing law, the Costa-Hawkins Rental Housing Act:
- States that notwithstanding any other provision of law, an owner of residential real property may establish the initial and all subsequent rental rates for a dwelling or a unit if it has a certificate of occupancy issued after February 1, 1995, or it has already been exempt from the residential rent control ordinance of a public entity on or before February 1, 1995, pursuant to a local exemption for newly constructed units, as specified. (Civ. Code Sec. 1954.52(a).)
- Provides that, for a dwelling or unit in which the initial or subsequent rental rates are controlled by an ordinance or charter provision in effect on January 1, 1995, the owner of such real property may establish the initial and all subsequent rental rates for all existing and new tenancies in effect on or after January 1, 1999, if the tenancy in effect on or after January 1, 1999, was created between January 1, 1996, and December 31, 1998. Existing law specifies that commencing on January 1, 1999, an owner of real property as described in this paragraph may establish the initial and all subsequent rental rates for all new tenancies if the previous tenancy was in effect on December 31, 1995, except as specified. (Civ. Code Sec. 1954.52(a).)
This bill:
- States that the provisions of the Petris Act governing the establishment and certification of permissible rent levels shall not, on and after January 1, 2016, apply to tenancies commencing on or after January 1, 1999, for which the owner of residential property may establish the initial rent under the Costa-Hawkins Rental Housing Act.
- Provides that for a tenancy that commenced on or after January 1, 1999, if a property owner has provided the local agency with the tenancy’s initial rent in compliance with that agency’s registration requirements in a writing signed under penalty of perjury, there shall be a rebuttable presumption that the statement of the initial rent is correct.
Background
In 1986, the Legislature adopted the Petris Act (Civ. Code Secs. 1947.7,1947.8), which directs cities with rent control laws requiring rent level registration to certify the maximum allowable rent for every rent controlled unit under its jurisdiction. Upon the request of a landlord or tenant, the Petris Act requires the city to provide a certificate or other document reflecting the permissible rent level for a rent controlled unit to the requesting party, or, if no certificate is on file, to provide a certification process to determine the maximum allowable rent. The Petris Act requires cities to provide the permissible rent certificate to the requesting party within five business days of the date of request, and sets certain parameters for cities to follow in establishing their certification processes.
Nine years later, the Legislature enacted the Costa-Hawkins Rental Housing Act (Civ. Code Sec. 1954.50 et seq.). Generally speaking, the Costa-Hawkins Rental Housing Act (Costa-Hawkins) preempts the local adoption of “strict vacancy control” rent control laws that do not allow a property owner or landlord to increase the rent when a unit is vacated and a new tenancy is created. Instead, Costa-Hawkins permitted the “vacancy decontrol-recontrol” form of local rent control where an owner is authorized to increase the rent without restriction to a new tenant when a former rent-controlled tenancy was voluntarily vacated, abandoned, or terminated by lawful eviction. The new rent for the new tenant would then be subject to local rent controls for the duration of that tenancy. Costa-Hawkins specified that its provisions would come into force on January 1, 1999. Costa-Hawkins protected the tenancy rights of all occupants “in place” prior to January 1, 1996, and provided that the owner could increase the rent to any sublessee or assignee where the original occupant no longer permanently resides.
According to the author, some individuals are attempting to take advantage of the 5-day certification process in the Petris Act to certify rent levels at higher or lower rates while either the landlord or tenant is not available to contest the certification. This bill amends the Petris Act to state that its provisions would not apply to tenancies commencing on or after January 1, 1999 – the effective date of Costa-Hawkins.
Comments
According to the author:
Existing law mandates that all rent control jurisdictions that require the registration of rents provide for the establishment and certification of permissible rent levels for registered rental units. At the time the law was enacted, vacancy control was still in effect in several local jurisdictions. The purpose at the time of enactment was to provide landlords, in particular, with certainty as to the maximum rent level at which they could offer a rental unit. At that time, controlled rents were determined by a “base rent” established through an initial, rental unit registration process. Even when a unit was vacant, a landlord could request a certificate of permissible rent levels prior to renting a rental unit, since base rents were set at an established level that determined all subsequent rent levels. With the full implementation of the Costa-Hawkins Rental Housing Act (Civil Code [Secs.] 1954.50-1954.535) in 1999, landlords were given authority to set a new market-level base rent at the start of the vast majority of new tenancies. Local agencies that require registration of new tenancies rarely have any role in the establishment of the initial, permissible rent level for any tenancy commencing from 1999 onward. Yet, the current law regarding rent level certification fails to account for this fact.
