BILL ANALYSIS
SENATE JUDICIARY COMMITTEE A
Charles M. Calderon, Chairman B
1995-96 Regular Session
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AB 3244
Assemblymember Hawkins
As amended on June 24, 1996
Hearing Date: July 9, 1996
Civil Code
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COSTA-HAWKINS RENTAL HOUSING ACT
-CLARIFICATION OF SUBLEASING PROVISIONS-
HISTORY
Source: California Housing Council
Related Pending Legislation: None Known
Prior Vote:Assembly Floor Vote: 69 - 2
Assembly Committee on Housing and
Community Development: 8 - 0
KEY ISSUE
SHOULD THE PROVISIONS OF THE COSTA-HAWKINS HOUSING ACT BE
CLARIFIED WITH RESPECT TO THE RIGHT OF A LANDLORD TO RAISE
THE RENT ON SPECIFIED TENANTS, SUBLESSEES AND ASSIGNEES?
PURPOSE
The purpose of this bill is to clarify existing provisions
of the Costa-Hawkins Rental Housing Act as it applies to
the subletting of a rental unit under local rent controls.
Existing law, known as the Costa-Hawkins Rental Housing
Act, enacted in 1995, preempts local rent control laws with
"vacancy controls" and allows an owner of residential real
AB 3244 (Hawkins)
Page 2
property to set the initial rental rate for the unit upon a
"voluntary vacancy". Existing law provides a three year
phase-in period for the law to take full effect, during
which time the rental rate may be raised a maximum of 15%
or up to an amount that is 70% of the prevailing market
rate for comparable units, whichever is greater.
The Costa-Hawkins Rental Housing Act specifically permits
the owner to increase the rent by any amount allowed by law
(see above) to a sublessee or assignee where the rental
agreement prohibits subletting or assignment without the
owner's consent and the original occupants no longer
permanently reside at the dwelling or unit. This
authorization to increase the rent does not apply where
partial changes in occupancy of a rental dwelling are made
with the consent of the owner, as specified.
This bill would revise those provisions as follows:
1.An owner would be permitted to increase the rent by any
amount allowed by law to a lawful sublessee or assignee
who did not reside at the dwelling or unit prior to
January 1, 1996, if the original occupants no longer
reside at the dwelling or unit. The authorization would
no longer be dependent on a specific clause in rental
agreement prohibiting subletting or assignment without
the owner's consent. That condition is repealed.
2.An owner could not impose a rent increase for "partial
changes in occupancy of a dwelling or unit where one or
more of the [original] occupants of the premises remains
an occupant in lawful possession, or where a lawful
sublessee or assignee who resided at the dwelling or unit
prior to January 1, 1996, remains in possession of the
dwelling or unit."
COMMENT
1. Should provisions of the Costa-Hawkins Housing Act be
clarified with respect to the right of a landlord in a
rent controlled jurisdiction to raise the rent on
specified tenants, sublessees and assignees?
Under the Costa-Hawkins Rental Housing Act, owners of
residential properties in "vacancy control" rent control
jurisdictions may increase the rent when a unit is sublet
AB 3244 (Hawkins)
Page 3
or assigned if the rental agreement absolutely prohibits
subletting or assignment or prohibits it without the
owner's consent. This condition has been the source of
considerable controversy.
The California Housing Council, source of this bill,
contends that the intent of this provision in the
Costa-Hawkins bill was to allow landlords to raise rents
when a rent controlled unit is assigned or sublet to a
third party. Since many property owners' leases did not
include an express "no subletting" clause, these property
owners have had to or will need to amend their rental
agreements to avail themselves of this right. Under
Civil Code Section 827, a property owner may change any
term or condition of a month-to-month rental agreement on
30 days written notice.
Accordingly, reports CHC, many property owners in Santa
Monica and Berkeley have amended their month-to-month
rental agreements, as authorized by Section 827, to
include language which prohibits or conditions subletting
and assignments on the landlord's approval. (According
to CHC, many owners have rental agreements which are
silent on the issue of subletting and assigning the
rental unit. Typically, these agreements were either
month-to-month tenancies in which subletting or
assignment simply wasn't contemplated, or they were
originally fixed term leases which became month-to-month
tenancies upon the expiration of the fixed term.)
Western Center on Law and Poverty contends that in many
cases, the landlords went further than just amending the
rental agreement. Instead, some landlords sent tenants
notices that they could no longer bring in roommates or
had to get rid of existing roommates who were not on the
written rental agreement. If enforced, such a provision
could dramatically affect disabled and elderly tenants
who often rely on a live-in attendant for their daily
needs.
This bill seeks to address both concerns.
First, for the property owners, it would remove the
current condition that the rental agreement must have
prohibited subletting or assignments before the property
owner can raise the rent on the new sublessee or
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Page 4
assignee. This change would also obviate the need for
landlords to issue Section 827 "Change in the Terms of
Tenancy" notices to exercise their rights.
Second, for the tenants, it spells out in greater detail,
and thus better protects, the rights of existing tenants
to change roommates without being subject to a rent
increase (as long as one of the original tenants to the
rental agreement continues to reside in the rental
unit.).
2. Western Center "neutral"
As amended, Western Center on Law and Poverty is
"neutral" on the bill. The June 24 amendments rewrote
the entire bill to better implement of the understanding
of the parties with respect to the rights of landlords to
raise rents in subletting and assignment situations.
Most importantly for Western Center, the new amendments
clarify that an existing tenant or pre-January 1, 1996
sublessee is not subject to a rent increase by reason of
a "partial change in occupancy". This clarification
would protect elderly tenants who may switch to another
live-in nurse or whose family member may move in with the
tenant. Implicitly, such a "partial change in occupancy"
is not a sublease or assignment which would authorize a
rent increase.
Support: California Association of Realtors; Black
Property Owners Association; Apartment
Association of Greater Los Angeles
Opposition: None Known
Prior Legislation:AB 1264 (1995) - Chaptered
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