San Francisco Legislative Update (2019): Updated Abandoned Buildings Ordinance

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Ordinance 52-19 amends the Building Code’s previous abandoned building ordinance to extend its scope and accelerate its application.

Previously, the code defined a commercial storefront as “vacant or abandoned” if,

(1) it is unoccupied and unsecured;
(2) it is unoccupied and secured by boarding or other similar means;
(3) it is unoccupied and unsafe as defined in Section 102A of the Building Code;
(4) it is unoccupied and has multiple code violations; or
(5) it has been unoccupied for over 30 days.

Properties come outside of the definition of vacant or abandoned if the owner or lessee is actively seeking permits or authorization for a particular use, or if there is a permit for repair, rehabilitation, construction, etc. However, Ordinance 52-19 removes the existing exception where the property is being actively listed for lease or sale. It also requires payment of the registration fee upon registration (as opposed to the former rule: 270 days after it became vacant), and the owner must annually register and pay the fee.

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AB 1795 (2019): Assemblymember Kamlager-Dove’s Amendment to the Unlawful Detainer Statutes Would Maintain “Public Records Mask” for Tenants Who Choose To Fight Ellis Evictions

Information about lawsuits is generally available to the public. And for tenants who have been evicted, this information is often used in credit checks for rental applications. (A landlord would understandably be interested in knowing if her applicant had just been evicted for non-payment of rent.) The unlawful detainer statutes have a specific provision governing the masking of eviction lawsuits from the public record. (Formerly, a limited civil eviction lawsuit would unmask automatically, unless a defendant prevailed in 60 days. A 2016 amendment inverted the rule, maintaining the mask unless the landlord prevailed in 60 days.)

AB 1795, however, would prevent the court clerk from allowing access to information about Ellis Act evictions, regardless of whether the landlord prevails in 60 days. Ellis Act evictions often feature a fight about wealth; the tenant has a non-transferable, valuable property interest in their rent-controlled tenancy, while the landlord wants possession of her valuable asset. In San Francisco, for instance, the City actively encourages tenants to hold over and fight Ellis Act evictions. (After all, there’s no better affordable housing than the exiting unit that already has a rent-controlled tenant in it.) But it is difficult to read this amendment as anything other than tacit encouragement from Sacramento for tenants to violate the law and fight an eviction with fewer consequences. A landlord would understandably be interested in knowing that her prospective tenant is likely to violate obligations other than paying rent, as well.

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AB 1399 (2019): Assemblymember Bloom’s Latest Attempt To Police Re-Rentals following Ellis withdrawal

Provoked by infamous landlord Anne Kihagi (whose aggressive reading of re-rental timing for withdrawn units was actually vindicated in the Court of Appeals), Assemblymember Bloom had introduced last year’s unsuccessful AB 2364 – seeking to require that landlords return to the market all at once or not at all. (By comparison, Kihagi was able to return units to the market that were unoccupied at the time she began the Ellis withdrawal, and was thus able to do so without price constraints.)

Gov. Newsom recently challenged the legislature at his “state of the State” address: “get me a good package on rent stability this year and I will sign it”. While many fresh ideas have already been advanced, AB 1399 appears to be another attempt at AB 2364.

As introduced, its language would allow cities to require Ellis-invoking property owners to return all units to the market at the same time. Many different configurations of properties are withdrawn under the Ellis Act, but for those where the owner (or their family) moves into a tenant-occupied unit, this change would either prevent rental of other units or force property owners to leave their own homes to rent units. One wonders how this bill would aid in easing the housing crisis, where it makes the process of putting existing units back on the market more onerous. (The language will likely need to be changed before the statute can advance.)

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SFAA, SFAR and SPOSFI Sue San Francisco over Sup. Ronen’s Rent Increase Legislation

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This week, the San Francisco Apartment Association, San Francisco Association of Realtors and the Small Property Owners of San Francisco Institute filed a petition for writ of mandate, seeking to permanently enjoin San Francisco from enforcing Ordinance 5-19, Supervisor Ronen’s legislation aimed at prohibiting “eviction by rent increase”.