The problem with the current law is that it has created opportunities for landlords and tenants to manipulate the certification process to their advantage, rather than for its intended purpose of creating certainty for the parties and the local agency. For example, a landlord or a tenant, knowing that a local agency does not have accurate information regarding a current tenancy, will seek a certificate that will be premised upon a higher or lower rent than what was initially agreed to by the parties. Because current law permits the initial rent to be established by the agreement of the parties, they are in the better position to ascertain the rent than the local agency. Not surprisingly, sophisticated landlords and tenants, knowing that the mandate to issue a certificate within 5 business days is still required of local agencies, will seek the certificate solely to obtain an advantage or create confusion in a dispute over rent levels, overcharges and/or an unlawful detainer proceeding. Local agency staff is then put in the difficult position of scrambling to ascertain a correct rent level with inadequate information, and to then issue a certificate that may impact the outcome of ongoing litigation.
By amending existing law to remove the certification requirement for post-January 1, 1999 rents established by the landlord, local agencies would no longer be placed in the impossible position of issuing binding certifications based on incomplete or absent information. The amendment would also protect the integrity of any contemporaneous administrative or judicial processes for establishing rent levels or overcharges by removing the ability to use the certification process to obfuscate the issues in those proceedings.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
According to the Assembly Appropriations Committee, this bill will have negligible state fiscal impact.
City of Santa Monica
City of West Hollywood
Rent Stabilization Board of the City of Berkeley
Santa Monica Rent Control Board
OPPOSITION: (Verified 6/27/16)
None received
ARGUMENTS IN SUPPORT: According to the City of West Hollywood, under state law, landlords have the right to establish the initial rent for most new tenancies that began on or after January 1, 1999, irrespective of local rent control laws, and local jurisdictions cannot be certain of the rent for those tenancies. While local rent-control jurisdictions may require landlords to register rents for those tenancies, the jurisdictions cannot know the truth or accuracy of the rent that the landlord registers. Thus, the jurisdiction cannot meaningfully certify the registered rent. Occasionally landlords will register a rent, then immediately demand that the local jurisdiction certify that rent, requiring the local government to verify the truth of something that it cannot know to be true. Tenants also use the certification process in an attempt to obtain an inaccurate rent amount, lower than the actual rent, because the city’s information is incomplete or outdated. SB 775 will eliminate these abuses by clarifying that the Petris Act does not apply to tenancies created after January 1, 1999, for which an owner can set the initial rent.
ASSEMBLY FLOOR: 75-0, 6/27/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood
NO VOTE RECORDED: Atkins, Harper, Medina, Thurmond, Rendon
6/29/16 15:56:16
**** END ****
SB 775
Page 2
SENATE THIRD READING
SB 775
(Allen)
As Amended July 8, 2015
Majority vote
SENATE VOTE: 38-0
Committee |
Votes |
Ayes |
Noes |
Housing |
7-0 |
Chau, Steinorth, Burke, Chiu, Beth Gaines, Lopez, Mullin |
|
Appropriations |
17-0 |
Gomez, Bigelow, Bloom, Bonta, Calderon, Chang, Daly, Eggman, Gallagher, Eduardo Garcia, Holden, Jones, Quirk, Rendon, Wagner, Weber, Wood |
|
SUMMARY: Provides that the requirement to certify rents in jurisdictions with rent control under the Petris Act does not apply to tenancies beginning January 1, 1999, that are subject to the Costa-Hawkins Rental Housing Act (Costa-Hawkins). Specifically, this bill:
Provides that the requirement to certify rents in jurisdictions with rent control under the Petris Act does not apply to tenancies beginning January 1, 1999, that are subject to Costa-Hawkins.
Provides that for a tenancy that began after January 1, 1999, if the property owner provides the local agency with the tenancy's initial rent in compliance with the agency's registration requirements, in writing signed under penalty of perjury, there will be a rebuttable presumption that the statement of the initial rent is correct.
FISCAL EFFECT: According to Assembly Appropriations Committee, this bill will have negligible state fiscal impact.
COMMENTS:
Background: In 1986, the Legislature adopted the Petris Act which directs cities with rent control ordinances requiring rent level registration to certify the maximum allowable rent for every rent controlled unit under its jurisdiction. Upon the request of a landlord or tenant, a city must certify the permissible rent for a rent controlled unit or if no certification is on file, provide a certification process to determine the maximum allowable rent. A city must provide the certification within five business days of the date of the request.
Nine years after the Petris Act was enacted, the Legislature enacted Costa-Hawkins which preempts local adoption of strict vacancy-control, rent control laws that do not allow a property owner or landlord to increase the rent when a unit is vacated and a new tenancy is created. Instead, Costa-Hawkins permits a vacancy decontrol-recontrol form of local rent control where an owner is authorized to increase the rent without restriction to a new tenant when the tenancy is voluntarily vacated, abandoned, or terminated by lawful eviction. The new rent for the new tenant would then be subject to local rent controls for the duration of the tenancy. Costa-Hawkins applied to tenancies entered into after January 1, 1999, and protected the tenancy rights of all occupants in place prior to January 1, 1999.
This bill would amend the Petris Act to state that its provisions do not apply to tenancies commencing on or after January 1, 1999. For those long-term tenancies still in existence today that were established prior to January 1, 1996, the Petris Act's maximum rent certification process may still apply.
