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Rent-Based Termination: A Guide to Relocation Assistance

Updated: Feb 9

Rent increase relocation assistance applies when rent has been increased over 7%.



Relocation assistance plays a crucial role in ensuring the well-being and financial stability of tenants facing significant rent increases. Both tenants and landlords should be aware of the rights and obligations associated with relocation assistance. This guide provides valuable information and resources to help navigate the process effectively.


Understanding Relocation Assistance


Relocation assistance refers to financial support provided to tenants who are required to move out of their current rental unit due to substantial rent increases. The assistance aims to help tenants mitigate the financial burden associated with relocation, including costs related to finding a new place to live, moving expenses, and potential temporary housing arrangements.


When does a notice of relocation assistance need to be offered?

Relocation assistance becomes applicable when a tenant chooses to move out of a unit in response to a rent increase that surpasses 7% of the rent charged at any point within the previous 12 months. The relocation assistance amount is dependent on varies factors which are explained below.


Landlords increasing the rent past 7% must provide an "notice of relocation assistance" which can be downloaded here:



Notice of Relocation Assistance
.pdf
Download PDF • 77KB

For landlords who have "banked" unused rent increases, the requirement for relocation assistance may not be necessary. Please continue reading for more information on banking.


Request for Relocation


Once a landlord has made an offer of relocation, tenants have 14 days from receiving the notice of a rent increase to request the assistance. If tenants are on a one year lease, they have 30 days after receiving the notice of rent increase to request the assistance.


Banking


Banking, in this context, refers to the practice where landlords choose not to implement the full allowable rent increase within a given year. Instead, they retain the unused portion and apply it towards future rent increases. This banking provision allows landlords to defer or accumulate unused rent increases for future use.


In a given year, landlords can choose increase the rent up to 7% without triggering relocation assistance. If a landlord choses to increase the rent any percentage amount below 7% the remainder of the amount is "banked" or accumulated for future use.


It's crucial to understand that the banked amount cannot exceed 21%, and landlords are limited to accumulating a bank to the preceding three years. For example, if the landlord wants to increase the rent in 2024, they cannot utilize any potentially banked amounts from before 2021. They can only use amounts from the previous three years leading up to: 2023, 2022, and 2021.


Additionally, there are restrictions on how much of the banked amount a landlord can utilize at any given time. Landlords are limited to using a maximum of 15% from the banked amount in a single rent increase. This ensures that the banked increase is gradually utilized over time, rather than implemented all at once.


**Please note, landlords are limited to the rent CAP established by AB 1482. AB 1482 imposes rent control measures on non-exempt properties, preventing them from raising rents beyond the established limits. Therefore, even if a landlord has banked amounts, they are still bound by the rent increase CAP set by AB 1482. As of August 2023, the rent increase CAP established by AB 1482 is 8.8%. **


Landlords cannot exceed this cap when implementing rent increases, regardless of any banked amounts they may have accumulated. For more detailed information on AB 1482 and its implications, it is recommended to refer to the resource "Understanding AB 1482."


Lastly, any unused bank will transfer from one owner to the next. This means that when ownership changes, any unused banked amount will be passed on to the new owner.


The following is an example of when relocation assistance IS NOT required.


EXAMPLE - No Relocation Assistance Offer Required


2021:


The landlord decides to increase the rent by 3%. Since this increase is below the 7% threshold that triggers relocation assistance, the landlord is not required to provide a "notice of relocation assistance" to the tenant. However, the landlord has the option to "bank" the remaining unused increase, which in this case is 4%.


Rent Increase: 3%

Banked Amount: 4%


2022:


The landlord plans to raise the rent again and realizes that there is 4% available in the bank. With this banked amount, the landlord can potentially increase the rent by up to 11% without triggering relocation assistance. However, it's important to consider the rent cap limit imposed by State AB 1482. In 2022, the rent cap limit is set at 10%. Therefore, the landlord can only increase the rent by a maximum of 10%.


The landlord is not required to offer "notice of relocation assistance" because they utilized the 2021 "banked" amount.

Banked Amount: 1%


The following is an example of when relocation assistance IS required.



EXAMPLE - Relocation Assistance Offer Required


2022:


The landlord decides to increase the rent by 10%. Since this increase is above the 7% threshold that triggers relocation assistance, the landlord is required to provide a "notice of relocation assistance" to the tenant. AB 1482 rent CAP is 10% so the landlord is within their limits.