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San Francisco Legislative Update (2019): Prohibition Against Tenant Harassment via Rent Increases

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San Francisco has amended the Rent Ordinance to add to the definition of “tenant harassment” and “misdemeanors” certain rent increases “imposed in bad faith with an intent to defraud, intimidate, or coerce the tenant into vacating the rental unit” in circumvention of the just cause for eviction provisions. This will include circumstances where:
(1) the rent increase was substantially in excess of market rates for comparable units;
(2) the rent increase was within six months after an attempt to recover possession of the unit: and
(3) such other factors as a court or the Rent Board may deem relevant.

According to the Board of Supervisors, this legislation was prompted, in part, by specific cases in recent years with headline-grabbing rent increases. Whether justified by comparables or not, the tenants in those anecdotes chose to vacate, rather than pay the rent (although, at least one sued over the same theory that the City has now codified).
Continue reading San Francisco Legislative Update (2019): Prohibition Against Tenant Harassment via Rent Increases

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Justin Goodman Featured in February 2019 SPOSF Newsletter

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The Small Property Owners of San Francisco institute featured Justin Goodman’s article on “How to determine if a tenant is just using his unit as his ‘place in the City’, and what to do about it”. San Francisco rent control protects “tenants in occupancy”, and landlords can use the “1.21 petition” (named for Rent Board Rules & Regulations section 1.21) to ask the Rent Board for a finding that tenant is really living somewhere else.

SPOSF’s mission is to provide owners of small rental properties in San Francisco with the tools and information necessary to conduct business successfully in a difficult regulatory climate, through educational programs, publications, and workshops that seek to help members better understand their rights and obligations, how to work constructively with city and state officials, and how to deal effectively with their tenants. SPOSF also seeks to protect the rights of small property owners against unfair and burdensome regulations through legal advocacy.

SPOSF holds monthly meetings at St. Mary’s Cathedral, located at 1111 Gough Street in San Francisco. You can join SPOSF by clicking here. Members have access to the full monthly newsletter.

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California Legislative Update (2018): AB 2219: New Requirements for Non-Cash/EFT Rent Payments and Mandated Rent-Acceptance from Third Parties

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AB 2219 adds Section 1947.3 to the Civil Code to create new requirements for the form of tender of rent payments, landlord’s rights when tenants bounce checks, and the ability of tenants to pay via third parties. This last change is a rent-control red flag, but Section 1947.3 includes requirements to protect landlords from creating new rent controlled tenancies at the historic rental rate of another tenant.

First, a landlord must accept rent in at least one form that is neither cash nor EFT. Second, if the tenant bounces a check, a landlord can require payment in cash for up to three months (provided that they change the terms of tenancy formally, if this is not already in the lease).

Ostensibly to allow greater flexibility for tenants (but with little legislative history to suggest this is a significant concern), a landlord must now accept rent from a third party, at the tenant’s election. The mechanics of this call to mind the classic waiver trap of a subsequent occupant trying to pay rent to her master tenant’s landlord to directly establish a rent controlled tenancy. However, the landlord is only required to accept payment from a third party who is not a “tenant”. The landlord may (and really should) have the third party sign an acknowledgement that includes the following:

I, [insert name of third party], state as follows:
I am not currently a tenant of the premises located at [insert address of premises].
I acknowledge that acceptance of the rent payment I am offering for the premises does not create a new tenancy.
(signature of third party) _____
(date)

These new rules do not require a landlord to accept rent after a “three-day notice to pay or quit” has expired. They also do not require a landlord to enter a public housing contact with a Section 8 tenant. However, San Francisco landlords should be cautioned that explicitly refusing to enter such an agreement may now be actionable.

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California Legislative Update (2018): AB 721: Enhanced Safety Regulations for Residential Balconies

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Following the tragic 2015 balcony collapse in Berkeley, which killed six students, California addressed concerns over similar safety issues in other buildings, adopting amendments to the Health and Safety Code requiring owners to inspect for structural soundness, no later than January 1, 2025, and every six years thereafter. AB 721 applies to buildings with 3 or more multifamily dwelling units.

