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July 28, 2015July 28, 2015

Pro-Tenant Law Leads to Ironic Rise in “Evictions”

The San Francisco Chronicle is reporting on the ironic consequences of San Francisco’s recently debuted “Buy-Out Legislation“, which regulates the circumstances under which landlords can discuss “payment for possession” and bestows certain extra-contractual rights on tenants (like the right to rescind such an agreement for 45 days).

In March of 2015, San Francisco’s Ordinance 225-14 became effective. It prevents landlords from even discussing payments to tenants in exchange for their vacating a rent-controlled tenancy, unless the landlord first obtains a signed disclosure form (apprising tenants of their rights under the new legislation) and then files an affidavit with the Rent Board indicating compliance. (A challenge to the constitutionality of this regulation of commercial speech is currently underway.)

San Francisco certainly has an interest in regulating the landlord-tenant relationship. And, while only the pending constitutional challenge will determine if this particular regulation is lawful, the City is already seeing the effects at the Rent Board, which records data on fault-based and non-fault evictions.

While these regulations have a wide reach, the settlement of a pending unlawful detainer action is explicitly exempted from the definition of a “Buy-Out”. So, it should surprise no one that the number of fault-based evictions has increased in response, where a “notice to quit” can serve as an icebreaker, without putting these conversations under a magnifying glass.

The new law is having a similar effect on non-fault evictions. Generally, San Francisco makes it difficult to condo-convert. In an effort to discourage the conversion of rent-controlled rental housing stock to de-controlled condominiums, the City penalizes certain non-fault evictions designed to “clear out” rental units before the conversion. Where the Subdivision Code now imposes the same penalty on Buy-Outs, landlords no longer have a disincentive to simply invoke the owner move-in provision of the Rent Ordinance and recover possession with a non-fault eviction instead of paying the premium for possession without the dark mark on their use of the property afterward.

Zacks and Freedman’s Andrew Zacks told the Chronicle, “Before, when a landlord bought a tenant out, one of the things they were willing to pay for was confidentiality and privacy . . . A lot of my clients would prefer to negotiate, to sit down and work something out . . . But because of the legislation they just go ahead and file for eviction”.

With even Supervisor Scott Weiner’s reversal of support, the Buyout Legislation may be short-lived, whether overturned by the courts or undermined from within.

July 27, 2015July 28, 2015

Shaw at BeyondChron on Metcalf at SPUR

BeyondChron’s Randy Shaw takes exception to the conclusion of a recent op-ed by Gabriel Metcalf, president of SPUR. Metcalf draws a straight line from the 1980s to the present in San Francisco, indicting the progressive agenda, grown in this liberal microcosm, for ironically urging housing policies against its own long term self interest. “As the city got more and more expensive, progressive housing policy shifted gradually to a sad, rearguard movement to protect the people already here from being displaced.”

Metcalf sets this against a backdrop of a strong regional economy, with one of the “most powerful engine[s] of job creation in the country” located next door. And for that reason, he urges “A regional solution, in which all cities do their part to accommodate regional population growth [which] would be far more effective than trying to solve our affordability problems inside the boundaries of a handful of cities.” These days, the shortcoming of housing supply manifests in ways like San Francisco missing its affordable housing needs allocation by a mile.

Shaw, a lifelong advocate of the San Francisco progressive agenda, acknowledges the thoughtfulness of Metcalf’s analysis, but largely tracks two California state laws before attributing the problem to the California association of realtors. In 1996, the California legislature enacted Costa-Hawkins in response to the spread of vacancy control (which, at the time, was enacted in five California cities). Costa-Hawkins was implemented as a compromise, exempting certain kinds of units entirely, and other kinds of units under certain circumstances.

Shaw argues that a regime of vacancy control (i.e., a world where Costa-Hawkins never existed) would have had a more positive impact on housing affordability than, for instance, the production of all proposed housing units from the 1980s to present. (And, while the absolute price of those units would indeed be lower, this does seem to gloss over the anguish of fighting over listings, in a manner perhaps akin to vying for affordable and below market rate housing.)

The second state law is the Ellis Act, which Shaw interprets as an eroding of the rent-controlled rental housing supply (particularly pernicious in neighborhoods like North Beach and the Castro where few affordable housing units are being built). However, unlike, e.g., condominium conversion or certain demolitions, the Ellis Act does not actually eliminate rent-controlled rental housing, functioning more like a five-year “reset button” on the rental rate.

That said, the Ellis Act and Costa-Hawkins certainly belong in any conversation about San Francisco’s housing crisis, where tenancies preserved at the lowest rents under the aegis of Costa-Hawkins essentially become targets for Ellis Act withdrawals. If rent-control reform is a necessary step toward mitigating the housing crisis, Ellis Act evictions will go down as the prices of long-term rent-controlled tenancies go up.

July 23, 2015November 22, 2015

Will the California Court of Appeals Reconsider Delta Imports and the Delta Motion

This week, the Appellate Division for the Superior Court in the County of Los Angeles found that Delta Imports as interpreted by Parsons means that an unlawful detainer defendant can challenge personal jurisdiction on the basis that an unlawful detainer complaint fails to state a cause of action for unlawful detainer through the introduction of extrinsic evidence. (If you think that sounds wordy, you should read a Delta motion sometime.)

The ruling in Borsuk v. Superior Court (La Hillcreste Apartments, LLC) is not novel. But the politic concurrence, by Acting Presiding Judge Kumar, is rallying. Acknowledging the deference the Appellate Division must pay to the Courts of Appeal (particularly, decisions by its own Second District, like Delta Imports), he agreed with the majority that a trial court must consider extrinsic evidence about service of the requisite notice to an unlawful detainer action in evaluating the sufficiency of its ability to state a cause of action and its worthiness of the unique unlawful detainer five-day summons.

