Home BUY Rent Control, Rent Stabilization. What do these mean and how do they work?

Rent Control, Rent Stabilization. What do these mean and how do they work?

by List & Found
Rent Control, Rent Stabilization. What do these mean and how do they work?

Let me start by saying this post is meant to clear up some of the confusion on the different types of rent regulations in the Los Angeles area and Santa Monica. However, I am not a lawmaker or legal professional so it’s advised to always check and do your own due diligence by contacting legal professionals, local boards and offices to verify and answer any questions you may have.

Rent Control vs Rent Stabilization. Is there a difference? YES
Santa Monica has rent control as well as rent stabilization and Los Angeles has rent stabilization with what they call Rent Stabilization Ordinance.  They are both a form of control on how much a landlord can charge for rent on a home, apartment or building as well as fundamental guidelines of what a landlord can and cant do. These rules apply to apartment buildings and condo buildings built before 1978 in L.A. and 1979 for Santa Monica. The main difference is in Los Angeles rent stabilization applies to buildings built prior to October 1,1978 and only applies to rental apartments not to condos or single family residences. In Santa Monica the rules apply to all 3 types of housing and in some cases even if the property was built before 1979 but the Torca conversion happened after 1979. What is Torca? I’ll answer this below.  Because there is no clear cut answer for rent control in Santa Monica it’s best to check with the local board to verify what type of rent control a property falls under in order to know what rules apply.

What is rent control?
For Santa Monica  rent control regulates how much a landlord can charge for rent as well as eviction protection.
There are varying levels on rent control in Santa Monica. The more in-depth regulations are the Torca conversion rent controlled units. These rules can and may apply to a condo and single family home as well as a rental in Santa Monica.
In  Los Angeles it’s called rent stabilization and it also offers some rent hike and eviction protections but it ONLY applies to rental units of apartment buildings that were built on or prior to Oct 1, 1978.  It does not apply to condos that are their primary residence or a single family home that is their primary residence. If an owner owns multiple properties then rent stabilization may apply on a condo or single family if it was built before 1978 .

Are there limits on rental rate increases with rent control?
Santa Monica
Yes, and the amount is calculated with what Santa Monica calls Maximum Allowable Rent. This is applied to decontrolled rentals in Santa Monica. Meaning the non-Torca rental units that no longer have the original tenants who were renting the unit when it converted via Torca. Remember the Torca conversions didn’t happen at the same time for every unit. So some units may have been converted with Torca in the 1980’s so if the tenant was in the unit when it converted in the 1980’s and they’re still in that unit, even if ownership has changed hands the unit still falls under Torca rent control. Only once the original tenant moves out will the unit then convert to de-controlled rent in Santa Monica where then this Maximum Allowable Rent would apply.
Los Angeles
Under the RSO landlords can only increase the rent a maximum of 3% per year.

Eviction rules for rent control and rent stabilization
a. may evict “just cause” that fits under the rent control law
https://www.smgov.net/uploadedFiles/Departments/Rent_Control/Rent_Control_Law/CharterAmndmnt.pdf#1806

b. Removing the unit from the rental market

c. Owner occupancy with limitation and may include relocation fees. Currently a Torca conversion condo that is decontrolled rent meaning the tenant is not the original tenant so the rent is controlled by the Santa Monica basic rent stabilization guidelines, if an owner of a condo wanted to move back into their unit and evict the tenant they would need to pay them a relocation fee.
Here are the current rents for relocation in Santa Monica
Single / Studio – $9,500
One Bedroom – $14,600
Two Bedroom – $19,800
The fee is higher if the tenant is a senior, disabled or if a minor is living in the home.
https://www.smgov.net/Departments/HED/Housing_and_Redevelopment/Housing/Fee_-_Tenant_Relocation/Fee_-_Tenant_Relocation.aspx

In summary in Los Angeles if a landlord’s unit(s) fall under the RSO they do not have ground to evict unless the tenant does something that would fall under just cause or fail to pay the rent. Some of the just cause would be violating the lease or breaking the law. In Santa Monica it’s not as clear cut because it relates back to what type of rent control the property falls under. Is it a Torca rent controlled unit or is its a decontrolled Torca unit or just a regular condo or home built before 1979? You’d want to verify with the city if it’s a Torca when the Torca conversion occurred. If it’s a condo or single family in Santa Monica it’s not rent controlled but Santa Monica still has guidelines on what it considers a fair rent hike each year. It’s calculated as a percentage and changes often so it’s wise to call and check if you’re looking to rent your home.

What falls into rent control ?
Santa Monica
Any rental apartment, condo or single family residence built before April 1979.
Exceptions: If the Torca conversion happened in 1980 but the unit was built before 1979 it may not fall under the Torca rent control rules because the conversion happened in the 1980’s or later. So you’ll need to verify with the Santa Monica rent control board on a case by case basis if the property is under Torca rent control or if it’s just rent stabilized. If the property was built after 1979 and is a single family residence or a condo and is a primary residence then it would not be under rent control but Santa Monica still has rent stabilization and regulates rules regarding evictions, owner occupancy evictions and rent increases. Because Santa Monica doesn’t have a one size fits all model it’s best to always verify and double check what your responsibilities are as a landlord or as a tenant.
Los Angeles
Rent Stabilization Ordinance. This applies to apartment rental units that were built on or before Oct 1, 1978. The RSO does not apply to condos or single family properties in the City Of Los Angeles.
http://hcidla.lacity.org/tags/rent-stabilization-ordinance

TORCA Rent Control (applies to Santa Monica only)
Torca was the legislation that allowed landlords of buildings to convert their apartment rental buildings into condos in the 1980’s so they could get out of the rental business and sell them as condos.
The rules with Torca are different than basic rent control. One of the main differences is an owner can’t evict a tenant to owner occupy the unit if the tenant is the original tenant from before the unit was converted under Torca from rental to condo.

More info links 
Santa Monica 
https://www.smgov.net/uploadedFiles/Departments/Rent_Control/Information_and_FAQ/Frequently%20Asked%20Questions.pdf
https://www.smgov.net/Owning_Rental_Property_in_Santa_Monica.aspx

Los Angeles
http://library.amlegal.com/nxt/gateway.dll?f=templates&fn=default.htm&vid=amlegal:lamc_ca
http://hcidla.lacity.org/RSO-Overview

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