The Ever-Expanding Reach of Rent Control in California
As if owners of single-family homes and condominiums did not have enough to worry about in the current pandemic environment, in Owens v. City of Oakland Housing, Residential Rent and Relocation Board (Owens) (filed May 29, 2020), Division Three of the First District of the California Court of Appeal expanded the reach of a local jurisdiction's rent control laws to an owner of a single-family home – who also resided in that home – where there was a rental of rooms within the home to separate tenants. While the Costa-Hawkins Rental Housing Act generally excludes single-family homes and condominiums from the imposition of local rent control laws (Cal. Civil Code Section 1954.52(a)(3)(A)), the court here held that the rental of rooms to separate tenants within an otherwise exempt home converts a single-unit dwelling into a multi-unit dwelling to potentially allow the imposition of a local jurisdiction's rent control laws.
In California, a homeowner or condominium owner can no longer rely on a presumption that his or her single-family home or condominium is exempt from a local jurisdiction's rent control ordinance due to the Costa-Hawkins Rental Housing Act exemption. Based on Cal. Civil Code Section 1940(c), this court interpreted "dwelling unit" to mean "a structure or the part of structure that is used as a home, residence, or sleeping place." Since there was more than one rental within a dwelling unit, the court held that there were multiple dwelling units within the house pursuant to Cal. Civil Code Section 1940(c). The Owens decision expands the potential reach of rent control law to housemate, roommate, house sharing and co-living situations where a homeowner or condominium owner may share his or her home with a tenant.
When a homeowner might want to make some extra cash to make ends meet by renting out a room in his or her home or condominium, or if a homeowner compassionately rents a room in his or her house or condo to a relative or friend down on his or her luck, the owner may be subjecting that home or condominium to a local jurisdiction's burdensome rent control regulations and tenant eviction protections. With the proliferation of home-sharing platforms, as well as co-living arrangements within existing homes, homeowners may now face the extra hurdle of being subject to a local jurisdiction's rent control laws in a variety of contexts where the owner may no longer be able to easily terminate the tenancy of a renter within his or her home.
As homeowners and condo owners may not anticipate the imposition of a local jurisdiction's rent control due to a roommate, a housemate, co-living or other living arrangement, the Owens decision should give pause to any owner, including a parent or friend, who may want to help out someone by leasing a room in a house or condo to others. Surely, the added regulatory hurdles of introducing rent control onto single-family dwelling units and condominiums where an owner rents a room to a tenant will only exacerbate our housing crisis as many owners realize it is not worth the trouble to make this lower-cost housing available to others.