In 1995, the California Legislature passed and the governor signed Assembly Bill 1164 – a law known as the Costa-Hawkins Rental Housing Act.
This law cleared the way for owners in rent controlled communities to establish initial rental rates when there was a change in occupancy at a dwelling unit – a policy known as vacancy decontrol.
While cities and counties continue to maintain the ability to implement local rent control laws, they must follow the parameters established in the Costa-Hawkins Rental Housing Act.
At the heart of Costa-Hawkins are a number of basic rules:
(1) Housing constructed after 1995 must be exempt from local rent controls
(2) New housing that was already exempt from a local rent control law in place before Feb. 1, 1995, must remain exempt
(3) Single-family homes and other units like condominiums that are separate from the title to any other dwelling units must be exempt from local rent controls
(4) Rental property owners must have the ability to establish their own rental rates when dwelling units change tenancy.
This law was intended to provide a moderate approach to the otherwise extreme vacancy control ordinances in place during the 1980s in Berkeley, Santa Monica, Cotati, East Palo Alto and West Hollywood.
To protect a tenant from an owner’s arbitrary eviction, the state law includes provisions that govern the change in terms of tenancy and thereby the owner’s ability or inability to raise the rent. The outline below is intended to provide a general overview of the provisions of the Costa-Hawkins Rental Housing Act. For specific wording, see the California Civil Code, beginning at Section 1954.50.