What’s a renoviction? How a loophole is forcing SLO County renters to lose their homes

When Lynn and Carrie were served eviction papers just a week before Christmas in 2022, they thought it was a mistake.

The couple — who declined to give their real names due to privacy concerns — had lived in their two-bedroom apartment in San Luis Obispo for more than two decades under the same landlord until late 2022.

That’s when the landlord sold the fourplex occupied by Lynn, Carrie and their neighbors to a new owner, whose name has also been withheld for privacy reasons.

“As soon as they closed escrow, they immediately did the maximum 10% (rent) increase,” Carrie said of the new landlord. “A month later, they evicted us.”

Carrie and Lynn had lost their longtime home due to what’s known as a no-fault, just cause eviction based on significant renovations to the property.

Such so-called “renovictions” have grown more common in California in recent years as COVID-19 pandemic-related protections for renters have lapsed.

What is a renoviction?

Since the Tenant Protection Act of 2019 — previously known as Assembly Bill 1482 — went into effect Jan. 1, 2020, it has become far more difficult for landlords to evict tenants, according to Kevin Green, legal director of civil law services at the San Luis Obispo Legal Assistance Foundation.

Under the Tenant Protection Act, landlords must have a “just cause” to terminate a tenancy, Green said.

The law also limits annual rent increases to no more than 5% plus the local consumer price index, or 10%, whichever is lower, he said.

Just cause evictions can be fault based or non-fault based, Green said.

Fault-based evictions typically involve tenants who fail to pay rent, breach the terms of their lease, use the unit illegally or cause nuisances and make messes, according to the Office of the California Attorney General.

Non-fault-based evictions can happen when tenants are removed due to owners moving into the property, taking the unit off the rental market, complying a government order or demolishing or substantially remodeling the unit, the state Attorney General’s Office said.

“Landlords will often just assert that a substantial remodel is the basis for the eviction,” Green told The Tribune. “However, upon inquiry, we often find that landlords are only doing cosmetic improvements, and cosmetic improvements alone do not qualify as a substantial remodel.”

Rather, a substantial remodel entails the replacement or modification of structural, electrical, plumbing, or mechanical systems, and usually requires a permit from a governmental agency, Green said.

In some cases, such remodels deal with the abatement of hazardous materials, including lead-based paint, mold or asbestos that cannot be reasonably accomplished in a safe manner with the tenant in place, Green said.

Most importantly, a substantial remodel requires the tenant to vacate the residential property for at least 30 days, Green said.

Landlords eager to bring in new tenants on new, market-rate leases may turn to renovictions to kick out current renters, knowing that most will not push the issue and take their chances in court, Green said.

“Such renovictions ... often involve situations where the landlord has a long-term tenant who has not, during the course of the tenancy, received rent increases,” Green said.

In the years since the Tenant Protection Act went into effect, renovictions have increased in San Luis Obispo County and the rest of California, Green said, although SLOLAF doesn’t have exact figures on how often they occur.

Why was SLO couple evicted from apartment?

At the time they were evicted from their San Luis Obispo apartment, Carrie and Lynn were paying $1,500 a month in rent, Carrie said, and would have payed “north of $2,000” to keep their place.

According to an online listing posted after the eviction, their former unit now rents for $3,500 a month, Carrie said.

When The Tribune reached out to the new owner via property management firm Haven Properties to confirm the current rental rate, they said it was “market rent based on condition and location.”

“We actually didn’t even get a chance to offer more rent, because they would not speak to us,” Lynn said. “Our intention was to work with them and negotiate, because we were going into the holiday season running our business.”

The couple’s business is agriculture-related, and the eviction came during peak harvest season, they said.

Carrie and Lynn said they kept the property in good condition during the two decades they lived there, but the new owner told them it required more extensive renovations.

However, the property owner said via email the unit was in disrepair due to “deferred maintenance by the previous owner and misuse by the existing tenants.”

“The tenants had proven to be poor stewards of the property for the previous owner, which automatically excluded them from selection upon completion,” the new owner told The Tribune in an email response shared via Haven Properties owner Gavin Payne. His company manages the fourplex.

Carrie and Lynn denied being “poor stewards” of the property, and said that the unit, while possibly messy, was safe.

Though Carrie and Lynn asked San Luis Obispo city officials and the San Luis Obispo City Council for help, the eviction stood, and the couple was forced to downsize to a studio apartment.

Lynn said the property’s new owner gave the couple $1,600 — their last month of rent — as assistance after the eviction in accordance with the Tenant Protection Act, though she said that wasn’t enough for a security deposit in many rentals in San Luis Obispo County.

“It did become more dicey because I lost my job in January,” Carrie said. “Then we couldn’t get a lease anywhere because we didn’t have W2 income, so we had to stay with friends for six months until I got a new job.”

“Our business is still getting off the ground and struggling, so we didn’t really have much income to qualify for a $3,000 rent,” she added.

The couple’s previous landlord said he had kept rents low in the San Luis Obispo apartments for several years to keep turnover low, and the apartment needed some repairs after 50 years of habitation.

