UNHAPPY NEW LAWS

Happy New Year! Although, we have a number of new laws taking effect January 1, 2003 that will make you less than happy.

Senate Bill 1403 (Kuehl) has changed the Ellis Act. If you Ellis a building, you now must maintain the old rent-controlled rent level for five years after the notice of withdrawal.

Owners must now provide written notice to tenants prior to entry except in cases of emergency. 24-hour notice is presumed to be reasonable if the notice is hand delivered or if by mail you need 5-days notice.

If you wish to evict a tenant for other than non-payment or breach of lease you must now give 60-days notice of termination of tenancy. In Santa Monica, this will affect owner occupancy evictions.

Assembly Bill 2065 (Orpeza) requires a withholding tax when you sell your buildings. The old law was that if you were a non-resident of California, the escrow company had to hold 3 1/3% of the total sales price. Now this is expanded to include all individuals whether or not you are a resident. It continues to apply to non-individuals such as corporations and limited partnerships that have a street address outside of California. Luckily the withholding tax does not apply to single-family houses or properties that are selling at a loss for California Income tax purposes. Another exemption is if you are doing a 1031 exchange. See Tom Nitti's article for more on this.

AB2330 (Migden) requires inspections of a tenants unit within two weeks before move-out. You have to give the tenant a written list of all items to be deducted from their security deposit. The purpose is to allow the tenant a chance to fix any deficiency in order to avoid security deposit deductions. The tenant has a right to be present at the time of the inspection. While both landlord and tenant should attempt to schedule a mutually agreeable time. Once the owner has chosen a date, the owner must give the tenant at least 48 hours. If you don't give the 48-hour notice, you can have the tenant sign a waiver of notice. Also, the tenant can waive the inspection entirely.

It's obvious that we will have to devise new forms for notice for waiver and for the pre-move-out inspection. And if that's not enough we must also give the tenants a copy of paragraphs one through four of Civil Code Section 1950.5.

2003 is shaping up to be more complicated, more forms, more withholding… Happy New Year.