Why this article matters: Staying up to date with new housing legislation is key to maintaining confidence in your real estate practice.
Notice when a rental losing its housing subsidy
Assembly Bill 1529 was recently passed to clarify several ambiguities in existing housing legislation.
Existing law requires an owner of a multi-family rental housing development of five or more units that receives governmental assistance proposing to terminate a subsidy contract, sell or otherwise dispose of the assisted housing development to provide the tenant a Notice of Opportunity to Submit an Offer of Purchase (NOSOP). [Calif. Government Code §§65863.10(a)(3); (b)]
The new law clarifies the NOSOP needs to be provided prior to or with the 12-month notice to tenants of the change. Previously, the law was unclear about whether the NOSOP was to be provided with the 12-month or 6-month notice to tenants. [Gov C §65863.10(b)(1)]
Separately, the owner needs to also provide a 6-month notice to tenants with the same information as the 12-month notice, minus the NOSOP. [Gov C §65863.10(c)(1)]
Each notice needs to include the following information:
- the expected date of the termination of the subsidy;
- the identity of the housing-assistance program;
- the current rent and rent anticipated for the unit during the 12 months following the contract termination with the housing-assistance program or expiration of rental restrictions;
- a statement that a copy of the notice will be sent to the city and county where the assisted housing development is located, to the appropriate local public housing authority, and to the Department of Housing and Community Development;
- a statement of the possibility that the development may remain in the housing assistance program after the proposed date of subsidy termination or that a rent increase may not take place due to the expiration of rental restrictions;
- a statement of the owner’s intention to participate in any replacement subsidy program made available to the tenants;
- a statement that the owner will accept all Section 8 vouchers when received by the tenants; and
- the name and telephone number of the city and county, the appropriate local public housing authority, the Department of Housing and Community Development, and a legal services organization the tenant can contact to request information about an owner’s responsibilities and the tenant’s rights. [CC §65863.10(b); (c)]
TPA notice clarification
Existing law, codified in 2019’s Tenant Protect Act (TPA), requires corporate landlords to show just cause to evict tenants who have occupied a property for 12 months or longer. It also sets an annual rent cap at the lower of 5% plus the rate of inflation or 10%. The TPA requires landlords of properties subject to these protections to notify the tenant of their TPA protections when they sign the lease. [Calif. Civil Code §1946.2]
The new law clarifies that the notice may be included as an addendum to the lease agreement, but it may also be included within the body of the lease agreement. [CC §1946.2(f); See RPI Form 550-3]
Editor’s note — The TPA covers most multi-unit residential real estate housing in California and those single family residential (SFR) units owned by a REIT, a corporation or an LLC with a corporate member. However, there are numerous exemptions for multiple family units and conditions for SFRs to be excluded.
Read more about who and what type of property the TPA applies to — and about the many exceptions — here: 2020’s Tenant Protection Act.
Related article:
Housing preservation notice law update
Under preservation notice law (PNL), subsidized housing that is foreclosed upon can often lose its subsidized housing status. This is despite the fact that the PNL is supposed to maintain those subsidized tax credit for three years after the foreclosure. However, during the foreclosure process, the properties can be “lost” in the system.
As a correction, the new law will require a mortgage holder, when recording a notice of default (NOD) to also serve notice to the affected public entities. [CC §2924b(b)]
