Renting Out Rooms? How Separate Leases Could Trigger Rent Control

Renting Out Rooms? How Separate Leases Could Trigger Rent Control

September 18, 2024
devinlucas

If you rent out individual rooms in your home in Newport Beach, Costa Mesa, or other California cities, you might still be subject to statewide rent control and tenant protection laws—even if your single-family home or condo would otherwise be exempt. Many landlords assume that single-family homes are always exempt, but that’s not entirely true—especially under California’s evolving legal landscape.

What About Rent Control Exemptions for Single-Family Homes and Condos?

Under both state and local laws (Newport Beach does not have its own rent control, but Costa Mesa does), single-family homes and condominiums are typically exempt from rent control—but there are important caveats to understand.

According to the Costa-Hawkins Rental Housing Act, single-family homes and condos are generally exempt from local rent control ordinances. Costa-Hawkins allows property owners of these dwellings to set their own rental rates, both initially and for subsequent increases, as long as the property is “separately alienable” (i.e., it can be sold independently of other units). This exemption applies broadly across California, meaning that if you own a single-family home or a condo, you are usually not subject to local rent control laws.

However, under California’s Tenant Protection Act (AB 1482), there are a few exceptions to the rule:

Single-family homes or condos owned by large corporate entities (like investment firms) are not exempt.
If the home is not separately titled or alienable (e.g., a home that’s part of a larger development that cannot be sold independently), rent control can still apply.

In Newport Beach, rent control is governed solely by AB 1482, while in Costa Mesa, the new local rent control ordinance adds additional protections. Even though single-family homes and condos are generally exempt, it’s important to stay updated on any developments, as local laws can evolve.

What About Rent Control Exemptions for Owner-Occupied Homes?

Owner-occupied homes where you share common areas like a kitchen or bathroom with your tenants could be exempt from rent caps under AB 1482, as long as you’re renting out fewer than two rooms.

For instance, if you share essential spaces like a kitchen or bathroom with tenants, both AB 1482 and Costa Mesa’s local rent control might not apply, depending on how many tenants are involved. This gives homeowners flexibility to rent out rooms and help cover costs while still residing on the property.

Be Cautious: Local Laws Are Changing

Costa Mesa’s new rent control ordinance is a game-changer for local landlords, and understanding the interaction between state and local regulations is essential. In Newport Beach, there’s no separate citywide rent control, but statewide protections still apply. If you’re renting to multiple tenants under different leases, you should be aware that local laws could change how much you can increase rent or handle evictions.

Navigating Newport Beach & Costa Mesa Laws

At Lucas Real Estate, we are experts in helping landlords in Newport Beach and Costa Mesa navigate the tricky waters of rent control and tenant protection laws. Whether you’re renting a single-family home or multiple units, it’s essential to stay compliant and understand how new local and statewide laws affect your rental business.

Let us help you avoid any legal surprises—reach out to us for expert advice today.

At Lucas Real Estate, we pride ourselves on expertly navigating these complexities, providing our clients with peace of mind that every detail is handled with the utmost professionalism. For more guidance on real estate transactions in Newport Beach, Costa Mesa, and the surrounding coastal communities, contact us today.

For more insights and professional real estate services in Newport Beach, Costa Mesa, and the coastal areas of Orange County, contact Lucas Real Estate today. Let us guide you through your next property transaction with confidence and clarity.

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