ACCESSORY DWELLING UNITS – 2020 STATEWIDE RENT CONTROL

ACCESSORY DWELLING UNITS – 2020 STATEWIDE RENT CONTROL

Accessory Dwelling Units.

It is possible to accidently convert an exempt single family dwelling into a California statewide rent controlled property by constructing an Accessory Dwelling Unit.
If the owner of a single family residence constructs an Accessory Dwelling Unit on the property, then that property becomes a “duplex” for purposes of California statewide Rent Control. A duplex is generally not subject to California Rent control as long as one of the units is owner-occupied.
An often overlooked aspect of statewide Rent Control is that an owner of a single family residence will lose the exemption if he/she rents more than two bedrooms at the property. This means that you will lose your exemption if you rent more than two bedrooms from your home at the same time.
Civil Code section 1946.2(e) exempts from statewide Rent Control:
“Single Family owner-occupied residences, including a residence in which the owner-occupant rents or leases NO MORE than two units or bedrooms including, but not limited to, an Accessory Dwelling Unit or Junior Accessory Dwelling Unit.”
An Accessory Dwelling Unit is defined as a secondary unit, or self-contained apartment, cottage or small residence located on a property that is separate from the main house (“ADU”). A Junior Accessory Dwelling Unit is defined as a separate housing unit created within the walls of the original house (“JADU”). JADUs are attached to and part of the main house.
There are two ways an owner can lose the exemption with an ADU. First, if an owner constructs and rent out a two bedroom ADU for extra cash, and then rents one bedroom in the main house to a college student, both the main house and ADU are now potentially subject to Rent Control under Civil Code section 1946.2(e). Second, if the owner-occupant moves out and decides to rent the main house, now both the main house and ADU are potentially subject to Rent Control as a duplex.
There is a limited exemption for structures that are less than 15 years old. However, there is no clear rule as to whether the age of the ADU/JADUs or age of the main house controls. At this point, assume both units are subject to Rent Control as long as one of the units is at least 15 years old.
In summary, the take-home message is that construction of an ADU or JADU on your property may inadvertently trigger new statewide Rent Control. This means that both rent increases and termination rights would be limited.

Owners beware.

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