The tenant has the option to as for relocation assistance or accept the rent increase. For our example the tenant decides to accept the rent increase.


Rent Increase: 10%

Banked Amount: 0%


2023:


The landlord plans to raise the rent again. The landlord does not have any "banked" increase. AB 1482 rent CAP is 8.8%. The landlord chooses to increase 8.8%.


The landlord is required to offer "notice of relocation assistance" because they increased the rent over 7% and have no "banked" amount.


It's important for both landlords and tenants to be aware of the banking provision. Landlords should carefully track and manage their banked rent increases, ensuring compliance with applicable regulations. Tenants, on the other hand, should understand the implications of banking on their eligibility for relocation assistance.


Qualified Tenant


Understanding "Qualified Tenant"


When navigating or Rental Rights Program rules, it's crucial to grasp the concept of a "Qualified Tenant." This term encompasses specific criteria that tenants must meet to be considered qualified within the context of the Rental Rights Program. Let's break down the criteria for a tenant to be categorized as a "Qualified Tenant."


A Qualified Tenant can be classified into two categories: a Low-Income Tenant who is either 70 years of age or older, disabled or handicapped, or a school-aged child; or a Very Low-Income Tenant.


A. Low-Income Tenant:


A Low-Income tenant is defined as a household whose income does not exceed the qualifying limits for lower-income families, as established and periodically updated pursuant to Section 8 of the United States Housing Act of 1937 or as defined in California Health and Safety Code Section 50079.


Additionally, the member of the tenant's household must also meet one of the following criteria:


(i) 70 Years of Age or Older; or


(ii) Disabled or Handicapped: Defined in Title 42 United States Code Section 423 or Section 50072 of the California Health and Safety Code; or


(iii) Primary Residence of a School-Aged Child: This applies when the rental unit serves as the primary residence of a school-aged child enrolled in a school within the public school district to which the rental unit is assigned. Additionally, if the notice of termination requires the rental unit to be vacated during the current school term.


B. Very Low-Income Tenant:


A very Low-Income tenant is defined as a household whose income does not exceed the qualifying limits for lower-income families, as established and periodically updated pursuant to Section 8 of the United States Housing Act of 1937 or as defined in California Health and Safety Code Section 50079.5.


Benefits for Qualified Tenants


If a tenant is classified as a qualified tenant, they are entitled to two benefits. Firstly, a landlord may not utilize owner or family move-in evictions as grounds to evict a qualified tenant, unless no other comparable unit is available. Second, any required relocation fee is doubled for qualified tenants, providing them with additional relocation during the eviction process.


Understanding these qualifications is vital for both landlords and tenants. For tenants, it determines their eligibility for certain benefits or protections outlined in the rental agreement. For landlords, it ensures compliance with legal requirements and fair treatment of tenants based on their specific circumstances.


Relocation Assistance Calculation


The formula for relocation assistance is as follows:


Relocation Calculation = 3 x Proposed Rent


Proposed rent is equivalent to the rent increase proposed by the landlord.


For a qualified tenant that formula is double (3 x Proposed Rent) x 2.


Example:


If a landlord increases the rent over 7%, say from $2,000 to $2,200. A 10% increase. If no banking is applied, the tenant has the option to ask for relocation an move. The relocation would be calculated as 3 x $2,200. Which would make relocation $6,600.


In case of a qualified tenant, the calculation would be (3 x $2,200) x 2. Which would make the relocation amount for qualified tenant $13,200.


Notice and Compliance


Failure to provide proper notice of relocation rights will render future rent increases null and void. Landlords who choose to increase rents by more than 7% within a 12-month period must serve notice of the tenant's "notice of relocation assistance" . This notice must accompany and be delivered in the same manner as the rent increase. Landlords may use the provided sample notice in section 9.30.035 (J) of Ordinance no. 5922. Which can be found here.


If relocation assistance is requested by a tenant, landlords must provide the first half of the amount owed 5 days after the request is made and the second half no later then 5 days after the tenant has vacated the unit.

 

Exemptions

While the Relocation Assistance ordinance applies to most rental units, there are exemptions to be aware of, including:


  • Rental units located on parcels with two or fewer dwelling units.

  • Single Family Homes

  • Condominiums and Townhouses

  • Rooms or accommodations in hotels rented for less than 30 days.

  • Properties with Certificate of Occupancy effective after 1995

  • Other limited circumstances.

The information provided on this website is not intended to be legal advice. It is recommended to consult an attorney and conduct thorough research before taking any action related to tenancy matters.


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