April 2026 handed East Bay property owners something rare: a court decision that actually clarified a boundary instead of adding another one. Cities had spent years treating lawful rent increases on Costa-Hawkins exempt properties as an invitation to demand relocation checks. A California Court of Appeal finally said that particular maneuver conflicts with state law. The same ruling left eviction debt thresholds standing, which means the practical headaches did not disappear. They simply moved.
If you own single-family homes, condos, or buildings that received their certificate of occupancy after February 1, 1995, the relocation piece is the part that changed. If you own anything else, or if you are dealing with nonpayment, the day-to-day rules look a lot like they did before the opinion was published. The difference is that owners who treat both parts the same way are more likely to write checks they do not owe or serve notices that get thrown out.
What Costa-Hawkins Actually Protects
Costa-Hawkins has been on the books long enough that most owners know the short version: certain properties are exempt from local rent caps. Single-family homes and condominiums are out. So are buildings with a certificate of occupancy issued after February 1, 1995. Local governments can still impose just-cause requirements and certain relocation obligations when they terminate a tenancy for an allowable reason. What they cannot do is use local rules to keep rents on those exempt units below market.
For a while, some cities found a workaround that looked clever on paper. Instead of capping the rent directly, they required the landlord to pay the tenant a large relocation sum if the tenant chose to leave after a substantial increase. The logic was that the payment was not a rent control; it was compensation for a “displacement” the landlord had caused by exercising a right the state already granted. Courts eventually disagreed. Requiring the payment, they said, frustrates the purpose of the statute that lets the owner set the rent in the first place.
The 2026 appellate decision built on an earlier Pasadena ruling and applied the same reasoning to a Los Angeles ordinance. Because the opinion is published and the California Supreme Court declined to review the underlying Pasadena case, other cities now have a clear precedent they are expected to follow on exempt properties. That does not mean every municipal website updated its FAQ the next morning. It means an owner who documents the exemption and the increase is in a stronger position if a city tries to enforce the old rule.
The practical line is narrower than many owners first assume. The decision does not give every landlord a free pass on every relocation demand. It limits one specific trigger: a payment demanded solely because the owner of an exempt unit raised the rent to a lawful level and the tenant decided to leave. No-fault terminations, owner move-ins, substantial remodels that require vacancy, and Ellis Act withdrawals still carry their own local relocation rules where those rules exist. Mixing those categories in the same mental folder is how owners end up either overpaying or under-documenting.
How the Relocation Rule Played Out Locally
Alameda moved first. Its Rent Program had required relocation assistance when a tenant left after a rent increase above a stated threshold on certain partially regulated units. After the appellate precedent became binding, the program stopped enforcing that particular requirement. Owners who received earlier notices or demands should check whether the unit was actually exempt and whether any payment has already been made; the practical result is that the city is no longer treating the increase itself as the trigger.
San Leandro’s rules are more layered. Ordinance 2026-001 created a local rent stabilization program that takes effect January 1, 2027, with a base-rent date of July 1, 2025. Separately, the city already had a tenant relocation assistance ordinance that applies when a landlord terminates a tenancy for certain landlord-caused reasons or when a cumulative rent increase exceeds 12 percent in a twelve-month period and the tenant elects to leave. The amount is the higher of three times the current monthly rent or three times the applicable HUD Fair Market Rent for the Oakland-Fremont area, with an additional $1,000 for households that include a senior, a person with a disability, or a minor. The total is capped at $7,000 per unit. Half is due within five business days of the tenant’s written notice that they will vacate; the rest is due within five business days of actual vacancy. For more on how this plays out in practice, see our breakdown of San Leandro relocation payments for remodels and owner move-ins.
On a Costa-Hawkins exempt property, the portion of that ordinance that ties the payment solely to a lawful rent increase is now vulnerable. The city has not formally repealed the language, which is common. Ordinances stay on the books until someone amends them. What changed is the likelihood that a court would uphold enforcement against an exempt unit. Owners who receive a demand tied only to an increase on a single-family home, condo, or post-1995 building should not treat the demand as automatic. The safer sequence is to confirm the property’s exempt status in writing, calculate the increase against the actual lease and any prior increases, and respond with the exemption rather than the check. Local San Leandro property management experience helps sort which triggers still apply.
Oakland and Berkeley have their own just-cause and relocation frameworks that predate the 2026 rulings. Those frameworks still apply to covered properties and to no-fault terminations. The appellate decision does not erase them. It limits the ability of any city to impose a relocation payment solely because an owner of an exempt unit raised the rent to market and the tenant decided the new number was too high. Owners who manage mixed portfolios sometimes apply the same response letter to every demand. That habit works until a hearing officer or a tenant’s attorney points out that one unit was exempt and another was not.
The Eviction Threshold That Survived
The court was less sympathetic on the second issue. Several cities, including Oakland and Berkeley, require that unpaid rent reach a minimum amount—typically one month of the applicable HUD Fair Market Rent—before a landlord can serve a valid three-day notice to pay or quit for nonpayment. The appellate panel treated this as a regulation of the substantive grounds for eviction rather than an improper restriction on the timing of an unlawful detainer action. Because the ruling upheld that type of ordinance, the thresholds remain in place where they exist.