Purpose of this bill: According to the author, "the problem with the current law is that it is has created opportunities for landlords and tenants to manipulate the certification process to their advantage, rather than for its intended purpose of creating certainty for the parties and the local agency. For example, a landlord or a tenant, knowing that a local agency does not have accurate information regarding a current tenancy, will seek a certificate that will be premised upon a higher or lower rent than what was initially agreed to by the parties. Because current law permits the initial rent to be established by the agreement of the parties, they are in the better position to ascertain the rent than the local agency. Not surprisingly, sophisticated landlords and tenants, knowing that the mandate to issue a certificate within five business days is still required of local agencies, will seek the certificate solely to obtain an advantage or create confusion in a dispute over rent levels, overcharges and/or an unlawful detainer proceeding. Local agency staff is then put in the difficult position of scrambling to ascertain a correct rent level with inadequate information, and to then issue a certificate that may impact the outcome of ongoing litigation.
"By amending existing law to remove the certification requirement for post-January 1, 1999, rents established by the landlord, local agencies would no longer be placed in the impossible position of issuing binding certifications based on incomplete or absent information. The amendment would also protect the integrity of any contemporaneous administrative or judicial processes for establishing rent levels or overcharges by removing the ability to use the certification process to obfuscate the issues in those proceedings.
"Notably, some rent control jurisdictions provide an administrative hearing for ascertaining base rents, current rents and overcharges. But, unlike the certification process, the administrative hearing process provides the parties with adequate notice, and opportunity to present all their evidence and to have the matter decided by a neutral hearing examiner, along with a right of appeal. This approach has been the preferred choice for the vast majority of parties who seek an accurate determination of permissible rent levels and will continue to be available to any landlord or tenant in those jurisdictions that offer such proceedings."
Analysis Prepared by: Rebecca Rabovsky / H. & C.D. / (916) 319-2085 FN: 0001527
Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 775
(Allen) – As Amended July 8, 2015
Policy Committee: |
Housing and Community Development |
Vote: |
7 - 0 |
|
|
|
|
|
|
|
|
Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill amends the Petris Act to state that its rent level certification provisions do not apply to tenancies commencing on or after January 1, 1999, for which the owner of the property may establish initial rent under the Costa-Hawkins Rental Housing Act (Costa-Hawkins). This bill excepts from this exclusion a tenancy for which the property owner provides the local rent control agency with the tenancy's initial rent in writing signed under penalty of perjury, which creates a rebuttable presumption that the statement of the initial rent is correct.
FISCAL EFFECT:
Negligible state fiscal impact.
COMMENTS:
Purpose. According to the author, some individuals are attempting to take advantage of the five-day certification process in the Petris Act to certify rent levels at higher or lower rates while either the tenant or landlord is not available to contest the certification. This bill amends the Petris Act to state that its provisions do not apply to tenancies commencing on or after January 1, 1999, the effective date of Costa-Hawkins, thereby eliminating the opportunity for abuse.
Background. In 1986, the Legislature adopted the Petris Act which directs a city with rent control ordinances requiring rent level registration to certify the maximum allowable rent for every rent controlled unit under its jurisdiction. Upon the request of a landlord or tenant, a city must certify the permissible rent for a rent controlled unit or if no certification is on file, provide a certification process to determine the maximum allowable rent. A city must provide the certification within five business days of the date of the request.
Nine years after the Petris Act was enacted, the Legislature enacted Costa-Hawkins which preempts local adoption of strict vacancy-control, rent control laws that do not allow a property owner or landlord to increase the rent when a unit is vacated and a new tenancy is created. Instead, Costa-Hawkins permits a vacancy decontrol-recontrol form of local rent control where an owner is authorized to increase the rent without restriction to a new tenant when the tenancy is voluntarily vacated, abandoned, or terminated by lawful eviction. The new rent for the new tenant would then be subject to local rent controls for the duration of the tenancy. Costa-Hawkins applied to tenancies entered into after January 1, 1999 and protected the tenancy rights of all occupants in place prior to January 1, 1999.
Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081
SB 775
Page 4
Date of Hearing: July 15, 2015
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Ed Chau, Chair
SB 775
(Allen) – As Amended July 8, 2015
SENATE VOTE: 38-0
SUBJECT: Tenancy: rent control: certification.
SUMMARY: Provides that the requirement to certify rents in jurisdictions with rent control under the Petris Act does not apply to tenancies beginning January 1, 1999 that are subject to the Costa-Hawkins Rental Housing Act (Costa-Hawkins). Specifically, this bill:
Provides that the requirement to certify rents in jurisdictions with rent control under the Petris Act does not apply to tenancies beginning January 1, 1999 that are subject to the Costa-Hawkins Rental Housing Act (Costa-Hawkins).
Provides that for a tenancy that began after January 1, 1999, if the property owner provides the local agency with the tenancy's initial rent in compliance with the agency's registration requirements, in writing signed under penalty of perjury, there will be a rebuttable presumption that the statement of the initial rent is correct.
