A landlord and property manager in California is facing legal repercussions for breaking rent control laws set forth by the legislature before the COVID pandemic.
Governor Gavin Newsom signed the California Tenant Protection Act, a rent control law in 2019 that protected tenants from excessive rent hikes and arbitrary or unwarranted evictions. Authored by Assembly member David Chiu, the act limited rent increases to only 5% each year, plus adjustments for inflation. Additionally, it required landlords to submit a justifiable reason, or a “just cause”, before evicting a tenant. Legally justifiable reasons can include engaging in criminal activity on the property or breaking the terms of the lease.
The law was the first legislation to address rent control in decades — a big change for Californians. With strict regulations on how individual cities can implement rent control policies, the statewide cap was a breakthrough in rent control laws throughout the state of California.
One thing left ambiguous, however, was the responsible parties for enforcing rent control and illegal evictions. Ultimately, the responsibility fell to tenants to challenge law violations in court. Often, tenants have limited resources to hold landlords legally responsible, so the rent control laws remained largely unenforced years following its enactment. Housing researchers are unable to determine how thoroughly the law is followed throughout the state.
That is why the legal scrutiny on the Green Valley Corporation this year is big news in the California rental industry. The Attorney General announced the state’s first official enforcement of the California Tenant Protection Act by prosecuting the Green Valley Corporation for hiking rent on 20 tenants in Silicon Valley by 151% on average. According to the settlement, the company also evicted six tenants unlawfully, providing no “just cause” for the evictions.
The settlement marks the end of an 18-month investigation by the Attorney General’s office. In 2021, the company unlawfully raised the rent on 23 tenants. Some tenants reached out to legal aid organizations, who reported the issue to the Department of Justice. Only three tenants were reimbursed at that time, although the company admitted that the rent increases were beyond that permitted by state law. Following the 2023 settlement, Green Valley will be fined $391,130, of which over $331,000 will be returned to tenants as overpaid back-rent.
The Attorney General noted that while this is the first enforcement for his office, it won’t be the last, indicating that the state plans on cracking down on rent control and eviction law enforcement.
Many residents and attorneys are seeing the settlement as a precedent for further legal action concerning rent control. Landlords and property managers should expect to see stricter enforcement of state rent control laws and evictions. The action taken by the Attorney General’s office is not the only tenant-friendly change we’re seeing in the California government — the state is also considering a proposal that would mandate air conditioning in all rental units, as well as a bill that would ensure tenants a right to counsel in eviction cases.