The bill also amends Civil Code §1954 to include inspection of balconies among the reasons a landlord is permitted to inspect a rental unit.

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Legal Q&A: How Do I Lawfully Access My Tenant’s Unit

A. How Do I Lawfully Access My Tenant’s Unit?

Q. Even though this is your building, as soon as you lease it to your tenant, you confer a “right of exclusive possession” against you and the world. This right is not absolute, and you can access under certain circumstances. But it is important to understand the laws governing access to avoid interfering your tenant’s rights. Even at the state level, a landlord may not abuse the right of access or use it to harass the tenant. But there may also be enhanced penalties at the local level (e.g., abusing the right of entry is among San Francisco’s definitions of “tenant harassment”, which can lead to misdemeanor penalties and other potential liability.)

First, a landlord should only enter with proper notice (or express consent of a tenant). This notice should be in writing and should provide “reasonable notice”, which Civil Code §1954 defines as six days by mail, or 24 hours if you hand the notice to your tenant (or someone else at the rental unit) or leave it under the door.

A landlord can only enter for the right reasons. Section 1954 lists the following:

(1) In case of emergency.
(2) To make necessary or agreed repairs, decorations, alterations or improvements, supply necessary or agreed services, or exhibit the dwelling unit to prospective or actual purchasers, mortgagees, tenants, workers, or contractors or to make an inspection pursuant to subdivision (f) of Section 1950.5.
(3) When the tenant has abandoned or surrendered the premises.
(4) Pursuant to court order.
(5) For the purposes set forth in Chapter 2.5 (commencing with Section 1954.201) (relating to access for water utility submeters located inside the tenant’s unit);
(6) To comply with the provisions of Article 2.2 (commencing with Section 17973) of Chapter 5 of Part 1.5 of Division 13 of the Health and Safety Code (referring to balcony and deck inspection)

Finally, a landlord should only notice the entry during “normal business hours” – something Section 1954 doesn’t define. There are very few cases interpreting this statute in general, but a 2013 case – Dromy v. Lukovsky (2013) 219 Cal.App.4th 278 – took a pragmatic approach based on context. A landlord was allowed to access with his real estate agent on weekends, as those were conventional “business hours” for open houses.

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Smyth v. Berman – Lessee’s Right of First Refusal Is Not an “Essential Term” for the Purpose of Renewal of Periodic Tenancies

“Does a right of first refusal contained in a written lease expire when that leasehold ends and the tenant becomes a ‘holdover’ tenant, and when the lease specifies ‘the continuing [holdover] tenancy will be from month to month’? We conclude that a right of first refusal is not an essential term that carries forward into a holdover tenancy unless the parties so indicate.”

In Smyth v. Berman, the Second District Court of Appeal held that, when a commercial tenant has a “right of first refusal” to purchase the property, included in a term lease agreement, that right is not among the “essential terms” of the lease. Because it is not essential, it is not included among the terms and conditions of the periodic tenancy created by the tenant’s holdover and the landlord’s acceptance of rent.

“When a lease expires but the tenant remains in possession, the ‘relationship’ of the landlord and tenant ‘changes’. The ‘lessor-lessee relationship’ based on ‘privity of contract’ ends, and a new ‘landlord’-‘tenant’ relationship based on ‘privity of estate’ springs into being by the operation of law. (Civ. Code §1945.) This new ‘hold-over’ tenancy is presumed to continue under the same terms contained in the now-expired lease except as those terms may have been modified by the landlord and tenant. (Civ. Code, § 1945) This case tees up the question: If the expired lease contained a right of first refusal, is that right one of the ‘terms’ that presumptively carries forward into the holdover tenancy? We conclude that the answer is ‘no’.”

The court added that this is merely a presumption, and the parties could contract for this term to renew. But absent such intention, this presumption added to the stability of commercial tenancies, by allowing the holdover tenant to remain on a month-to-month basis, under terms and conditions that didn’t give the landlord an incentive to nullify the right of first refusal by evicting their tenant.

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Residential Rent and Eviction Control Resources