EXISTING LAW:
States, under the Petris Act, that if an ordinance or charter controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and requires the registration of rents, the ordinance or charter, or any regulation adopted pursuant thereto, shall provide for the establishment and certification of permissible rent levels for the registered rental units, and any changes thereafter to those rent levels, by the local agency, as specified. Provides that the ordinance, charter, or regulation shall provide a process for the establishment and certification of permissible rent levels within one year after it is adopted, as specified. (Civil Code Sections 1947.7 and 1947.8)
Requires a local agency, upon the request of the landlord or the tenant, to provide the landlord and the tenant with a certificate or other documentation reflecting the permissible rent levels of a rental unit. Provides that the landlord or tenant may appeal the determination of the permissible rent levels reflected in the certificate, and that the permissible rent levels reflected in the certificate or other documentation shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed. (Civil Code Sections 1947.7 and 1947.8)
Requires the local agency, after the establishment and certification of permissible rent levels and upon the request of the landlord or the tenant, to provide the landlord and tenant with a certificate of the permissible rent levels of the rental unit. Requires that the certificate shall be issued within five business days from the date of request by the landlord or the tenant. (Civil Code Section 1947.8)
Allows the landlord or the tenant to appeal the determination of the permissible rent levels reflected in the certificate, and requires the appeal to be filed with the local agency within 15 days from issuance of the certificate, except as specified. Requires the local agency to notify the landlord and the tenant in writing of its decision within 60 days following the filing of the appeal. (Civil Code Section 1947.8)
Provides that an owner of a residential rental unit who is in substantial compliance with an ordinance or charter that controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and which requires the registration of rents, or any regulation adopted pursuant thereto, will not be assessed a penalty or any other sanction for noncompliance with the ordinance, charter, or regulation. (Civil Code Section 1947.7)
Allows, under Costa-Hawkins, an owner of residential real property to establish the initial and all subsequent rental rates for a dwelling or a unit if it has a certificate of occupancy issued after February 1, 1995, or it has already been exempt from the residential rent control ordinance of a public entity on or before February 1, 1995, pursuant to a local exemption for newly constructed units, as specified. (Civil Code Section 1954.52)
Provides that, for a dwelling or unit in which the initial or subsequent rental rates are controlled by an ordinance or charter provision in effect on January 1, 1995, the owner of such real property may establish the initial and all subsequent rental rates for all existing and new tenancies in effect on or after January 1, 1999, if the tenancy in effect on or after January 1, 1999, was created between January 1, 1996, and December 31, 1998. Existing law specifies that commencing on January 1, 1999, an owner of real property as described in this paragraph may establish the initial and all subsequent rental rates for all new tenancies if the previous tenancy was in effect on December 31, 1995, except as specified. (Civil Code Section 1954.52)
FISCAL EFFECT: None.
COMMENTS:
Background: In 1986, the Legislature adopted the Petris Act which directs cities with rent control ordinances requiring rent level registration to certify the maximum allowable rent for every rent controlled unit under its jurisdiction. Upon the request of a landlord or tenant, a city must certify the permissible rent for a rent controlled unit or if no certification is on file, provide a certification process to determine the maximum allowable rent. A city must provide the certification within 5 business days of the date of the request.
Nine years after the Petris Act was enacted, the Legislature enacted Costa-Hawkins which preempts local adoption of strict vacancy-control, rent control laws that do not allow a property owner or landlord to increase the rent when a unit is vacated and a new tenancy is created. Instead, Costa-Hawkins permits a vacancy decontrol-recontrol form of local rent control where an owner is authorized to increase the rent without restriction to a new tenant when the tenancy is voluntarily vacated, abandoned, or terminated by lawful eviction. The new rent for the new tenant would then be subject to local rent controls for the duration of the tenancy. Costa-Hawkins applied to tenancies entered into after January 1, 1999 and protected the tenancy rights of all occupants in place prior to January 1, 1999.
SB 775 would amend the Petris Act to state that its provisions do not apply to tenancies commencing on or after January 1, 1999. For those long-term tenancies still in existence today that were established prior to January 1, 1996, the Petris Act’s maximum rent certification process may still apply.
Purpose of the bill: According to the author, "the problem with the current law is that it is has created opportunities for landlords and tenants to manipulate the certification process to their advantage, rather than for its intended purpose of creating certainty for the parties and the local agency. For example, a landlord or a tenant, knowing that a local agency does not have accurate information regarding a current tenancy, will seek a certificate that will be premised upon a higher or lower rent than what was initially agreed to by the parties. Because current law permits the initial rent to be established by the agreement of the parties, they are in the better position to ascertain the rent than the local agency. Not surprisingly, sophisticated landlords and tenants, knowing that the mandate to issue a certificate within 5 business days is still required of local agencies, will seek the certificate solely to obtain an advantage or create confusion in a dispute over rent levels, overcharges and/or an unlawful detainer proceeding. Local agency staff is then put in the difficult position of scrambling to ascertain a correct rent level with inadequate information, and to then issue a certificate that may impact the outcome of ongoing litigation.
