Just Cause Eviction Protection

Chula Vista, San Diego’s second largest city, has officially enacted (effective March 31, 2023) a revised Just Cause Eviction protection that changes the landscape for property investors. These changes may not stay within the Chula Vista zip codes so property owners and investors should get familiar as these protections will change the buying and selling landscape. Before we dive into the key points here is how we see this affecting both sides of the market:

Sellers:

• Pricing based on upside won’t be as effective. If you want the best price for your property you’ll need to have your rents as close to market as possible. (See blog for Average San Diego Rents).

• Vacant units/properties will have a much higher value than those with long term tenants.

Buyers:

• Similar as above, properties with vacant units or developable garages/ADU potential will hold much higher value than a property that needs more than the allowable 10% rent increase.

• You’ll need extra funds on hand and built in carrying costs. This protection will change:

  • Substantial renovations. Stricter policies make this truly substantial (by new definition substantial renovation requires $40 sq ft of improvements + vacant for 60 days, with permits in hand).

  • Increased relocation benefits for tenant

• More value in found opportunities:

  • ADU potential

  • Vacant units

  • Development potential

Key take away from the article:

Rental Rights

1. Stricter tenant notices disclosing to existing and new tenants about the changes in rental law. If you own in the Chula Vista zip codes plan to deliver policy changes by March 1, 2023.

2. Reporting requirements:

   1. At fault tenancy termination must be reported to the city

   2. Opportunity must be given to the tenant to “cure” the at fault violation(s)

3. For no fault evictions

   1. Tenant given 60 day notice with choice between relocation assistance or rent waiver and notice to receive right to rent the unit if re-listed within 2 years.

      1. If a rental unit is offered for rent or lease for residential purposes within two (2) years of the date the tenancy was terminated, the owner shall first offer the unit for rent or lease to the tenant displaced from that unit by the No-fault Just Cause termination (stipulations apply), unless the property has been sold in the meantime.

      2. A direct payment of the greater of two months of the HUD small area fair market value (FMV) rents for the zip code in which the unit is located or two months of the actual rent. If the tenant is elderly or disabled, then an additional month is added to the greater of each option resulting in three months relocation – or – 2) a written waiver of the amount.

      3. If the eviction is based on removing the rental from the market, but comes back market on within 2 years the tenant is entitled to 6 months market rent.

If you have any questions on how this could affect your property please schedule a call. We can run a rent survey to help you evaluate where your rents stand in the market and provide a proper valuation for your property.

Just Cause Eviction Protection

If you want the full article on the Chula Vista Just Cause Eviction Protection please CLICK HERE. (From Kimball, Tirey & St. John LLP’s legal alert. You’ll find their contact info and informational disclaimer at the end of their article). Can can also check Chula Vista municipal codes HERE.