Investigating Santa Ana’s Just Cause Ordinance: What it Means for Rental Owners

Santa Ana’s city council just passed a Just Cause Eviction Ordinance October of 2021. What does this means for property owners in Santa Ana?

Sam Fernley here with TrueDoor property management, creating content for Realtors and Property Owners in Orange County, California!

What’s in Santa Ana’s new ordinance?

Now let me explain this Just Cause Eviction Ordinance. On November 19 2021, a Tenant cannot be evicted or asked to leave unless the property owner has a “just cause” to terminate the lease or retake possession of the property or unit. So here are some of the key rules for this ordinance: 

This ordinance applies to all long term residential rental properties. Homes, townhomes, condos, apartments, mobile homes, etc. Hotels and Short term rentals, or lease terms of less than 30 days do not qualify. 

What is Just Cause?

Once a tenant has lived in a property for 30 days the owner cannot terminate the tenancy or lease without just cause. So let’s define just cause. There are two types of Just Cause, at fault Just cause and no fault just cause. 

Here are some examples of “at Fault Just Cause terminations”: non payment of rent, breach of the lease, committing a nuisance, criminal activity, etc. So if the tenant is breaking their lease then you can evict them because they are “at fault” or they have broken an important part of the lease. 

The other way to terminate a tenancy is a no fault just cause termination. So they are not at fault but you want to take possession of the property. The only acceptable reasons or just causes for termination are the following: 

1. The owner or a family member intends to occupy the property, they are going to move in and live there. 
2. The owner is going to remove the property from the residential rental market. And no longer use it as a rental.
3. The owner will be demolishing or remodeling a substantial portion of the house or property.  ( a good rule of thumb on whether it is substantial enough is that the property must be under construction for 30 plus days.) 

If the property owner is terminating the tenancy for one of these mentioned reasons which are considered a no fault just cause eviction then the property owner must provide relocation assistance in the amount equal to 3 months worth of rent. They can either forgive the last 3 months of rent or they can pay them 3 months worth of rent prior to the end of the lease. 

So does this apply to all rental properties? No similar to the Rent Stabilization ordinance, this does not apply to residential real estate that has been built in the last 15 years, and it also does not apply to hotels, short term rentals, hospitals, care facilities, dormitories, and other shared living quarters. 

Relocation expenses

Now, There is one way around this but it will require more than three months worth of relocation money. If you want to remove the tenant for any reason you can negotiate directly with your tenant and offer them more than the customary 3 months of relocation funds. As long as you and the tenant come to a written agreement for more than 3 months rent in exchange for possession of the property then this is legal and allowed.  

So What does this mean for Santa Ana rental Property owners? Well if you want to end a lease because you don’t like the tenant or they are rude or disrespectful you cannot terminate the lease. Any termination must be a just cause. Before this ordinance, you did not have to provide a reason for ending the tenancy, you could just end it for no reason. With these additional restrictions Santa Ana property owners will need to ask themselves if it is worth continuing or better to cash out and invest somewhere else. Whatever you do, take your time and weigh all your options before making any significant decision.