"By amending existing law to remove the certification requirement for post-January 1, 1999 rents established by the landlord, local agencies would no longer be placed in the impossible position of issuing binding certifications based on incomplete or absent information. The amendment would also protect the integrity of any contemporaneous administrative or judicial processes for establishing rent levels or overcharges by removing the ability to use the certification process to obfuscate the issues in those proceedings.
"Notably, some rent control jurisdictions provide an administrative hearing for ascertaining base rents, current rents and overcharges. But, unlike the certification process, the administrative hearing process provides the parties with adequate notice, and opportunity to present all their evidence and to have the matter decided by a neutral hearing examiner, along with a right of appeal. This approach has been the preferred choice for the vast majority of parties who seek an accurate determination of permissible rent levels and will continue to be available to any landlord or tenant in those jurisdictions that offer such proceedings."
REGISTERED SUPPORT / OPPOSITION:
Support
City of West Hollywood
Rent Stabilization Board of the City of Berkeley
Santa Monica Rent Control Board
Opposition
None on file
Analysis Prepared by: Lisa Engel / H. & C.D. / (916) 319-2085
SB 775
Page 6
|
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
THIRD READING
Bill No: SB 775
Amended: 4/23/15
SENATE JUDICIARY COMMITTEE: 7-0, 5/12/15
AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning, Wieckowski
SUBJECT: Tenancy: rent control: certification
DIGEST: This bill amends the Petris Act to state that its rent level certification provisions shall not apply to tenancies commencing on or after January 1, 1999, for which the owner of the property may establish initial rent under the Costa-Hawkins Rental Housing Act.
Existing law, the Petris Act:
States that if an ordinance or charter controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and requires the registration of rents, the ordinance or charter, or any regulation adopted pursuant thereto, shall provide for the establishment and certification of permissible rent levels for the registered rental units, and any changes thereafter to those rent levels, by the local agency, as specified. Existing law states that the ordinance, charter, or regulation shall provide a process for the establishment and certification of permissible rent levels within one year after it is adopted, as specified. (Civ. Code Secs. 1947.8(a), 1947.7(b).)
States that upon the request of the landlord or the tenant, a local agency shall provide the landlord and the tenant with a certificate or other documentation reflecting the permissible rent levels of a rental unit. Existing law specifies that the landlord or tenant may appeal the determination of the permissible rent levels reflected in the certificate, and that the permissible rent levels reflected in the certificate or other documentation shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed. (Civ. Code Secs. 1947.8(b), 1947.8(c).)
Provides that after the establishment and certification of permissible rent levels, the local agency shall, upon the request of the landlord or the tenant, provide the landlord and tenant with a certificate of the permissible rent levels of the rental unit. Existing law specifies that the certificate shall be issued within five business days from the date of request by the landlord or the tenant. (Civ. Code Sec. 1947.8(c).)
States that the landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate, and that such an appeal shall be filed with the local agency within 15 days from issuance of the certificate, except as specified. Existing law provides that the local agency shall notify, in writing, the landlord and the tenant of its decision within 60 days following the filing of the appeal. (Civ. Code Sec. 1947.8(c).)
Provides that an owner of a residential rental unit who is in substantial compliance with an ordinance or charter that controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and which requires the registration of rents, or any regulation adopted pursuant thereto, shall not be assessed a penalty or any other sanction for noncompliance with the ordinance, charter, or regulation. (Civ. Code Sec. 1947.7(b).)
Existing law, the Costa-Hawkins Rental Housing Act:
States that notwithstanding any other provision of law, an owner of residential real property may establish the initial and all subsequent rental rates for a dwelling or a unit if it has a certificate of occupancy issued after February 1, 1995, or it has already been exempt from the residential rent control ordinance of a public entity on or before February 1, 1995, pursuant to a local exemption for newly constructed units, as specified. (Civ. Code Sec. 1954.52(a).)
Provides that, for a dwelling or unit in which the initial or subsequent rental rates are controlled by an ordinance or charter provision in effect on January 1, 1995, the owner of such real property may establish the initial and all subsequent rental rates for all existing and new tenancies in effect on or after January 1, 1999, if the tenancy in effect on or after January 1, 1999, was created between January 1, 1996, and December 31, 1998. Existing law specifies that commencing on January 1, 1999, an owner of real property as described in this paragraph may establish the initial and all subsequent rental rates for all new tenancies if the previous tenancy was in effect on December 31, 1995, except as specified. (Civ. Code Sec. 1954.52(a).)
This bill states that the provisions of the Petris Act governing the establishment and certification of permissible rent levels shall not, on and after January 1, 2016, apply to tenancies commencing on or after January 1, 1999, for which the owner of residential property may establish the initial rent under the Costa-Hawkins Rental Housing Act.
