California’s Senate Bill 567 (SB 567), effective April 1, 2024, has introduced stringent measures aimed at limiting the ability of housing providers to terminate tenancies, particularly under the guise of “no-fault” justifications like substantial remodels or owner move-ins. These changes are poised to reshape the landscape for housing providers, who are already navigating a complex web of regulations.

Substantial Remodels

Housing providers can still end tenancies for substantial remodeling, but now, they must provide detailed termination notices. These notices must include the intended scope of work, required permits, and information about tenants’ rights to reoccupy if the work is not initiated or completed. Additionally, housing providers must now offer tenants the first right to return to the property once the renovations are complete.

Government Overreach

The introduction of SB 567 is another instance of government overreach, undermining property rights and profitability. The stringent requirements and penalties effectively make it harder to manage properties as owners see fit, and come with significant penalties attached to any missteps in compliance. Additionally, renters can now bring civil lawsuits for damages against the owner.

This new law came about because the government realized that housing providers were finding a loophole in AB 1482 by terminating tenancies under the pretext of substantial remodels, only to avoid carrying out the promised renovations. However, even AB 1482 is excessive, stripping owners of their right to terminate a lease unless they intend to move in or undertake substantial remodels. Owners should be able to end a lease at its conclusion with proper notice, without needing to justify it with a move-in or remodel.

Unjust Policies: Discrimination Against Housing Providers

It raises the question: who is the government to impose such restrictions on property owners, dictating unequal terms of their lease agreements? Is this not a form of discrimination, where one party is unfairly favored over another, receiving preferential treatment at the expense of the other’s rights, and in this case the tenant is receiving preferential treatment at the expense of the property owner’s rights. In today’s society, discrimination based on race, gender, or religious beliefs is rightly condemned. Yet, an overlooked form of discrimination persists against housing providers, evident in restrictive rent caps and laws that contradict fundamental economic and contractual principles.

Unilateral Termination Rights

The notion that a housing provider cannot terminate a tenancy unless they plan to move in or undertake a substantial remodel is unreasonable. Words matter, and this should not even be categorized as a non-just cause eviction; it is simply a termination of tenancy and should be permitted without requiring any reason or justification from the housing provider. By definition, a lease is a temporary agreement granting the lessee the right to use the property for a specified period under certain conditions, without conferring ownership rights.

With the extensive tenant-friendly legislation in place, it increasingly appears that tenants are gaining ownership-like rights and enjoying all benefits of ownership without having to bear any of the responsibilities that accompany it.

In other contexts, such as car leases, the agreement is clear and fair to both parties. A car lease, for instance, allows the lessee to use the vehicle for a set term, after which the lease can be terminated by either party or renewed by mutual consent. Both parties have defined rights and obligations, ensuring a balanced and fair contractual relationship. Similarly, housing leases should reflect this balance, with both parties having equal rights to end the tenancy. Restricting termination rights solely to tenants creates an unfair burden on housing providers and undermines the fundamental principles of contractual agreements.

Conclusion

As a housing provider, it’s critical to safeguard property rights against excessive regulations like SB 567 and AB 1482. These laws not only compromise the ability to manage properties effectively but also erode the foundational rights of property ownership. I believe that housing providers, like tenants, should be able to terminate tenancies with proper notice at the conclusion of the lease term, and without needing to justify their actions through substantial remodels or personal or family move-ins. Government interference disrupts the fair balance of lease agreements and tips the scales heavily in favor of tenant rights. As housing providers and apartment owners, we must communicate our concerns to local and state lawmakers and work together to restore equal rights for all, upholding the principles of fairness and justice upon which this country was founded. How do you think we can create meaningful change in this area? I would love to hear your thoughts.

If you have questions about buying, selling or doing a 1031 exchange, contact me. I can be reached at 714.330.9999, InvestingInTheOC@gmail.com, or you can visit my website at InvestingInTheOC.com.  I’m Mercedes Shaffer, a multifamily real estate agent with REAL Broker, helping you build wealth one door at a time. DRE 02114448.