Even Judge Kumar thought this reasoning wasn’t absurd: “The apparent thought process behind cloaking the notice requirement with jurisdictional ramifications is this: if there is no valid three-day notice, the summons corresponding to the complaint is necessarily invalid because the truncated time for an answer provided therein is conditioned on a valid three-day notice.” He simply asserted that, in allowing a jurisdictional challenge to test the sufficiency of a cause of action, “Delta expanded the traditional scope of a motion to quash”.

Delta stressed that it would moot the point of a jurisdictional challenge if a tenant were required to challenge the cause of action for unlawful detainer on demurrer – a general appearance in the action. The tenant should be able to specially appear and challenge jurisdiction.

However, Judge Kumar reasoned that, “If the defendant was not properly served with the precedent three-day notice, the summons remains facially valid. As the three-day notice is an element of the unlawful detainer action, a challenge to it, like a challenge to any other element of the cause of action, should be directed to the legitimacy of the complaint, not the validity of the service of the summons.”

He closed by issuing an open invitation for “a court higher than the appellate division” to revisit the matter. The Delta motion is one of the more peculiar features of unlawful detainer law, and reform would straighten out what is supposed to be a simplified and summary proceeding for recovery of possession of real property. On the other hand, this doctrine is over three decades old, and higher courts have had no shortage of opportunities to spill ink on this issue.

July 23, 2015July 23, 2015

Proposed Changes to Vacancy Control in San Francisco

New proposed legislation would make significant changes to the Rent Ordinance, and, in particular, how it interacts with Costa-Hawkins. If the proposed ordinance passes in its current form, it would impose vacancy control on rental units where the previous tenancy was terminated by the landlord or terminated by the tenant following a change in the terms of the tenancy. (Most often, this will be based on a “non-fault” eviction by the landlord, or the termination of the tenancy by the tenant following a rent increase.) For rent increases, the landlord will be required to file information about the former and (proposed) new rent increase with the Rent Board.

Other changes would allow tenants to retroactively come into compliance on certain unlawful sublets, require heightened standards for what constitutes a breach of lease, and impose mandatory service of a multi-lingual form to accompany notices to quit.

July 22, 2015July 22, 2015

Richmond Becomes First City in Contra Costa To Implement Rent Control

Contra Costa Times is reporting that Richmond has implemented a rent control ordinance today, making it the first in Contra Costa County.

With rents climbing throughout the Bay Area, tenants in Richmond have been feeling the same squeeze of devoting a higher percentage of their income to rent as the more politicized stories in San Francisco and Oakland.

A last minute reversal by the Council’s swing vote landed in favor of rent increase limitations, a rent control board and a just-cause for eviction ordinance. The new law is set to go into effect on December 1st of this year.

July 20, 2015July 20, 2015

Curbed SF Charts San Francisco “Housing Drought”

Curbed SF charts the San Francisco “housing drought”, showing median price as a function of housing per resident, intimating that policies like the Mission Moratorium may not alleviate the tension.

July 17, 2015July 17, 2015

Zacks & Freedman Attends 31st Annual Judges Reception

judges reception

Zacks & Freedman attended the 31st Annual Judges Reception, put on by the Barrister’s Club of the San Francisco Bar Association. Zacks & Freedman was a Patron of this annual reception that encourages informal interaction between the judiciary and the Club’s membership.

This year, the Club also awarded Magistrate Judge Laurel Beeler of the United States District Court for the Northern District of California with the 2015 Tara L. Riedley Barristers Choice Award, to recognize her extraordinary efforts to educate and encourage young lawyers.

July 13, 2015January 3, 2016

First District Court of Appeals Highly Committed to Mosser Companies Opinion in T & A Drolapas & Sons, L.P. v. CCSF (Borjas)

While there are relatively few appellate decisions interpreting Costa-Hawkins and its application to local rent-control ordinances, this year has already seen a pair of cases that add a lot of specificity to rent increases on the children of rent-controlled original occupants who move away.

Recently, in Mosser Companies v. CCSF, Division Three of the First Appellate District held that the son of the original lessees on the lease was an “original occupant”, having moved in at the commencement of the tenancy with the consent of the landlord, even though he was not a party to the lease. Accordingly, when the parents moved out, and the son stayed behind, the court found that the decontrol provisions of Costa-Hawkins would not allow the establishment of a new rental rate while an “original occupant” was still in possession. In Drolapas v. CCSF, Division Four acknowledged and agreed with their colleagues’ Mosser opinion.

Continue reading “First District Court of Appeals Highly Committed to Mosser Companies Opinion in T & A Drolapas & Sons, L.P. v. CCSF (Borjas)”

July 8, 2015July 8, 2015

San Francisco Landlords Challenge “Campos II” Enhanced Relocation Payments for Ellis Act Withdrawals of Rental Property

This week, San Francisco landlords, along with the Small Property Owners of San Francisco Institute, filed a Petition with the San Francisco Superior Court to challenge the propriety of San Francisco Ordinance 68-15 – requiring enhanced relocation payments to tenants where a landlord seeks to “go out of the rental business” under the Ellis Act.

The challenge alleges the same defects that found its predecessor (Ordinance 54-14) to be an unconstitutional “exaction” (a taking without just compensation) in Levin, et al. v. CCSF last year and preempted by the Ellis Act and retroactive in violation of due process in Jacoby, et al. v. CCSF earlier this year.