The arithmetic is straightforward and unforgiving. Suppose a unit rents for $1,650 and the relevant Fair Market Rent for that bedroom count is $2,200. A tenant who pays nothing in a given month has not yet crossed the threshold. The owner cannot serve a three-day notice that a court is likely to uphold until the unpaid balance reaches at least $2,200. In the meantime the owner is carrying the vacancy-equivalent cost plus any late fees the lease allows, while the notice clock has not started. If the owner serves the notice early, the notice is defective. The case can be dismissed, the clock resets, and the owner has spent filing fees and attorney time to learn that the threshold still applied. Precise rent collection tracking makes the difference between a valid notice and a reset.
Cities that have adopted these rules generally publish the current Fair Market Rent figures or point to the HUD schedule. The figures change annually. An owner who relies on last year’s number, or who uses the contract rent instead of the FMR, will miscalculate the threshold. Tracking requires a running balance that separates base rent, any allowed late fees, and any other charges the local ordinance permits to be included. It also requires knowing whether the particular city has adopted a threshold at all and whether any temporary state or local moratoria have altered it.
The threshold does not pause the underlying debt. Late fees that the lease and local law allow can still accrue. The owner can still send reminder notices and demand letters. What the owner cannot do is serve the three-day notice that starts the formal eviction process until the balance clears the FMR line. Owners who treat every late payment the same way—serve the notice on day four or day five—are the ones who discover the defect after they have already paid a process server and a filing fee.
What the Split Decision Changes in Daily Operations
Most owners do not lose sleep over the abstract difference between a preempted ordinance and a valid police-power regulation. They lose sleep when a notice comes back invalid or when a city demands a payment the owner believes is no longer owed. The practical adjustments are narrower than the headlines suggest and more important than they look.
First, leases and rent-increase notices need a current exemption analysis. On any property that might be Costa-Hawkins exempt, the file should contain the certificate of occupancy date or the recorded condominium map or the single-family status. When an increase is issued, the notice should state the amount, the effective date, and the basis for treating the unit as exempt if that is the owner’s position. Vague language that simply says “market adjustment” is less useful later if a tenant or a city questions it.
Second, relocation demands require a short decision tree. If the demand is tied to a no-fault termination (owner move-in, substantial remodel that requires vacancy, Ellis Act withdrawal), the local ordinance still applies and the payment calculation is still required. If the demand is tied only to a rent increase on an exempt unit, the demand is the one the court has now limited. Mixing the two categories in the same response letter is a common error. The letter should identify which trigger the city or tenant is asserting and respond to that trigger.
Third, nonpayment tracking has to be precise enough to know the exact day the local threshold is crossed. Many owners still rely on a mental note or a spreadsheet that only shows the contract rent. The spreadsheet needs a column for the applicable FMR, a column for the cumulative unpaid amount, and a flag that appears only when the unpaid amount meets or exceeds the FMR. Serving the three-day notice the day before the flag appears is the mistake that turns a collectible balance into a defective notice.
Fourth, city websites and printed forms lag. Alameda updated its enforcement posture. Other cities have not rewritten every FAQ or every sample notice. An owner who assumes the website is current will sometimes follow an outdated instruction. The safer practice is to treat the published ordinance text and the most recent appellate decision as the controlling sources and to ask the city, in writing, whether it is still enforcing a particular relocation trigger on exempt units. The written answer becomes part of the file.
Fifth, mixed portfolios need separate templates. An owner with three single-family homes and two pre-1995 duplexes cannot safely use one rent-increase notice and one relocation response for every property. The exempt units and the covered units now sit on different sides of the relocation question even when they sit on the same street. Keeping the supporting documents (certificate of occupancy, condo map, or exemption memo) attached to the notice reduces the chance that a later dispute turns on what the owner “meant” rather than what the paper shows. Full-service East Bay property management keeps those distinctions current across a portfolio.
City-by-City Notes That Actually Matter
San Leandro’s combination of a delayed rent-stabilization effective date and an existing relocation ordinance creates a temporary window. Until January 1, 2027, the new rent cap does not apply. The relocation rules for landlord-caused terminations and for increases above 12 percent already do. An owner planning a substantial increase on a covered unit before the new cap takes effect should calculate both the AB 1482 state limit and the city’s 12 percent relocation trigger. Crossing the 12 percent line can obligate the relocation payment even if the increase is otherwise lawful under state law. On an exempt unit the 12 percent trigger is the one now limited by the appellate decision; on a covered unit it is not. Our earlier look at San Leandro rent control in 2026 covers the timeline in more detail.
Oakland’s just-cause ordinance and its capital-improvement and owner-move-in rules remain in force for covered properties. The city also maintains an eviction threshold tied to Fair Market Rent. Owners who manage both exempt and covered units in the same portfolio sometimes apply the Oakland forms to every property. That shortcut works until a tenant or a hearing officer points out that the unit was exempt and the form assumed it was not. Separate notice templates, or at least a clear checkbox and supporting exhibit for exemption status, reduce the risk.
