California Civil Code 1947.12: Rent Cap, Exemptions, and Sunset

California Civil Code Section 1947.12 caps annual rent increases on most residential units at 5 percent plus the local change in the cost of living, or 10 percent, whichever is lower. It also requires landlords of certain otherwise-exempt properties, most commonly single-family homes and condos, to hand tenants a specific written notice claiming the exemption. Skip the notice and the property stays under the cap by default.¹

How the Annual Cap Is Calculated

The cap is 5 percent plus regional CPI, with a hard ceiling of 10 percent in any 12-month period. The base for the calculation is the lowest rent the landlord charged for that unit at any point during the 12 months before the increase takes effect. If you got a temporary discount, that discounted figure is the starting point, not whatever you were paying the month before the increase.¹

The cost-of-living piece comes from the Consumer Price Index for All Urban Consumers (CPI-U) for the metropolitan area where the property sits. If no regional index is published, the statewide CPI determined by the Department of Industrial Relations applies. For increases that take effect before August 1 of a given year, the CPI change is measured from April of two years earlier to the April immediately before. For increases taking effect on or after August 1, the calculation uses the most recent April figures.¹ Depending on regional inflation, the combined cap has run roughly 8 to 10 percent in recent years.

Which Properties Are Exempt

Several categories of residential property fall outside Section 1947.12 entirely:

Housing that received its certificate of occupancy within the previous 15 years. The window rolls forward each year, so a building exempt in 2024 can lose the exemption in 2025. Mobilehomes do not qualify for this exemption regardless of age.¹
Single-family homes and condominiums, but only if the owner is not a real estate investment trust, a corporation, or an LLC with at least one corporate member, and only if the landlord delivers the written notice described below. An individual owner or family trust qualifies; a corporate rental portfolio does not.¹
Duplexes where the owner occupies one unit as a principal residence at the start of the tenancy and continues living there. Neither unit can be an accessory dwelling unit or junior ADU.¹
Properties already subject to a local rent control ordinance that caps annual increases below the statewide limit. The stricter local rule governs.¹
Units subject to a deed restriction or regulatory agreement with a government agency that limits rents.

The Written Notice for Single-Family Homes and Condos

The single-family and condo exemption is the one that trips up landlords, because it does not activate on its own. The landlord must give the tenant a written notice using the exact statutory language:

“This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12 (d)(5) and 1946.2 (e)(8) of the Civil Code and the owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation.”¹

For any tenancy that began or renewed on or after July 1, 2020, that notice must appear in the lease itself. For mobilehome tenancies, the equivalent date is July 1, 2022. For tenancies already in place before those dates, the notice can be delivered in a separate written document.¹

The wording is not customizable. A paraphrase, a notice that drops the specific code references, or a generic line saying the property is “exempt from AB 1482” does not satisfy the statute. If the notice is missing or defective, the property stays under both the rent cap and the just cause eviction rules in Section 1946.2, even when it would otherwise qualify.¹ The statute does not spell out whether a late notice can cure past coverage. The safer reading is that the unit stays covered for whatever period no valid notice was in force, so any increases imposed during that stretch remain subject to the cap.

What a Tenant Can Recover for an Overcharge

When a landlord charges more than Section 1947.12 allows, whether by missing the exemption notice or by pushing past the cap on a covered unit, the tenant can sue for:¹

Actual damages equal to the dollar amount of each payment that exceeded the legal maximum.
Injunctive relief to stop the ongoing overcharge. The statute presumes irreparable harm from a violation, which lowers the usual hurdle for an injunction.
Reasonable attorney’s fees and costs, at the court’s discretion.
Up to three times the overcharge if the landlord acted willfully or with oppression, fraud, or malice.¹

The California Attorney General, along with city attorneys and county counsel, can also enforce the cap and seek injunctive relief on tenants’ behalf. Any claim, whether brought by a tenant or a public enforcer, must be filed within three years of the overcharge.¹

How It Ties to Just Cause Eviction

Section 1947.12 travels with Section 1946.2, the just cause eviction statute. The exemption notice above references both because a qualifying single-family home or condo with a properly delivered notice is exempt from the rent cap and the just cause rules together. A landlord who never delivers the notice keeps the property under both protections at once. Once a tenant has lived in a covered unit continuously for 12 months, the landlord cannot end the tenancy without a qualifying at-fault or no-fault reason under Section 1946.2, and no-fault terminations generally require relocation assistance equal to one month’s rent.²

The 2030 Sunset

Section 1947.12, along with the rest of the Tenant Protection Act, is currently set to expire on January 1, 2030. Before then, the Legislative Analyst’s Office must report to the legislature on the rent cap’s effect on California’s housing market.¹ If the legislature does not extend the law, the cap, the exemption notice requirement, and the just cause protections all lapse on that date.

1
California Legislative Information. California Code CIV 1947.12
2
California Legislative Information. California Code CIV 1946.2