Background
In 1986, the Legislature adopted the Petris Act (Civ. Code Secs. 1947.7,1947.8), which directs cities with rent control laws requiring rent level registration to certify the maximum allowable rent for every rent controlled unit under its jurisdiction. Upon the request of a landlord or tenant, the Petris Act requires the city to provide a certificate or other document reflecting the permissible rent level for a rent controlled unit to the requesting party, or, if no certificate is on file, to provide a certification process to determine the maximum allowable rent. The Petris Act requires cities to provide the permissible rent certificate to the requesting party within five business days of the date of request, and sets certain parameters for cities to follow in establishing their certification processes.
Nine years later, the Legislature enacted the Costa-Hawkins Rental Housing Act (Civ. Code Sec. 1954.50 et seq.). Generally speaking, the Costa-Hawkins Rental Housing Act (Costa-Hawkins) preempts the local adoption of “strict vacancy control” rent control laws that do not allow a property owner or landlord to increase the rent when a unit is vacated and a new tenancy is created. Instead, Costa-Hawkins permitted the “vacancy decontrol-recontrol” form of local rent control where an owner is authorized to increase the rent without restriction to a new tenant when a former rent-controlled tenancy was voluntarily vacated, abandoned, or terminated by lawful eviction. The new rent for the new tenant would then be subject to local rent controls for the duration of that tenancy. Costa-Hawkins specified that its provisions would come into force on January 1, 1999. Costa-Hawkins protected the tenancy rights of all occupants “in place” prior to January 1, 1996, and provided that the owner could increase the rent to any sublessee or assignee where the original occupant no longer permanently resides.
According to the author, some individuals are attempting to take advantage of the five-day certification process in the Petris Act to certify rent levels at higher or lower rates while either the landlord or tenant is not available to contest the certification. This bill amends the Petris Act to state that its provisions would not apply to tenancies commencing on or after January 1, 1999 – the effective date of Costa-Hawkins.
Comments
According to the author:
Existing law mandates that all rent control jurisdictions that require the registration of rents provide for the establishment and certification of permissible rent levels for registered rental units. At the time the law was enacted, vacancy control was still in effect in several local jurisdictions. The purpose at the time of enactment was to provide landlords, in particular, with certainty as to the maximum rent level at which they could offer a rental unit. At that time, controlled rents were determined by a “base rent” established through an initial, rental unit registration process. Even when a unit was vacant, a landlord could request a certificate of permissible rent levels prior to renting a rental unit, since base rents were set at an established level that determined all subsequent rent levels. With the full implementation of the Costa-Hawkins Rental Housing Act (Civil Code [Secs.] 1954.50-1954.535) in 1999, landlords were given authority to set a new market-level base rent at the start of the vast majority of new tenancies. Local agencies that require registration of new tenancies rarely have any role in the establishment of the initial, permissible rent level for any tenancy commencing from 1999 onward. Yet, the current law regarding rent level certification fails to account for this fact.
The problem with the current law is that it has created opportunities for landlords and tenants to manipulate the certification process to their advantage, rather than for its intended purpose of creating certainty for the parties and the local agency. For example, a landlord or a tenant, knowing that a local agency does not have accurate information regarding a current tenancy, will seek a certificate that will be premised upon a higher or lower rent than what was initially agreed to by the parties. Because current law permits the initial rent to be established by the agreement of the parties, they are in the better position to ascertain the rent than the local agency. Not surprisingly, sophisticated landlords and tenants, knowing that the mandate to issue a certificate within 5 business days is still required of local agencies, will seek the certificate solely to obtain an advantage or create confusion in a dispute over rent levels, overcharges and/or an unlawful detainer proceeding. Local agency staff is then put in the difficult position of scrambling to ascertain a correct rent level with inadequate information, and to then issue a certificate that may impact the outcome of ongoing litigation.
By amending existing law to remove the certification requirement for post-January 1, 1999 rents established by the landlord, local agencies would no longer be placed in the impossible position of issuing binding certifications based on incomplete or absent information. The amendment would also protect the integrity of any contemporaneous administrative or judicial processes for establishing rent levels or overcharges by removing the ability to use the certification process to obfuscate the issues in those proceedings.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
City of West Hollywood
OPPOSITION: (Verified 5/15/15)
None received
ARGUMENTS IN SUPPORT: According to the City of West Hollywood, under state law, landlords have the right to establish the initial rent for most new tenancies that began on or after January 1, 1999, irrespective of local rent control laws, and local jurisdictions cannot be certain of the rent for those tenancies. While local rent-control jurisdictions may require landlords to register rents for those tenancies, the jurisdictions cannot know the truth or accuracy of the rent that the landlord registers. Thus, the jurisdiction cannot meaningfully certify the registered rent. Occasionally landlords will register a rent, then immediately demand that the local jurisdiction certify that rent, requiring the local government to verify the truth of something that it cannot know to be true. Tenants also use the certification process in an attempt to obtain an inaccurate rent amount, lower than the actual rent, because the city’s information is incomplete or outdated. SB 775 will eliminate these abuses by clarifying that the Petris Act does not apply to tenancies created after January 1, 1999, for which an owner can set the initial rent.