“I think the folks that bought (the unit) are really a decent people,” the former owner said. “Honestly, they didn’t take advantage of anybody. They did what was necessary.”

In his response, the property’s new owner said he purchased the fourplex with the intent of housing his parents in one apartment while renting out the rest of the units.

The new owner said he spent around $200,000 over five to six months removing asbestos from the ceiling of Carrie and Lynn’s former apartment as well as gutting the kitchen and bathrooms, changing out windows, removing an electric heat source and installing a new heating system and ducting.

The new owner said he also installed new flooring and tiling, along with new cabinetry, countertops, flooring, fixtures, toilets and window coverings.

Carrie and Lynn said the risk of asbestos exposure wasn’t mentioned during their roughly more than? 20 years living at the property. While the unit may have been old, they said, it was still habitable.

‘Eviction’ has become a negative term, yet it is often the only legal remedy to protect the property owner’s rights,” the new owner said. “In this case, the right to improve my property to provide improved living conditions and a return on my investment. This eviction was a just cause eviction under the terms of the (California) Tenant Protection Act.”

Property manager: Owners need to work with tenants

Payne acknowledged that renovictions occur in SLO County and described them as a symptom of the Tenant Protection Act’s limits on rent increases.

In the years following the COVID-19 pandemic, eviction moratoriums “massively impacted” property owners who lost money from unpaid rents while continuing to make mortgage and insurance payments, Payne said.

The Tenant Protection Act’s cap on rent increases left property owners with fewer options to recoup that lost income, Payne said, because the state government did not consider the needs of landlords and property managers.

“The state is making the housing crisis a property owners’ problem, and it’s not. It’s the state’s problem,” Payne said. “The ‘haves’ — the property owners — end up carrying the burden, and the ‘have nots’ tend to get a louder voice.”

As a result, property owners have gotten worsening returns on their investments, creating the incentive to abuse loopholes such as renovictions, Payne said.

“You show me an opportunity for somebody to make a buck by going through a loophole” and two out of every 10 people “are gonna go through there,” Payne said. “I think the vast majority (of property owners) are law-abiding and are conscious of their tenants’ rights, and they’re conscious of their own rights.”

To prevent renovictions, he said, owners need to work with tenants so they can perform remodels and increase rents to offset the costs of renovations.

“That would be fair, and that would incentivize the tenant to say, ‘Yeah, I’d love a new kitchen, and yes, I would happily pay 10% more of my rent to have a new kitchen,’ ” Payne said. “That’s the problem with the California Tenant Protection Act: it’s a tenant protection act. There’s nothing in there that says, ‘Hey, listen tenants, you have to work with the landlord on this.’ ”

Can renters fight renovictions?

Stanley Tzankov, an organizer with the Santa Barbara Tenants Union, said the group was formed three years ago to help tenants navigate the new regulations in the rental market. The union later shifted its focus to renovictions as coronavirus pandemic-related renter protections expired.

Tzankov said those newly-won protections are already playing an important role in a rental market where developers have “put a bullseye on a lot of tenants.”

Earlier this year, Chicago-based developer Core Spaces purchased a total of 254 units across four apartment buildings on six acres in Isla Vista collectively known as CBC & The Sweeps for $91 million, and served tenants a 60-day eviction notice the following day.

The move sparked protests by dozens of Isla Vista tenants, prompting local policymakers to take a look at reining in renovictions.

The Santa Barbara City Council voted 7-0 in March to tighten its rules surrounding just cause evictions, by adding a provision to its existing just cause eviction ordinance that requires owners obtain all permits necessary before demolishing or substantially remodeling a building.

Tzankov said the updates may make it easier for tenants of CBC & The Sweeps who want to stay in place.

However, that doesn’t mean they’ll be able to pay the higher rents that often follow renovictions, he said.

“A way for these these investment companies to really squeeze out as much profit as they can and more profits for their shareholders, is really to try and deregulate the rent,” Tzankov said.

Green said SLOLAF and other legal aid organizations can often provide free legal help to eligible individuals, including identifying a renoviction in progress.

However, fighting a renoviction in court doesn’t guarantee a win for the tenant, Green said.

Green suggested San Luis Obispo County should pass an ordinance regulating the basis for evictions based on substantial remodels that would require proof of permits from a government agency.

Those permits would need to prove the work could not be accomplished in a safe manner, and than the work would require the tenant to vacate the property for at least 30 days before a landlord could file any unlawful detainer actions against a tenant, Green said.

“Alternatively, a local rule of court for the courts of San Luis Obispo County could require such proof be attached to any complaint if the landlord seeks to evict a tenant based upon a claim of substantial remodel,” Green said.

Though Carrie and Lynn managed to stay housed during their eviction and have since found a new place to live, others have likely not been as fortunate.

“It’s a thorny topic,” Carrie acknowledged.

“You should be able to renovate a unit, but not if you’re just doing it to evict people so you can get market rates,” she said. “There’s something else screwy about the landscape of housing that’s incentivizing this behavior, and it’s hurting our economy.”