Buying a rental property in California: tenant rules to know

Rent control or rent caps

The statewide cap (AB 1482)

The Tenant Protection Act of 2019 (AB 1482) lives in Civil Code §§ 1947.12 and 1946.2. The current texts have applied since April 1, 2024 (SB 567); § 1946.2 was last amended by AB 1529, effective January 1, 2026. Both are repealed on January 1, 2030.

Under § 1947.12(a):

• the increase is measured against the lowest rent charged in the prior 12 months;
• the cap is 5% plus the change in the regional CPI, or 10%, whichever is lower;
• a tenant who stays can get at most two increases in 12 months;
• when a unit is re-rented to new tenants, the owner sets the new starting rent freely (§ 1947.12(b)).

For Los Angeles and Orange counties, the law uses the Los Angeles-Long Beach-Anaheim CPI-U. For increases taking effect on or after August 1, it compares April of that year with April of the year before (§ 1947.12(g)). Bureau of Labor Statistics data put that index at 355.166 in April 2026 against 342.565 in April 2025, a 3.7% change. The cap for Los Angeles increases from August 1, 2026 to July 31, 2027 is therefore 8.7%.

Main exemptions (§ 1947.12(d)):

• housing with a certificate of occupancy issued within the previous 15 years;
• a single-family home or condo that can be sold separately, if the owner is not a REIT, a corporation or an LLC with a corporate member, and the tenants received the exact written exemption notice (in the lease for tenancies since July 1, 2020);
• a duplex where the owner lives in the other unit, neither unit being an ADU;
• deed-restricted affordable housing;
• units under local rent control that caps increases lower, such as the Los Angeles RSO.

Los Angeles: the Rent Stabilization Ordinance

The city’s RSO generally covers rental properties first built on or before October 1, 1978, including duplexes, apartments and two or more houses on one parcel (Los Angeles Housing Department). For condos and townhomes, the rent amount is not regulated for tenancies that began after December 31, 1995.

The allowable annual increase follows the CPI, between 1% and 4%. LAHD’s bulletin sets it at 3% for July 1, 2026 through June 30, 2027, the same as the year before. Since February 2, 2026, landlords can no longer add an extra percentage for utilities. Rent may return to market when a tenant moves out voluntarily or is evicted for nonpayment or a lease violation.

Example: the same $3,000 rent, two buildings

Security deposits

Since July 1, 2024, a landlord may not take a security deposit of more than one month’s rent, in addition to the first month’s rent (Civil Code § 1950.5(c)). The rule does not apply to deposits collected before that date.

The small landlord exception allows up to two months when the landlord is a natural person, or an LLC whose members are all natural persons, and owns no more than two residential rental properties with no more than four units in total (§ 1950.5(c)(5)). It never applies to a service member tenant.

Other rules a buyer inherits:

• itemized statement and refund within 21 days after the tenant moves out (§ 1950.5(h));
• no deposit can be labeled “nonrefundable” (§ 1950.5(n));
• bad-faith retention can cost up to twice the deposit in damages (§ 1950.5(m)).

Eviction notice periods

Once the Tenant Protection Act applies, these notices also need a just cause stated in writing (§ 1946.2(a)). No-fault causes include an owner or close relative moving in, withdrawal from the rental market, and demolition or substantial remodel. For a no-fault termination, the owner must pay relocation equal to one month’s rent within 15 days, or waive the last month’s rent (§ 1946.2(d)). An owner or relative who moves in must do so within 90 days and stay 12 months, or offer the unit back (§ 1946.2(b)(2)(A)). A notice that does not strictly comply is void.

Where a qualifying local just cause ordinance applies, the state rule steps aside (§ 1946.2(i)). In Los Angeles, RSO units follow the RSO’s eviction reasons; most other units fall under the Just Cause Ordinance, which applies after six months of tenancy or when the first lease expires, whichever comes first (LAHD). The JCO can cover single-family homes and buildings newer than 1978. No-fault evictions generally require relocation assistance, and every eviction notice must be filed with LAHD within three business days.

Buying a home with a tenant in place

The purchase does not reset the rules. State law defines “owner” to include a predecessor in interest (§§ 1946.2(k), 1947.12(g)), so a new owner steps into the existing tenancy, the 12-month rent history and the tenant’s just cause protection. In Los Angeles, RSO coverage follows the building’s age, so a 1970 fourplex stays under the RSO after the sale, and new owners have 45 days to register it with LAHD.

The deposit must follow the property. On a sale, the seller must either transfer the deposit, minus lawful deductions, to the buyer and notify the tenant, or refund it to the tenant (§ 1950.5(i)). If neither happens, the buyer is jointly liable with the seller for repaying it (§ 1950.5(k)). Ask for the leases, the rent ledger, any exemption notices and the deposit statement before closing.

For transaction costs, see closing costs in California and property tax in California; for the city, see the Los Angeles guide. A real estate attorney can review a rent roll before you commit.