Berkeley’s rules are similarly detailed on both just cause and relocation. The city has historically been aggressive about enforcing its local standards. The 2026 decision does not remove Berkeley’s authority over covered units or over no-fault terminations. It does limit the city’s ability to demand relocation solely because an owner of an exempt unit raised the rent and the tenant left. Owners who have received Berkeley demands in the past on single-family homes or newer buildings should re-examine those files against the new precedent before paying any additional amounts or agreeing to any stipulated resolutions.
Smaller East Bay cities vary. Some have only the state Tenant Protection Act rules. Others have adopted local registries, just-cause ordinances, or both. The appellate decision travels with the owner: any city that tries to impose a rent-increase relocation payment on a Costa-Hawkins exempt unit now faces the same preemption argument that succeeded against Los Angeles and Pasadena. The argument is stronger when the owner has already documented the exemption and responded in writing before any payment is made. Cities that have not yet updated their public materials are not required to send owners a courtesy notice that the old trigger is no longer enforceable. The owner who waits for that notice is usually the one who has already written the check.
The Longer Pattern These Rulings Fit Into
East Bay cities have spent the last several years adding local layers on top of state law. Rent registries, just-cause expansions, relocation formulas, capital-improvement passthrough limits, and eviction thresholds all arrived in different combinations. Each one was defended as a modest protection. Collectively they require an owner to maintain a compliance calendar that most self-managers do not have. The 2026 appellate decision removed one of those layers for a defined set of properties. It did not simplify the rest.
Owners who self-manage often discover the complexity at the worst moment: when a three-day notice is challenged, when a relocation demand arrives with a short deadline, or when a city inspector asks for the certificate of occupancy during a complaint investigation. The cost is rarely the face amount of any single payment. It is the reset of the eviction timeline, the attorney fees to unwind a defective notice, or the decision to leave a unit under-rented because the owner is no longer confident which rules apply. Those costs compound across a portfolio faster than most owners track.
Professional management does not eliminate the underlying ordinances. It does keep the lease forms, the increase calculations, the notice templates, and the payment ledgers aligned with the current text of each city’s rules and with the latest appellate boundaries. When a city has not yet updated its website, the management file still contains the exemption analysis and the written inquiry to the city. When a threshold is about to be crossed, the three-day notice is prepared against the correct FMR figure rather than the contract rent. The difference is measurable in avoided resets and in fewer checks written for obligations that no longer exist. SLPM has provided that local continuity for East Bay owners since 1978.
What to Do With the File You Already Have
Pull the certificate of occupancy or the condominium documents for every property that might be exempt. Note the date and put a copy in the compliance folder. For any rent increase issued in the last twelve months on those properties, confirm that the increase notice itself identifies the exemption if you intend to rely on it. If a city or tenant has already demanded relocation tied solely to that increase, prepare a short written response that cites the exemption and the appellate precedent and asks the city to confirm it is no longer enforcing the trigger. Keep the response and any reply.
On the nonpayment side, add the current HUD Fair Market Rent for each unit’s bedroom count to the ledger. Calculate the cumulative unpaid amount weekly. Set a reminder for the day the balance is projected to meet the threshold so the three-day notice can be served the following business day, not the day before. If the property is in a city without a local threshold, the state rules and the lease control; do not import another city’s FMR figure out of caution. Using the wrong city’s number creates its own defect.
Review any open relocation demands that arrived before the appellate decision became widely known. If the demand was based solely on a rent increase to an exempt unit and you have not yet paid, the written response described above is the next step. If you already paid, the file should still note the exemption and the date of the decision so that any later audit or tenant claim can be answered with the same documents. Cities do not automatically refund payments made under rules they later stop enforcing; the owner who wants the money back usually has to ask.
None of these steps require a law degree. They do require a system that treats the exemption status and the threshold calculation as line items rather than background knowledge. Owners who already maintain that system will find the 2026 decision mostly confirmatory. Owners who have been relying on memory and last year’s forms will find that the decision rewards the ones who update the file before the next notice or the next demand arrives.
The ruling drew a clearer line on one issue and left the rest of the local framework in place. For East Bay owners the useful question is not whether the line is perfect. It is whether the current leases, notices, and ledgers reflect the line that now exists. If they do not, the next rent increase or the next nonpayment month is when the gap becomes expensive.
SLPM has handled East Bay residential management since 1978. We keep the exemption documentation, the increase calculations, the city-specific notices, and the collection thresholds current so the file matches the rules that actually apply. If you want that work handled instead of added to the list of things you are already tracking, start with a free management quote.
Request your free property management quote here. No obligation, and we will tell you exactly what the current rules mean for the properties you own.
Sources
- California Apartment Association: Court strikes down L.A. rent-triggered relocation mandate
- California Apartment Association: Supreme Court leaves Pasadena Costa-Hawkins ruling intact
- Bisnow: Appeals Court Partially Sides With LA Landlords
- The Real Deal: Landlords win partial victory in challenging LA rental laws
- City of San Leandro Municipal Code Chapter 4-46: Residential Rent Stabilization
- City of San Leandro Tenant Relocation Assistance Ordinance
- City of Alameda Rent Program