Prepared by: Tobias Halvarson / JUD. / (916) 651-4113
5/15/15 15:24:32
**** END ****
SB 775 (Allen)
Page 5 of 5
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
SB 775 (Allen)
Version: April 23, 2015
Hearing Date: May 12, 2015
Fiscal: No
Urgency: No
TH
SUBJECT
Tenancy: Rent Control: Certification
DESCRIPTION
Existing law, the Petris Act, requires jurisdictions with a local ordinance or charter controlling residential rent prices that requires the registration of rents to provide for the certification of permissible rent levels according to a specified process. This bill would amend the Petris Act to state that its rent level certification provisions would not apply to tenancies commencing on or after January 1, 1999, for which the owner of the property may establish initial rent under the Costa-Hawkins Rental Housing Act.
BACKGROUND
In 1986, the Legislature adopted the Petris Act (Act) (Civ. Code Secs. 1947.7,1947.8), which directs cities with rent control laws requiring rent level registration to certify the maximum allowable rent for every rent controlled unit under its jurisdiction. Upon the request of a landlord or tenant, the Act requires the city to provide a certificate or other document reflecting the permissible rent level for a rent controlled unit to the requesting party, or, if no certificate is on file, to provide a certification process to determine the maximum allowable rent. The Act requires cities to provide the permissible rent certificate to the requesting party within 5 business days of the date of request, and sets certain parameters for cities to follow in establishing their certification processes.
Nine years later, the Legislature enacted the Costa-Hawkins Rental Housing Act (Civ. Code Sec. 1954.50 et seq.). Generally speaking, the Costa-Hawkins Rental Housing Act (Costa-Hawkins) preempts the local adoption of “strict vacancy control” rent control laws that do not allow a property owner or landlord to increase the rent when a unit is vacated and a new tenancy is created. Instead, Costa-Hawkins permitted the “vacancy decontrol-recontrol” form of local rent control where an owner is authorized to increase the rent without restriction to a new tenant when a former rent-controlled tenancy was voluntarily vacated, abandoned, or terminated by lawful eviction. The new rent for the new tenant would then be subject to local rent controls for the duration of that tenancy. Costa-Hawkins specified that its provisions would come into force on January 1, 1999. Costa-Hawkins protected the tenancy rights of all occupants “in place” prior to January 1, 1996, and provided that the owner could increase the rent to any sublessee or assignee where the original occupant no longer permanently resides.
According to the author, some individuals are attempting to take advantage of the 5-day certification process in the Petris Act to certify rent levels at higher or lower rates while either the landlord or tenant is not available to contest the certification. This bill would amend the Petris Act to state that its provisions would not apply to tenancies commencing on or after January 1, 1999 – the effective date of Costa-Hawkins.
CHANGES TO EXISTING LAW
Existing law, the Petris Act, states that if an ordinance or charter controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and requires the registration of rents, the ordinance or charter, or any regulation adopted pursuant thereto, shall provide for the establishment and certification of permissible rent levels for the registered rental units, and any changes thereafter to those rent levels, by the local agency, as specified. Existing law states that the ordinance, charter, or regulation shall provide a process for the establishment and certification of permissible rent levels within one year after it is adopted, as specified. (Civ. Code Secs. 1947.8(a), 1947.7(b).)
Existing law states that upon the request of the landlord or the tenant, a local agency shall provide the landlord and the tenant with a certificate or other documentation reflecting the permissible rent levels of a rental unit. Existing law specifies that the landlord or tenant may appeal the determination of the permissible rent levels reflected in the certificate, and that the permissible rent levels reflected in the certificate or other documentation shall, in the absence of intentional misrepresentation or fraud, be binding and conclusive upon the local agency unless the determination of the permissible rent levels is being appealed. (Civ. Code Secs. 1947.8(b), 1947.8(c).)
Existing law provides that after the establishment and certification of permissible rent levels, the local agency shall, upon the request of the landlord or the tenant, provide the landlord and tenant with a certificate of the permissible rent levels of the rental unit. Existing law specifies that the certificate shall be issued within five business days from the date of request by the landlord or the tenant. (Civ. Code Sec. 1947.8(c).)
Existing law states that the landlord or the tenant may appeal the determination of the permissible rent levels reflected in the certificate, and that such an appeal shall be filed with the local agency within 15 days from issuance of the certificate, except as specified. Existing law provides that the local agency shall notify, in writing, the landlord and the tenant of its decision within 60 days following the filing of the appeal. (Civ. Code Sec. 1947.8(c).)
Existing law provides that an owner of a residential rental unit who is in substantial compliance with an ordinance or charter that controls or establishes a system of controls on the price at which residential rental units may be offered for rent or lease and which requires the registration of rents, or any regulation adopted pursuant thereto, shall not be assessed a penalty or any other sanction for noncompliance with the ordinance, charter, or regulation. (Civ. Code Sec. 1947.7(b).)
