For most of the last three decades, the word Santa Monica landlords reached for first was exempt. Single-family rental, a condo you leased out, an in-law unit over the garage: as long as the building went up after the rent control cutoff or fell under the state's Costa-Hawkins Rental Housing Act, City Hall had no real reason to know the unit existed. No filing. No annual fee. No board to answer to. That assumption held for years.
It stopped holding on January 1, 2026. On November 18, 2025, the Santa Monica City Council passed, unanimously, an ordinance requiring every rental unit in the city, not just the ones already under rent control, to register with the city. Duplexes, single-family homes, condos, townhouses, accessory dwelling units, junior accessory dwelling units, and every non-stabilized multifamily property now sit inside the same paperwork perimeter as a 1962 fourplex on Wilshire. If you own income property here and you're thinking about selling this year, that shift changes what a buyer's attorney asks for before removing contingencies, not just what shows up in your mailbox in July.
Two Registries, Not One
Santa Monica has tracked rent-controlled units since voters created the Rent Control Board on April 10, 1979. That registry assigns every controlled unit a Maximum Allowable Rent, updated nightly in a public database, and a $0 MAR in that system has always meant one thing: exempt. For RSO-controlled units, the 2026/2027 fiscal year registration fee is $240 per unit, split so up to half can be passed through to the tenant, with bills going out each July 1.
That registry never touched a single-family rental or a condo leased to a tenant. The new ordinance does. It requires the exact category of owner who has spent years hearing "you're exempt, you don't need to file anything" to now register that unit with the city and keep the filing current, or lose the ability to collect rent altogether once 2027 arrives. Civil penalties for skipping it run $200 per unit per month, and a tenant facing eviction can raise the owner's failure to register as a defense in court.
What Changes at the Closing Table
Registration status on a Santa Monica rent-controlled unit runs with the unit, not the owner. A buyer inherits whatever gap the seller left behind. That's why due diligence on income property here increasingly includes a request that the seller bring registration current before closing, an escrow holdback tied to any gap that can't be resolved in time, and estoppel certificates signed by each tenant confirming the rent they're actually paying. If a buyer discovers an unregistered unit after closing, the exposure isn't hypothetical. It can mean immediate refund obligations to the tenant and, under the Rent Control Charter's treble damages provision, three times the rent collected in violation.
The new universal ordinance widens that exposure to properties that never used to carry it. A single-family rental or a rented condo that closes escrow in 2026 without an active registration on file is no longer a compliance footnote. It's the kind of gap a buyer's attorney flags before funds get wired.
| What owners assumed | What's true in 2026 |
|---|---|
| Costa-Hawkins exemption meant no city filing at all | Every rental unit, exempt or not, must register with the city |
| Registration only mattered for pre-1979 buildings | Registration now covers single-family rentals, condos, ADUs and JADUs too |
| A registration gap was the seller's problem to fix later | Registration status and MAR history transfer to the buyer at closing |
| Skipping registration meant a fine, eventually | Skipping it risks losing the legal right to collect rent starting in 2027 |
What the Comps Say Buyers Are Already Pricing In
Santa Monica's small multifamily market kept trading through all of this, and the deals that closed over the past year show buyers underwriting more carefully, not backing away. Five to eleven unit buildings sold between April 2025 and April 2026 across a wide band: a building on 18th Street closed at $2,176,000 at a 4.47 percent cap rate, a Berkeley Street property brought $3,330,000 at 5.6 percent, and a Kansas Avenue building closed at $2,660,000 at 5.64 percent. Two years ago, a ten-unit building in this price range would typically have traded at a cap rate under 4 percent. Now it's closer to 5.
That compression is the market doing arithmetic on everything above. Registration exposure, relocation costs, and the annual rent adjustment ceiling all reduce what a buyer is willing to pay against the same rent roll. Reported cap rates on recent sales ranged from roughly 3.2 percent up past 6.8 percent depending on the building's condition and compliance history, which tells you pricing has grown more sensitive to paperwork, not less. A seller who walks into escrow with a clean registration file and current MAR documentation is negotiating from a different position than one who hasn't checked the Rent Control Board's records in a decade.
The Other Numbers on the Table This Year
Three more figures belong in this conversation if you're weighing whether to sell now, hold, or pursue a no-fault path like an Ellis Act withdrawal.
- The 2026 General Adjustment for RSO-controlled units is 2.6 percent, effective September 1, 2026, capped at $70 a month for any unit with a Maximum Allowable Rent of $2,674 or higher. That's the ceiling this year's rent increase can reach on a controlled unit you might be weighing whether to sell or keep.
- Relocation payments tied to no-fault evictions, including Ellis Act withdrawals, run roughly $23,000 to $24,000 per unit as a base amount in early 2026, with another $4,000 to $5,000 added for tenants age 62 or older. On a ten-unit building with several long-tenured or protected tenants, total relocation costs can clear $250,000 before a single unit changes hands.
- The RSO registration fee itself, $240 per unit for the 2026/2027 fiscal year, is small next to those other two numbers, but a lapsed registration compounds at 4 percent a month in penalties if a bill goes unpaid, on top of the separate $200 per unit per month civil penalty tied to the new universal ordinance.
None of these numbers make selling the wrong move. They make the timing and preparation of a sale worth planning around instead of discovering mid-escrow.
Before You List
- Pull your property's current MAR status through the Rent Control Board's lookup tool, even if you believe the unit is exempt. A registered $0 MAR confirms exemption on paper. An unregistered unit does not.
- If your property falls under the new universal ordinance, most single-family rentals, condos, ADUs, and JADUs, confirm an active registration is on file with the city rather than assuming Costa-Hawkins still covers you the way it used to.
- Gather any buyout agreements, capital improvement approvals, or relocation filings tied to the property. Buyers' attorneys ask for these as a matter of course now.
- Loop in your escrow officer early if there's any gap. A registration brought current before you open escrow moves faster than one negotiated during it.
FAQ
Does this apply to a single-family home I rent to one long-term tenant?
Yes. The ordinance passed in November 2025 names single-family properties specifically among the types required to register starting January 1, 2026, regardless of whether the unit was ever covered by rent control.
I own a condo I rent out. Do I need to register it too?
Yes. Condominiums are named explicitly in the ordinance. Owning a unit that was previously exempt from rent control does not exempt it from the new registration requirement.
What if I never registered because I always assumed I was exempt?
Get current before you list. A buyer's due diligence will surface an unregistered unit either way. Resolving it on your own timeline beats resolving it against an escrow deadline.
If you own income property in Santa Monica and you're weighing whether this is the year to sell, the registration question is worth answering before a buyer's attorney answers it for you. Zack Neeley works the investor side of the Westside market daily, from the numbers that make a rent roll pencil to the paperwork that makes a closing go smoothly. Get your instant home valuation and find out what your building is actually worth in today's Santa Monica market.
