In 2019, California Governor Gavin Newsom signed a rent control law to protect tenants from excessive rent increases and random evictions. However, nearly four years later, the state has only recently announced its first enforcement action against a landlord under this law.
San Jose-based developer and property manager Green Valley Corporation, also known as Swenson Builders, has been accused of violating the law by raising the rent for 20 tenants by an average of 151%, exceeding the rent cap set by the law. Furthermore, the corporation reportedly unlawfully evicted six tenants without just cause. As a result, Green Valley will be forced to pay $391,130 in a settlement filed in Santa Clara County Superior Court, with $331,130 being refunded to tenants in overpaid back-rent.
San Francisco City Attorney David Chiu, the author of the 2019 law, reiterated that the California Tenant Protection Act will be enforced, marking the conclusion of an 18-month investigation by the Attorney General’s office. Despite criticism from tenant rights groups that the law lacks enforcement, this case demonstrates that violations can and will be prosecuted.
The 2019 law, introduced by Chiu and co-authored by then-Assemblymember Rob Bonta, limits annual rent increases to 5% plus inflation and mandates that landlords provide a “just cause” before evicting a tenant without compensation. As such, this recent case serves as a clear warning to landlords to comply with these protections.
However, due to rising inflation, the maximum allowable rent under the law has been increasing. This has led Los Angeles Democratic Sen. María Elena Durazo to introduce a bill to strengthen the 2019 rent cap law, including provisions for financial damages for tenants who sue their landlords and enabling local and state prosecutors to sue on their behalf. Despite opposition from the California Apartment Association, which represents large landlords, the bill passed the Senate last month and is now awaiting consideration before the Assembly.