Existing law, the Costa-Hawkins Rental Housing Act, states that notwithstanding any other provision of law, an owner of residential real property may establish the initial and all subsequent rental rates for a dwelling or a unit if it has a certificate of occupancy issued after February 1, 1995, or it has already been exempt from the residential rent control ordinance of a public entity on or before February 1, 1995, pursuant to a local exemption for newly constructed units, as specified. (Civ. Code Sec. 1954.52(a).)
Existing law provides that, for a dwelling or unit in which the initial or subsequent rental rates are controlled by an ordinance or charter provision in effect on January 1, 1995, the owner of such real property may establish the initial and all subsequent rental rates for all existing and new tenancies in effect on or after January 1, 1999, if the tenancy in effect on or after January 1, 1999, was created between January 1, 1996, and December 31, 1998. Existing law specifies that commencing on January 1, 1999, an owner of real property as described in this paragraph may establish the initial and all subsequent rental rates for all new tenancies if the previous tenancy was in effect on December 31, 1995, except as specified. (Civ. Code Sec. 1954.52(a).)
This bill would provide that the provisions of the Petris Act governing the establishment and certification of permissible rent levels shall not, on and after January 1, 2016, apply to tenancies commencing on or after January 1, 1999, for which the owner of residential property may establish the initial rent under the Costa-Hawkins Rental Housing Act.
COMMENT
Stated need for the bill
According to the author:
Existing law mandates that all rent control jurisdictions that require the registration of rents provide for the establishment and certification of permissible rent levels for registered rental units. At the time the law was enacted, vacancy control was still in effect in several local jurisdictions. The purpose at the time of enactment was to provide landlords, in particular, with certainty as to the maximum rent level at which they could offer a rental unit. At that time, controlled rents were determined by a “base rent” established through an initial, rental unit registration process. Even when a unit was vacant, a landlord could request a certificate of permissible rent levels prior to renting a rental unit, since base rents were set at an established level that determined all subsequent rent levels. With the full implementation of the Costa-Hawkins Rental Housing Act (Civil Code [Secs.] 1954.50-1954.535) in 1999, landlords were given authority to set a new, market-level base rent at the start of the vast majority of new tenancies. Local agencies that require registration of new tenancies rarely have any role in the establishment of the initial, permissible rent level for any tenancy commencing from 1999 onward. Yet, the current law regarding rent level certification fails to account for this fact . . .
The problem with the current law is that it has created opportunities for landlords and tenants to manipulate the certification process to their advantage, rather than for its intended purpose of creating certainty for the parties and the local agency. For example, a landlord or a tenant, knowing that a local agency does not have accurate information regarding a current tenancy, will seek a certificate that will be premised upon a higher or lower rent than what was initially agreed to by the parties. Because current law permits the initial rent to be established by the agreement of the parties, they are in the better position to ascertain the rent than the local agency. Not surprisingly, sophisticated landlords and tenants, knowing that the mandate to issue a certificate within 5 business days is still required of local agencies, will seek the certificate solely to obtain an advantage or create confusion in a dispute over rent levels, overcharges and/or an unlawful detainer proceeding. Local agency staff is then put in the difficult position of scrambling to ascertain a correct rent level with inadequate information, and to then issue a certificate that may impact the outcome of ongoing litigation.
By amending existing law to remove the certification requirement for post-January 1, 1999 rents established by the landlord, local agencies would no longer be placed in the impossible position of issuing binding certifications based on incomplete or absent information. The amendment would also protect the integrity of any contemporaneous administrative or judicial processes for establishing rent levels or overcharges by removing the ability to use the certification process to obfuscate the issues in those proceedings.
Would not impact Petris Act tenancies
When the Legislature passed the Costa-Hawkins Rental Housing Act (Costa-Hawkins) in 1995, it mandated a phased-in process of decontrolling the initial rental price of new tenancies in rent-controlled properties. Costa-Hawkins authorized landlords to establish initial and subsequent rental rates for tenancies created after the act entered into force on January 1, 1996, and left undisturbed tenancies created on or before December 31, 1995. For those tenancies still in existence today that were established prior to January 1, 1996, the Petris Act’s maximum rent certification process may still apply. This bill would not impact those long-term tenancies. By specifying that the Petris Act’s certification provisions shall not apply to tenancies commenced after January 1, 1999, this bill effectively places a terminal date on tenancies subject to the Petris Act. Importantly, this terminal date occurs after full implementation of the Costa-Hawkins Rental Housing Act. As a consequence, this bill would only impact tenancies in rent-controlled properties that are already subject to Costa-Hawkins, and would not reach back to any tenancies still governed by the Petris Act.
Support: City of West Hollywood
Opposition: None Known
HISTORY
Source: Author
Related Pending Legislation: None Known
Prior Legislation: None Known
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Bill Author
Bill Co-Author(s):